Current through Register Vol. 50, No. 6, December 1, 2023
RELATES TO:
KRS
139.010,
139.200,
139.260,
139.270,
139.470,
139.480
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
131.130(1) authorizes the
Department of Revenue to promulgate administrative regulations for the
administration and enforcement of Kentucky tax laws. This administrative
regulation interprets the sales and use tax law as it applies to landscaping
services.
Section 1. Definitions.
(1) "Construction contract" is defined by
103 KAR 26:070,
Section 1(1).
(2) "Contractor" is
defined by
103 KAR 26:070,
Section 1(2)(a).
(3) "Department"
means the Department of Revenue.
(4) "De minimis threshold exemption" is
defined by
KRS
139.470(23).
(5) "Farm machinery" is defined by
KRS
139.480(11).
(6) "Landscaping services" means those
services listed in
KRS
139.200(2)(g).
(7) "Person" is defined by
KRS
139.010(26).
(8) "Practice of landscape architecture" is
defined by
KRS
323A.010(3).
(9) "Professional services" is defined by
KRS
323A.010(4).
(10) "Resale certificate" means Resale
Certificate Form 51A105, Streamlined Sales and Use Tax Agreement - Certificate
of Exemption, Form 51A260, or Multistate Tax Commission's Uniform Sales and Use
Tax Exemption/Resale Certificate - Multi-jurisdiction.
(11) "Retailer" is defined by
KRS
139.010(35).
(12) "Seller" is defined by
KRS
139.010(39).
(13) "Subcontractor" is defined by
103 KAR 26:070,
Section 1(2)(a).
Section
2. Landscaping Services.
(1) The
furnishing of landscaping services is subject to sales tax pursuant to
KRS
139.200(2)(g). Sales tax
shall apply to the sales price received from the furnishing of landscaping
services.
(2) Persons engaged in
the business of providing landscaping services are retailers of the landscaping
services furnished. Landscaping service providers shall register for, collect,
and remit sales tax.
(3) The list
provided in this subsection shall serve as examples of the furnishing of
landscaping services:
(a) Aerating;
(b) Applying chemicals to lakes or ponds to
control the growth of algae or plant life;
(c) Bush hogging;
(d) Dethatching;
(e) Diagnosing lawn conditions for the
purpose of providing landscaping services;
(f) Fertilizing;
(g) Hydro seeding;
(h) Installation of decorative bricks,
blocks, and timbers such as those installed for a flower bed;
(i) Installation of lawn edging, decorative
rock, and weed control fabric;
(j)
Installation of free-standing planter boxes;
(k) Landscape design and installation
services;
(l) Lawn care and
maintenance services;
(m) Lawn
fungus treatments;
(n) Leaf
removal;
(o) Mowing and
trimming;
(p) Mulching;
(q) Planting, pruning, bracing, removal,
surgery, and trimming of plants, trees, and shrubs;
(r) Raking, including power raking;
(s) Seeding or reseeding;
(t) Services for the removal of gophers,
moles, voles, and other lawn pests;
(u) Snow plowing or removal
services;
(v) Sod laying;
(w) Soil moving, grading, removal, or
installation as part of a landscaping service (such as removing a top layer of
soil to install sod);
(x) Spraying
or other applications of chemicals and fertilizer within the landscape.
Examples include:
1. Granular and liquid lawn
fertilizers;
2. Lime
applications;
3. Seed and
fertilizer combination applications;
4. Herbicides; or
5. Insecticides, including those to eliminate
grubs, ants, fleas, and ticks.
(y) Stump removal;
(z)
Tilling and soil preparation;
(aa)
Turf installation; or
(bb)
Watering, including the installation of soak hoses.
Section 3. Non-landscaping
Services. The list provided in this section shall serve as examples of
activities not considered the furnishing of landscaping services:
(1) Vegetative management of highway
rights-of-way including mowing, line trimming, and tree trimming;
(2) Vegetative management of utility
rights-of-way including mowing, line trimming, and tree trimming;
(3) Perpetual care of gravesites at a
cemetery;
(4) Government-mandated
land reclamation at a mining site;
(5) Mosquito spraying services;
(6) Professional services authorized as part
of the licensed practice of professional landscape architecture provided under
separate contract from landscape design and installation services;
(7) Mowing, spraying, tree trimming, and
fence clearing, provided to a person regularly engaged in the business of
farming and provided on land that is:
(a)
Being cultivated for the production of crops as a business;
(b) Being directly used in the occupation of
raising and feeding livestock or poultry for sale;
(c) Being directly used in the occupation of
producing milk for sale;
(d) Being
directly used in the occupation of egg production;
(e) Being directly used in the occupation of
breeding or producing:
1. Aquatic
organisms;
2. Buffalos;
3. Cervids;
4. Llamas or alpacas; or
5. Ratites; and
(8) Mowing, spraying, tree
trimming, and fence clearing, provided to a person engaged in the raising of
equine as a business; provided however, that the landscaping services are
performed on the portion of land directly used in the raising of
equine.
Section 4.
Property Purchased for Resale by Persons Furnishing Landscaping Services.
(1) Persons furnishing landscaping services
may issue a fully completed resale certificate for the purchase of property to
be resold to a customer when furnishing the landscaping services where the
property remains with the customer after the furnishing of landscaping
services. The purchaser of the property to be resold to a customer when
furnishing the landscaping services shall collect sales tax from the customer
on the sales price of the property.
