Sales Tax on Certain Services FAQs
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.
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Pest Control Services
Are pest control services purchased by a contractor and performed at a construction site subject to tax?
Yes Charges for pest control services performed before, during, or after construction are subject to tax. The contractor cannot purchase such services tax-free (for resale) because this service is not considered contractor labor for sales tax purposes. Nor can such services be purchased tax-free under a Purchasing Agent Appointment, Form 17, issued by the governmental unit or exempt entity.
Can I buy my chemicals and other supplies for resale?
No. You are the consumer of all chemicals and supplies used in providing your pest control services and must pay sales or use tax on all purchases of materials, supplies and equipment used to provide your service.
I provide pest control services to farmers and ranchers. Are these services subject to sales tax?
No. Pest control applications made to crops or land used in commercial agriculture are not subject to sales tax. This includes applications made to grain storage or livestock facilities on the farm. All other pest control applications on the farm are taxable.
Are pest control services contracts which are in effect prior to October 1, 2002, subject to tax?
Sales tax applies to all payments for pest control services recorded as a sale on and after October 1, 2002.
Are charges for a single application of a product containing both insecticide and fertilizer subject to tax?
Yes. Charges for the single application of a blended product containing both pest control chemicals and fertilizer or weed control chemicals are subject to tax. A retailer is not allowed to collect tax on only a portion or percentage of the charge (for insecticide) when both products are commingled in a single application.
Is someone who inspects and treats trees for emerald ash borer infestation providing a taxable pest control service?
Yes. A person who inspects and treats trees for infestation of emerald ash borers is providing taxable pest control services. Retailers of pest control services must hold a Nebraska sales and use tax permit and collect the Nebraska and applicable local (city) sales tax on charges for these services. These charges must be shown on an invoice separate and apart from your non-taxable charges, otherwise the entire invoice amount is subject to sales tax. Retailers have certain administrative responsibilities for collecting and remitting sales tax. These responsibilities are summarized in our Information Guide titled “Nebraska and Local Sales Tax.”
Building Cleaning and Maintenance
Is construction site clean-up subject to tax?
Yes. Charges for the clean-up of a building under construction are subject to tax. Contractors cannot purchase such services tax-free (for resale) from a third party. This service is not considered contractor labor for sales tax purposes. Nor can such services be purchased tax-free under a Purchasing Agent Appointment, Form 17, issued by the governmental unit or exempt entity.
Are charges to clean a furnace, air conditioner, heat pump, duct work, or drains taxable?
Yes. Building cleaning services includes any work done to clean a fixture that has been annexed to real estate. This includes cleaning a furnace, air conditioner, heat pump, duct work, sewer, and drains located in or attached to a building. Such work in not considered contractor labor.
What happens when a contractor responds to a service call to repair a furnace blower and also takes a few minutes to change out the furnace filter?
An Option 1 contractor must collect sales tax on the total amount charged for the furnace filter and parts and will not collect any tax on his or her labor charge provided it is separately stated. Option 2 and 3 contractors will pay or remit tax on the furnace filter and repair parts according to their option and will not collect any tax on the amount charged to repair the furnace.
Is the charge to clean a building after a fire or flood subject to tax?
Yes. Charges for cleaning the interior or exterior of a building and its contents after a fire, flood, or similar disaster are subject to tax. Labor charges to repair or replace part or all of the building are not taxable.
Is the charge to winterize an underground sprinkler system subject to tax?
No. Charges for services such as the blowout and draining of the underground pipes and sprinkler heads are not taxable.
Can I buy my cleaning supplies tax free?
No. You are the consumer of all supplies used in providing your cleaning and maintenance services and must pay sales or use tax on all purchases of materials, supplies and equipment used to provide your service.
Does taxable building cleaning and maintenance include property attached to the outside of a building?
Yes. Examples would be an awning, a sign, or an attached deck.
Does building cleaning and maintenance service include picking up containers of grease from a restaurant?
No. The charge to pick-up and dispose of or take the containers of grease to a recycling center is not taxable.
Does building cleaning and maintenance service include removing grease from a collection pit located in a building?
Yes. The charge for removing the grease from the collection pit is taxable.
If I only charge to inspect a home and its heating and air conditioning systems (HVAC) related to the purchase of a home, am I required to collect sales tax on such charges?
No. These inspection charges are normally just to determine if the heating and air conditioning systems are operating properly.
However, if the inspector both inspects and cleans the HVAC system and itemizes the different charges, only the charge to clean the HVAC system is taxable. If one amount is charged to both inspect and clean the HVAC system, the entire charge is taxable.
