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Jean   Murray

Do I Have to Charge Sales Tax on My Services?

By August 6, 2008

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I spent some time last weekend talking to someone who wants to go into business to set up a web site that sells online listings. During our discussion, we came to the question of whether his service is subject to sales tax. I said I would do some checking for him.

Since sales taxes are set by the states, it is difficult to make any general statements about this question. Here is what I found for Iowa: The Iowa Department of Revenue lists sales taxes on all kinds of products. For services, the site states:

Unlike tangible personal property, which is subject to sales/use tax unless specifically exempted by Iowa law, services are subject to sales/use tax only when specified by Iowa law. Iowa sales tax is due when the taxable service is rendered, furnished or performed.

So what I understand is that sales of tangible items are subject to sales tax, unless the item is called out as being non-taxable, while sales of services are only taxable if the service is on the list. Makes sense. I read through the list and didn't find his particular type of service (Internet listings). For the definitive information, the site suggests you call and ask. Probably, this is a smart idea. Among professional services, investment counseling, dating services, and limousine services are listed as taxable. It doesn't look like other professional fees are taxable.

I checked a couple more states, just to see...

  • Florida has a nice Business Owner's Guide, but it didn't specify what services are taxable; it just said "certain services" are subject to sales tax. Not very helpful.
  • It took me a while to find the list of taxable services for Ohio, but I was able to locate it in the FAQ's. This might be a possibility for you, if you're having trouble locating the list.

Only 46 more states to go....

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July 30, 2009 at 10:44 pm
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How about Utah? What services are taxable in Utah?

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