November 2, 2015

 

 

 

Christopher L. Nuss

Brownwinick Law Firm

666 Grand Avenue, Suite 2000

Des Moines, IA  50309

 

RE:   Fisher Groundskeeping Inc.

         Docket No.  2015-300-1-0187

         Retail Sales Tax Protest

        

Dear Mr. Nuss:

 

The Iowa Department of Revenue (Department) has reviewed the protest, facts and evidence presented, and the laws which apply to the protest referenced above.  This letter states the Department’s positions in this matter.

 

The first issue in the protest concerns four invoices upon which you claim the Department assessed tax for exempt services.  The protest states that the four invoices were for services on or connected to new construction, reconstruction, alteration, expansion or remodeling and should be exempt from tax.  You request that these invoices be excluded from the error rate computation and that the assessment be adjusted accordingly.  Based upon the additional information you provided, the Department agrees that invoice #19985 was for services related to new construction and should be exempt from tax.  However, the Department is unable to verify that the other three invoices in question (#19836, #20086 and #20121) were related or connected to new construction, reconstruction, alteration, expansion or remodeling and will, therefore, remain in the error rate computation.

 

The second issue involves whether the taxpayer meets the requirements necessary to qualify for the forestry exemption as presented in Iowa Code §423.3(100).  That code section exempts from sales tax the “sales price from services furnished by forestry consultants and forestry vendors engaged in forestry practices on private or public land.”  You assert that the services provided on the thirteen invoices involving this issue meet the forestry exemption because the services involved managing trees for the customer.  You also state that Fisher often utilized the services of an arborist to determine how they would manage the forestry systems in delivering its services.  For these reasons, you request that the thirteen invoices related to this issue be excluded from the error rate computation and that the assessment be adjusted accordingly. 

 

The Department’s position is that in order to qualify for the exemption, it is the taxpayer that must be a forestry consultant or a forestry vendor.  Because Fisher is neither a forestry consultant nor a forestry vendor, it does not qualify for the forestry exemption.  Some of the various services that were provided on the thirteen invoices include taking down a tree for better view of the lake, grinding out tree stumps, cutting up parts of trees that fell during the winter, cutting down a storm damaged tree, trimming trees, taking down and removing dead trees, cleaning up limbs and trees from storm damage and other similar services.  These services are considered enumerated services and are subject to tax.  The thirteen invoices in question will not be removed from the assessment or the error rate computation.

 

The final issue involves your assertion that one of your customers self-accrued use tax on a purchase from Fisher and remitted the tax to the Department.  You request that this invoice be excluded from the error rate computation and that the assessment be adjusted accordingly.  For this occurrence, the Department has verified that the customer did accrue and remit use tax on the invoice in question and the Department agrees to remove this invoice from the assessment and the error rate computation.  However, for future reference, it is Fisher’s responsibility to charge sales tax on any invoice that includes an enumerated service unless a completed exemption certificate is received. 

 

In summary, the Department denies in part and grants in part your protest based on the information provided.  Copies of the adjusted schedules are enclosed.  Please respond in writing by December 1, 2015 whether you agree with the Department’s position.  If you agree, or choose not to pursue the protest, then your letter and payment of the amount due, which is $13,820.57, with interest computed through November 30, 2015, will serve as authority for the Department to request the Director to close the protest.  Please note that interest accrues at the rate of $47.35 per month.

 

If you disagree with the Department’s position in this matter, then the Department requests that you identify those areas of disagreement and provide documentation to support your position.  Upon receipt of your letter, the Department may file an Answer, which will initiate the process for an administrative hearing on your protest.  A departmental attorney will be assigned to your protest at that time.

 

If no response is received by December 1, 2015, then the Department will construe this inaction as failure to pursue the protest and will request dismissal of the protest pursuant to departmental rule 701 IAC 7.11(2).

 

If you have any questions regarding this matter, please do not hesitate to contact me.

 

Sincerely,

 

 

 

Holly Cretsinger, Technical Tax Specialist

Policy and Communications Division

Audit Services Section

Telephone: 515-725-2995

Email: Holly.Cretsinger@iowa.gov