(2) The list provided in this subsection
shall serve as examples of property purchased for resale that demonstrate the
types of property that generally are received by, or remain with, the customer
after landscaping services are performed:
(a)
Bulbs;
(b) Bushes;
(c) Chemicals;
(d) Dirt;
(e) Fertilizer;
(f) Insecticides;
(g) Landscaping materials;
(h) Lawn care chemicals;
(i) Mulch;
(j) Rock;
(k) Shrubs;
(l)
Sod;
(m) Trees; or
(n) Weed barriers.
Section 5. Property Used or
Consumed by Persons Furnishing Landscaping Services.
(1) Persons furnishing landscaping services
shall not issue a resale certificate for property used or consumed in the
performance of the landscaping services. Property sold to landscaping service
providers and used or consumed by the landscaping service providers when
furnishing landscaping services shall be subject to sales tax at the time of
purchase by the landscaping service provider.
(2) The list provided in this subsection
shall serve as examples of property consumed in the performance of landscaping
services:
(a) Chemical applicators;
(b) Equipment rentals;
(c) Gasoline;
(d) Gloves;
(e) Lawnmowers;
(f) Oil;
(g) String trimmers, string trimmer lines and
spools;
(h) Tools; or
(i) Wheelbarrows.
Section 6. Resale of Landscaping
Services.
(1) A person furnishing landscaping
services may issue a fully completed resale certificate to another person
furnishing landscaping services for the purchase of the landscaping services
that will be resold to the end consumer. The purchaser of the landscaping
services to be resold shall collect sales tax from the end consumer on the
sales price for the furnished landscaping services.
(2) Example. Landscaping services provider A
may issue a fully completed resale certificate to landscaping services provider
B for the purchase of lawn mowing services to fulfill his obligations to the
end consumer. Landscaping services provider A shall collect the sales tax from
the end consumer on the sales price of the landscaping services.
(3) A contractor or subcontractor shall not
issue a resale certificate for the purchase of landscaping services.
Section 7. De Minimis Threshold
Exemption.
(1) Transactions are exempt from
tax for the furnishing of landscaping services or the furnishing of landscaping
services combined with other services listed in
KRS 139.200(h) through
(q) if a service provider's receipts have
never exceeded the de minimis threshold exemption in a calendar year. Gross
receipts from the furnishing of landscaping services that exceed the de minimis
threshold exemption amount in a calendar year shall be subject to sales tax.
All subsequent receipts in the calendar year and all gross receipts for each
calendar year thereafter shall be subject to sales tax.
(2) The de minimis threshold exemption
described in subsection 1 of this section shall not apply if the landscaping
services provider is also engaged in the business of selling tangible personal
property or digital property, or furnishing other services listed under
KRS 139.200(2)(a) to
(f). For example, if a landscaping services
provider also sells grass seed, weed and feed, lawn equipment, or other similar
products at retail, then all of the sales (both landscaping services and sales
of tangible personal property) shall be subject to sales tax.
Section 8. Non-taxable Services
and Exemptions for Purchases Applicable to Landscaping Services Providers
Engaged in Dual Businesses.
(1) This section
applies to persons engaged in furnishing landscaping services that are also
engaged in a dual business.
(2)
Contractors and subcontractors shall be subject to
103 KAR
26:070.
(3) If a person furnishing landscaping
services also operates as a contractor or subcontractor, the following list
shall serve as examples of services not considered to be landscaping services
when performed by a contractor or subcontractor to fulfill the terms on a
construction contract.
(a) Installation,
repair, or removal of the following:
1. Berm
walls;
2. Driveways, sidewalks,
parking areas, and patios, including those constructed of asphalt, brick,
concrete, crushed stone, or gravel;
3. Decks;
4. Fences;
5. Fountains or other water works installed
as plumbing fixtures;
6.
Gazebos;
7. In-ground sprinkler and
irrigation systems;
8. Masonry,
stone setting, terrazzo, tile marble, or mosaic work;
9. Ponds, excluding decorative or ornamental
ponds; or
10. Retaining walls,
including those constructed of block, stone, or brick;
(b) Land clearing, excavation, erosion
control, and finish grading for the construction of a permanent
structure.
(4) Purchases
of tangible personal property such as building materials, fixtures, and
supplies that are to be incorporated or fabricated into any structure or any
improvement to real estate shall be subject to sales and use tax at the time of
the sale to the contractor or subcontractor furnishing landscaping services in
conjunction with his business as a contractor or subcontractor.
(5) If a person furnishing landscaping
services is also acting as a retailer of tangible personal property, and sells
tangible personal property to a person who is claiming an exemption, the
retailer shall not be relieved of the burden of collecting the tax until the
purchaser provides the retailer with a fully completed certificate of exemption
or a direct pay authorization.
Section
9. Forms. The forms referenced in this administrative regulation
may be inspected, copied, or obtained, subject to applicable copyright law, at:
(1) The Kentucky Department of Revenue, 501
High Street, Frankfort, Kentucky 40601;
(2) A Kentucky Taxpayer Service Center,
Monday through Friday, 8:00 a.m. to 4:30 p.m.; or
(3) The Department or Revenue Web site at
http://revenue.ky.gov.
47 Ky.R. 1857; 48
Ky.R. 20; eff. 10-5-2021.
STATUTORY AUTHORITY:
KRS
131.130