If the inspector inspects the HVAC system and determines it needs to be repaired and performs the repair work, the inspector is considered to be a contractor for the repairs performed. As a contractor, the inspector is required to be registered in the Contractor Registration Database, and charges for materials and labor to repair the HVAC system will be taxed in the following manner:
- An Option 1 contractor must collect sales tax on the total amount charged for any materials and will not collect any tax on separately stated charges for the inspection and repair labor. If the charges are not separately stated, the entire charge is taxable.
- An Option 2 or Option 3 contractor will not collect any sales tax on the amount charged to the customer.
Installation or Application of Tangible Personal Property
I install a built-in dishwasher for my customer. Is the installation charge subject to sales tax as a taxable installation service?
No, since a built-in dishwasher is considered annexed to real estate, normal installation labor rules for personal property do not apply. The person "installing" the dishwasher is a contractor. Contractors must elect between three options to show how they will collect sales tax (Option 1) pay sales tax (Option 2), or remit use tax (Option 3) on building materials that are annexed. The contractor’s labor is generally not taxable. An option 1 contractor must collect sales tax from its customer on the selling price of the dishwasher. No sales tax will be charged on the installation labor as long as the labor charge is separately stated from the price of the dishwasher.
Option 2 or 3 contractors do not separately charge tax on their customer’s invoice for the dishwasher or their installation labor. An Option 2 contractor pays sale tax to its supplier when purchasing the dishwasher, and an Option 3 contractor remits use tax to DOR on its purchase price of the dishwasher. See Reg-1-017, Contractors for more information.
Motor Vehicle Towing
If I tow a wrecked vehicle from the crash site to a holding facility in Nebraska, am I required to charge sales tax on the amount charged for towing?
Yes. The charge is taxable regardless of who you bill, even if the wrecked vehicle is later totaled by the insurance company.
If you are later hired to tow this wrecked vehicle from the holding facility to the salvage yard, and you charge a separate fee for this tow, such charge is not subject to sales tax provided the salvage yard is a licensed motor vehicle dealer. The salvage yard can issue a Nebraska Resale or Exempt Sale Certificate, Form 13, to you when this vehicle will become an inventory vehicle of the salvage yard.
Is a wrecked or totaled vehicle considered an auto hulk or crushed vehicle?
Can I purchase motor vehicle towing services for resale?
Yes, but only if your business is engaged in motor vehicle towing and you "farm out" or subcontract a tow job to another towing company. You may give that company a resale certificate to avoid paying sales tax when that company bills you. You will then collect tax on the full amount you charge your customer for the towing service.
I own an auto engine repair shop. We have an outside service tow for us. We pay the tow company for the tow, plus tax. Then we charge our customer a mark-up for the tow. Do we collect sales tax on this marked-up charge?
No. Since you are not providing towing services to your customer (you are simply repairing the vehicle), you should not be charging tax to the customer for "towing." You can recoup the cost of the tow (including tax) paid to the tow company by passing this cost on to your customer. Your bill to your customer should include the charge for the tow along with any other labor charges. There will be no separate tax collected by you on the tow charge, including any mark-up.
Are towing services provided for under a warranty or maintenance agreement subject to tax?
What if the towing charge is paid for by an insurance company or will be reimbursed by insurance?
The amount charged for vehicle towing is taxable.
Is the sale of a warranty or service agreement that covers towing taxable?
Yes. Although any charge for actual towing services performed under such an agreement would not be taxable. However, if the owner of the motor vehicle pays for towing but is later reimbursed by an insurance company, the charge for towing is taxable.
Is a motor club membership taxable as a service agreement for towing?
No, as long as the motor club membership provides other services and benefits besides towing.
Is a motor club taxable when it pays for towing a member’s vehicle and on what amount do I collect sales tax when I bill the motor club?
The charge to the motor club for towing is taxable. The taxable amount is the amount the motor club pays for the tow.
Does towing include winching or uprighting a motor vehicle?
Yes. Motor vehicle towing consists of towing, pulling, transporting, winching, or uprighting an overturned motor vehicle. Therefore, the charge to winch a motor vehicle out of a ditch or upright an overturned vehicle by using a winch, air bags, or a crane is taxable.
Are mileage charges for towing a motor vehicle part of gross receipts and taxable?
Yes. The mileage charge for towing a motor vehicle is taxable, even if the mileage charge is separately itemized or separately invoiced.
Is the charge for towing a repossessed motor vehicle taxable?
