Sales & Use Tax - Snowplowing, Sanding and Salting Services

The Wisconsin Department of Revenue has just issued its December 2008 Sales and Use Tax Report.  In the report, the WDOR reminds providers of snowplowing, sanding and salting services that theses services are not subject to sales tax.  This means that while sales tax need not be charged on these services, the provider of the services must pay sales tax on the sand or salt when purchased. 

The bulletin gives the following examples:

Example 1: A person contracts with Company A to have its driveways and parking lots plowed and sanded during the winter months.  Company A charges the person by the hour.  The charge by Company A is not subject to sales tax.  Company A must pay Wisconsin sales or use tax on its purchase of the sand used in providing the service.

Example 2: A person contracts with Company B to have its driveways and parking lots plowed and sanded during the winter months.  company B charges the person based on the amount of salt used.  The charge by Company B is not subject to sales tax.  Company B must pay Wisconsin sales or use tax on its purchase of the salt used in providing the service.

This means that the service of snowplowing, sanding or salting is not subject to sales or use tax, but at some point sales tax is in fact paid on the sand or salt used.  It is just a question of who is paying the tax.  In these cases, it is the service provider that directly pays the tax on the sand and salt, not the customer receiving the services.

Rob Teuber is a tax attorney located in Milwaukee, Wisconsin.  His practice includes Wisconsin state and local tax matters and federal tax problem resolution nationwide.  For more information on Rob Teuber’s federal tax law practice, see www.federaltaxlawforum.com.