Landscaping, lawn care, and tree trimming and removal services are subject to Iowa sales and use tax. Persons providing such services must obtain a sales tax permit and remit sales tax to the Department of Revenue. Snow removal services are not a taxable service in Iowa. Expand each topic for full details.
View the Sales and Use Tax: Taxable Services page for additional taxability clarification.
The gross receipts from landscaping materials that are used in providing landscaping services and which are sold to final consumers are subject to sales tax. “Landscaping materials” includes sod, dirt, trees, shrubbery, bulbs, sand, rocks, woodchips, and other similar materials.
For the purpose of this rule, final consumer ordinarily means the owner of the land to which the landscaping materials are applied, or a general building contractor when the landscaping contractor contracts with the general building contractor. When a landscaping contractor uses materials to fulfill a contract, the landscape contractor is considered the retailer of the landscaping materials and is obligated to collect sales tax on the selling price from the final consumer.
When the retailer of sod, dirt, trees, shrubbery, bulbs, sand, rock, woodchips, and other similar landscaping materials installs these items as a part of a contract for landscaping or improving land for a lump sum, the entire gross receipts are subject to tax. Any retailer’s charges for landscaping are taxable. However, a retailer’s charges for nontaxable services are not taxable if contracted for separately; or, if no written contract exists, the charges are itemized separately on the invoice.
Examples:
Any portion of a landscaping service that includes labor and materials to erect a structure is considered construction contracting, not landscaping service, and is generally exempt from sales tax. “Structures” include such items as retaining walls, lawn lighting systems, lawn irrigation systems, pools, walkways, and any other permanently attached item to realty or real estate. To be exempt from sales tax, the invoice must state the charges for construction contracting separate from landscaping charges.
By statute, a landscaper is considered the consumer of any construction materials used in the performance of construction contracting and must therefore pay sales taxes and applicable local option taxes on all construction materials they purchase.
“Lawn care” refers to services specifically related to the care and maintenance of lawns. This includes mowing, trimming, watering, fertilizing, reseeding, re-sodding, and killing of insects, moles, other vermin, weeds, or fungi that may be threatening a lawn.
“Lawn” means an open space between woods or ground (as around a house or in a garden or park) that is covered with grass and is generally kept mowed or required to be kept mowed. Nonexclusive examples of properties which may contain lawns include cemetery grounds, golf courses, parks, and residential or commercial properties containing one or more buildings or structures.
Persons who mow lawns are providing a taxable service regardless of their ages.
“Tree trimming” and “tree removal” means the removal of any portion of a tree in whole or in part, including branches, trunks, and stumps. “Tree” includes any woody perennial plant, including shrubs with main stems or trunks made of wood.
The sale of any wood derived from a tree trimming or removal service, such as for sale as firewood, constitutes the sale of tangible personal property. When providing tree trimming or removal services and retaining byproduct from the service for later sale, the service is not provided as a “sale for resale;” the service provider must charge tax on both the tree trimming/removal service and the later sale of any byproducts derived from the performance of the service.
Snow removal services are not a taxable service in Iowa. A seller’s charge for the service of snow plowing, sanding, or salting roads, sidewalks, or parking lots is not subject to sales tax. However, salt, sand, brine, or other similar materials used during snow removal is tangible personal property and is subject to tax. Additionally, tools and equipment used for snow removal such as plows, shovels, and snow blowers are also subject to tax as tangible personal property (but see note below). The service provider is the consumer of the tangible personal property that it transfers to its customers with such services and is liable for sales or use tax on its purchase of such property.
Example 1: Person A contracts with Company X to have its driveways and parking lots plowed and sanded during the winter months. Company X charges Person A by the hour. No part of the charge by Company X is subject to sales tax. Company A must pay Iowa sales or use tax on its purchase of the sand used in providing the service.
Example 2: Person B contracts with Company Y to have its driveways and parking lots plowed and salted during the winter months. Company Y charges Person B based on the amount of salt used. No part of the charge by Company Y is subject to sales tax. Company Y must pay Iowa sales or use tax on its purchase of the salt used in providing the service.
NOTE: Snow blowers may be exempt from sales tax if used for agricultural production. See IAC 701-214.1 for details.
The total charge for lawn care services is subject to Iowa sales tax. It does not matter if the bill is itemized or a lump-sum charge.
Billing Examples:
A landscaping company is not required to purchase products for resale. If a landscaping company pays sales tax to its supplier for supplies, it must still charge its customer sales tax on the entire amount of the services the landscaping company provides.
Businesses must remit the sales tax to the Department in the filing period in which the service was performed.
For example, if the service was performed in the second quarter (April - June) but the customer paid in July, the second-quarter return must be used to report the sale and remit the tax due. You cannot wait and use the third-quarter return.