May 19, 2015
Re: Question
Dear :
Recently, the Department received your question regarding sales tax on a service.
The facts and questions as stated in your letter are as follows:
You have a client who is going to start a business that entails injecting ash trees to save them from the emerald ash borer. Is he required to collect sales taxes on this service?
Analysis and conclusion:
Iowa Code section 423.2 imposes sales tax of six percent on the sales price of the sale of tangible personal property sold at retail in this state and enumerated services. Iowa Code § 423.2(6) sets out the enumerated services, which includes “termite, bug, roach and pest eradicators.” Iowa Admin. Code r. 701—26.45 provides in pertinent part:
Persons engaged in the business of eradicating or preventing the infestation by termites, bugs, roaches, and all other living pests are rendering, furnishing, or performing a service, the gross receipts from which are subject to tax. Persons who eradicate, prevent, or control the infestation of any type of pest by spraying or other means are rendering, furnishing, or performing a service, the gross receipts from which are subject to tax. Included in the performance of this taxable service are persons who eradicate, prevent, or control pest infestation sin farmhouses, in outbuildings (such as machine and livestock buildings) and in other structures (such as grain bins) used in agricultural production.
The service at issue is injecting ash trees to save them from the emerald ash borer, which would fall under the taxable service of termite, bug, roach and pest eradicators as your client is eradicating or preventing the infestation of living pests.
I hope this information has been helpful to you. Please remember that this letter is an informal opinion based only on the facts you provided, and on the current law. In the future the Department could take a position contrary to that stated in this letter. Any written advice or opinion rendered to members of the public by Department personnel that is not pursuant to a Petition for Declaratory Order under 701 IAC 7.24 is not binding upon the Department. If you have any additional questions regarding this matter please do not hesitate to contact me.
Sincerely,
Theresa A. Dvorak
Policy Section
Taxpayer Services and Policy Division
Iowa Department of Revenue
(515) 281-3194
theresa.dvorak@iowa.gov