Yes, with the exception of towing charges on inventory vehicles billed to a company that holds a motor vehicle dealer's license, a finance company license, or a wrecker or salvage dealer license issued by the Nebraska Motor Vehicle Industry Licensing Board.
Are towing companies that charge for cleanup or for off-loading a disabled vehicle required to collect sales tax on such charges?
No. The charges for off-loading and cleanup of the wreckage site are not taxable provided such charges are separately itemized on the billing invoice or separately invoiced and such statement is not used as a means of avoiding the imposition of the sales tax upon the actual charge for the towing service.
Motor Vehicle Painting
I am a car dealer. When I take my inventory vehicles to have them touched up, re-striped, airbrushed, etc., am I supposed to pay sales tax to my vendors?
When the touch-up, re-striping, or airbrushing is done by a paint/body shop, the touch-up, etc. is deemed a sale for resale, and the dealer should issue a Nebraska Resale or Exempt Sale Certificate, Form 13, to avoid the payment of any sales tax.
Are motor vehicle painting services which are billed to a Common or Contract Carrier subject to sales tax?
Motor Vehicle Washing and Waxing
Can I buy my soap, wax, and other supplies for resale?
No. You are the consumer of all materials and supplies used in providing your washing and waxing services, and must pay sales or use tax on all purchases of such materials and supplies used to provide your service.
Do gross receipts from providing coin-operated motor vehicle washing and waxing services include coin-operated vacuuming?
No, provided the vacuuming receipts are accounted for separately.
Our nonprofit organization is conducting a car wash to raise funds for a camping trip. Is this a taxable service?
The gross receipts from motor vehicle washing services are taxable. If your nonprofit organization chooses not to set a fee or charge for its car wash and will accept a free-will donation, the free-will donation is not taxable. The organization must post a sign that states "free-will donations accepted." If the organization charges a specific amount for washing, it must have a sales tax permit and collect sales tax on the amount charged for washing the vehicles.
Our church is conducting a car wash to raise funds for the organization. Is this a taxable service?
In addition to the above answer on free-will donations, a religious organization may have one sale a year that is not taxed. The sale may last up to 3 consecutive days. (See Sales and Use Tax Regulation 1-091.07B). A car wash with a set charge could be conducted during the once a year sale without collecting tax.
Our school is conducting a car wash to raise funds for a band trip. Is this a taxable service?
If a school or school group conducts a car wash, and the proceeds from the car wash are used to support school activities or the school itself, the service is not taxable even if a specific charge is set for the car wash. (See Sales and Use Tax Regulation 1-092)
Can a motor vehicle dealer purchase detailing services for resale?
No. A motor vehicle dealer must pay tax on detailing services purchased for any of its inventory vehicles.
I accidentally locked my keys in the car and called a locksmith to open the vehicle for me. Is this a taxable security service?
No. This is not considered a taxable security service.
Are security services contracts in effect prior to October 1, 2002, subject to tax?
Sales tax applies to all payments for security services recorded as a sale on and after October 1, 2002.
Are charges for monitoring services for patients or residents of a nursing home subject to tax?
No. Nursing homes and other healthcare facilities are not retailers of security services.
Are charges for in-home health care monitoring services subject to tax?
Yes. Charges for in-home medical and panic alarm monitoring services are subject to tax.
Are off-duty police officers who only provide traffic control services providing security services?
No. However, if the officer is providing traffic control services and also has other security service responsibilities for which he or she is being paid, the total amount charged is taxable.
Are off-duty police officers required to obtain a sales tax permit if they only provide security services to organizations or entities that are exempt from paying sales and use taxes?
Yes. Officers must obtain a sales tax permit by filing a Nebraska Tax Application, Form 20, and request to file an annual sales and use tax return. He or she must obtain from the exempt entity a properly completed Nebraska Resale or Exempt Sale Certificate, Form 13, to exempt the charges from tax.
Do security services include the installation of the security system wires and monitoring equipment?
No. All security system wires and equipment (parts) that are annexed must be taxed based on the installer's contractor option. A definition of “annexed” is available in Nebraska Sales and Use Tax Regulation 1-017.02A.
All security system wires and equipment (parts) that are installed and remain tangible personal property after installation are retail sales, and the total amount charged for such items and installation is subject to sales tax.
If the installation of a security system involves the installation of both tangible personal property and building materials that are annexed for one amount, the total amount charged (materials and labor) is subject to sales tax.
Is a business which provides security services required to collect sales tax on the charge to repair the security system?
Yes. The total amount charged to repair a security system is taxable regardless of whether the item repaired is annexed property or tangible personal property. See Nebraska Sales and Use Tax Regulations 1-101.02D, 1-017.05D(5), 1-017.06D(5), and 1-017.07D(5).
