Is There a Sales Tax on Services?

December 27, 2019

When you run a business, you know you need to collect sales tax on the products you sell. However, you may be less certain about sales tax on services. This isn’t surprising because service sales tax is a lot more complicated. It may be helpful to look for Los Angeles tax preparation services to help you with figuring out your liability. Nonetheless, below are the basics.

Do You Owe Sales Tax on Services?

This depends on the type of service and where you live. Every state and municipality have slightly different sales tax rules. In general, sales tax is owed on services that affect tangible property and on professional services. These may include financial services, maintenance services and construction contracting.

Some of the Rules of Thumb

The most important rule to follow is to check the laws for where you live. So, it may be a good idea to contact those Encino tax advisors. For example, Texas made parking and storage services taxable in recent years.

Typically, taxability is based on the real object being provided. So, a medical service would be taxed based on the service, not the supplies used even though they are physical goods. Nonetheless, services on goods are usually taxable, even if no new good is provided. Jewelry repair, for example, maybe taxed where you live.

Keep in mind that multiple jurisdictions may have a claim on sales tax. It is generally best to pay tax when you are unsure. It is better to get a refund than a penalty.

Learn More

As you can likely tell, the sales tax on services situation is complicated. Call some Encino tax consultants to help you with figuring out your liability. The experts can help you pay all the taxes you need to without paying ones you don’t. That is well worth the effort and cost of hiring the right service.