Reporting Taxes on Landscaping and Horticultural Services
What are landscaping and horticultural services?
For this publication, landscaping and horticultural services include:
- Yard maintenance
- Pruning and cultivating of fruits, flowers, vegetables, trees
- Installation of sod, the planting of trees, flowers or shrubs
- Weeding, mowing, brush removal
- Installation of paths, tables, benches, fences, and retaining walls
- Installation of sprinkler systems, pools, and fountains
- Application of pesticides and herbicides
- Leveling of land and tree trimming
What Business & Occupation (B&O) taxes do I owe? Do I collect sales tax?
Find the landscaping and horticultural services you provide below, and report taxes as indicated:
Landscaping services to home owners or businesses
On your tax return, report this income under the retailing classification of the business & occupation tax (B&O). You must also charge your customer retail sales tax based on the sales tax rate for the job location. Remit the sales tax with your tax return.
Items you purchase that are directly resold to your customer (without intervening use) may be purchased without paying sales tax by using a reseller permit. Examples are mulch, fertilizer, potted plants, sod, paving stones, and so forth. Installing these items for a customer is not considered to be taxable (intervening) use by the landscaper.
Landscaping services to cities or towns
Within the public road right-of-way
On your tax return, report this income under the public road construction classification of the B&O tax. You do not collect retail sales tax on these services. You must pay sales or use tax on any materials you purchase that are installed on this job. (Examples: soil, seed, rocks, gravel, etc.)
In public areas such as parks
On your tax return, report this income under the retailing B&O classification. You must also collect and remit retail sales tax. Materials you purchase that are installed on this job may be purchased without paying sales tax by using a reseller permit. (Examples: soil, seed, rocks, gravel, etc.)
Horticultural services to farmers
A farmer is a person in the business of growing, raising, or producing any agricultural product to be sold, upon land he or she owns or has a present right of possession.
Report income earned from services performed for farmers under the service and other activities B&O classification. Do not collect sales tax on these services.
When you purchase items that will be applied on farms, such as fertilizers, spray materials, and baling wire, you must pay sales or use tax on those items. Exception: You are not required to pay sales tax or use tax on these materials if you bill the farmer separately for them. In this case, you can purchase these materials using a reseller permit.
The income from separately billed materials is generally subject to the retailing B&O tax classification. You must also charge your customer retail sales tax and remit the sales tax with your tax return. Exception: Sales to farmers of feed, seed, seedlings, fertilizer, spray materials, and agents for enhanced pollination are subject to the wholesaling B&O tax classification. Do not collect sales tax on these sales.
Landscaping services for public or private utilities
These services include clearing limbs and brush from power lines, telephone lines, etc. Report your income from this work under the service and other activities B&O classification. Do not collect sales tax on these services.
Landscaping services to a general contractor
If you are hired by a general contractor who provides you with a reseller permit, report the income from that work under the wholesaling B&O classification. You do not collect retail sales tax from the general contractor.
Items you purchase that are installed on the job or directly resold to your customer (without intervening use) may be purchased without paying sales tax by using a reseller permit. Examples are mulch, fertilizer, potted plants, sod, paving stones, and so forth. Installing these items for a customer is not considered to be taxable (intervening) use by the landscaper.
Landscape design services
Landscape design services (if those are the only services you are providing) are reported under the service and other activities B&O classification. Do not collect sales tax on the design services.
If you provide landscaping design and installation services, then report the total income under the retailing B&O tax on your tax return, and collect and remit retail sales tax on these services.
Services for properties owned by Fannie Mae and Freddie Mac
Charges for retail services such as lawn mowing and trimming, while subject to retailing B&O tax, are exempt from retail sales tax when these services are performed for property owned by Fannie Mae or Freddie Mac. If hired as a subcontractor, sales tax would not need to be collected and the income would be subject to the B&O tax under the wholesaling classification. For more information regarding these types of activities, see WAC 458-20-226.
Do I pay sales tax on items I purchase or rent for my business?
You must pay retail sales tax (or use tax) on purchases or rentals of the tools and equipment you use to provide landscaping or horticultural services.
Where do I find more information about taxes on these services?
For more information on the taxability of landscaping services, see WAC 458-20-226.
For more information on sales to farmers, see WAC 458-20-210.
What other Washington agencies do I need to I contact for my business?
Office of the Secretary of State: If you intend to register your business as a corporation or limited liability company (LLC), you must contact the Secretary of State office. Complete your articles of incorporation before completing your business license application with the Department of Revenue’s Business Licensing Service.
Washington State Department of Revenue – Business Licensing Service: To license your business, you must file a Washington State business license application. You can file your application online at http://bls.dor.wa.gov. This application also allows you to register with:
- Employment Security Department if you plan to hire employees.
- Department of Labor and Industries to enroll in workman’s compensation for yourself and/or your employees.
- Department of Agriculture to get a Nursery Retailer/Wholesaler license if required. (You must have a Nursery Retailer/Wholesaler License if you sell or hold live plants or turf, or install live plants or turf provided by the customer.)
- Department of Revenue to register your business.
Your Local City Business Office: You may be required to register with each city where you do business as well as the State of Washington. Go to http://bls.dor.wa.gov/citycounty.aspx to see a list of cities that you register through the state. If the city is not listed, contact the city to find out if you need to register directly with the city.
Washington State Department of Labor and Industries (L&I): You must get a contractor’s license directly from L&I.