Computer Software and Training
I do not sell computer software, but I provide training in the use of various canned software applications which are purchased "off the shelf." Must I charge tax on my computer software training services?
No. Your training services are taxable only if you also sell the computer software.
Animal Specialty Services
Are charges for medicated baths taxable?
Charges for medicated baths for livestock are not taxable. Livestock is defined as domesticated cattle, horses, mules, donkeys, sheep, and swine.
Charges for medicated baths for animals other than livestock, are taxable unless performed by a veterinarian or veterinary technician, as a part of a medical treatment of the animal.
Are charges for shearing or grooming animals taxable?
Charges for shearing or grooming livestock are not taxable. Livestock is defined as domesticated cattle, horses, mules, donkeys, sheep, and swine.
Charges for shearing or grooming animals other than livestock are taxable unless performed by a veterinarian or veterinary technician as a part of a medical treatment of the animal.
Are charges for rendering or disposal of livestock taxable?
Charges for rendering or disposal services of livestock are not taxable. Refer to the previous answer for a definition of livestock. All rendering or disposal charges for animals other than livestock are taxable.
I am a licensed private detective hired to repossess a car. Is this service taxable?
Yes. However, if the service is provided by someone other than a licensed detective the charge is not taxable.
I am a licensed private detective hired to investigate the cause of a fire. Is this service taxable?
If a licensed private detective or detective agency is hired to determine the cause of a fire, the charge is taxable.
I am a licensed private detective hired by an exempt governmental agency or exempt organization. Are charges billed to these entities subject to tax?
Charges billed by a detective or detective agency to an exempt governmental agency or exempt organization are not taxable, provided the customer issues a properly completed Nebraska Resale or Exempt Sale Certificate, Form 13. For additional information regarding exempt governmental units and exempt organizations see Nebraska Sales and Use Tax Regulations 1-072, 1-090, 1-091, 1-092, and 1-093.
My private investigative business is located in Omaha and I am hired to "follow" a person who lives in Lincoln. What city sales tax is collected?
Detective services are taxed at the customer’s primary residential or business address in this state, regardless of the detective agency’s location or the place(s) the detective goes in performing its service.
If I perform investigative services but am not a "licensed" detective, are my services subject to sales tax?
No. However, Nebraska Revised Statute Section 71-3202, requires individuals and businesses performing private detective services to be licensed with the Nebraska Secretary of State’s Private Detective Division.
I am a licensed private detective hired by an out-of-state customer to serve papers to a person in Nebraska, is this taxable?
Detective services are taxed at the customer’s primary residential or business address in this state. Since the customer is located outside this state, the detective’s services are not taxable.
I am a licensed private detective hired by a Nebraska resident to serve papers to a person who is outside of Nebraska, Is this taxable?
Detective services are taxed at the customer’s primary residential or business address in this state. Since the customer is located in this state, the detective’s services are taxable.
Recreational Vehicle (RV) Park Services
Do RV park services include charges for the rental or lease of a site for a mobile home that is annexed to real property?
No. A mobile home annexed to real property is not considered a recreational vehicle.
If I operate an RV park that has a separate RV storage area, is the charge for storage taxable?
No, as long as the RV is parked in the separate storage area. However, if the RV is actually parked at a pad site instead of in the storage area, the charge would be subject to tax.
Repair or Maintenance Services
Are charges for repairing tires used on a licensable motor vehicle taxable?
No. Charges for repairing tires used on a licensable motor vehicle are exempt from tax whether or not the tire is on the vehicle at the time of repair. Charges to repair tires that are not for a licensable motor vehicle are taxable.
Are charges to restore or refinish (paint or stain) tangible personal property such as appliances and furniture taxable?
Are charges for repairing and maintaining musical instruments, such as pianos, taxable?
Are charges for gunsmith services taxable?
Are charges for dry cleaning and laundering clothes taxable?
Charges for cleaning and laundering clothes are considered restoration services and are not taxable. However, charges for alterations and repairs such as mending or replacing a button are taxable. See Nebraska Sales and Use Tax Regulation 1-048.
Are charges for sharpening tools and equipment taxable?
Are charges for the re-calibration of machinery and equipment taxable?
I am hired to perform tests on machinery or equipment to determine if it is functioning properly. Are these testing charges taxable?
No. Services performed to merely test machinery or equipment are not considered taxable repair or maintenance labor. However, if any repairs are made to the machinery or equipment, the total amount charged, including the charge for testing, is taxable.