Iowa clarifies that landscaping and lawn care are taxable, snow removal is not; invoicing and materials rules detailed

The Iowa Department of Revenue clarified during an Iowa SourceLink webinar that landscaping, lawn care and tree-trimming services are taxable in Iowa while snow removal is not, and it explained how landscaping materials and mixed contracts should be billed to ensure correct tax treatment.

"Landscaping, lawn care, tree trimming, and removal services are subject to Iowa sales and use tax under Iowa code section 4 23 2 6 a b," Nick Belke, policy director with the Iowa Department of Revenue, said during the presentation. He added that entities providing these services must hold a sales tax permit and remit sales tax to the department.

Why this matters: landscapers, mowing services, and tree contractors must collect and remit sales tax on the full sales price of taxable landscaping and lawn-care services to final consumers, and they must document billing appropriately when a job contains both construction-contracting items and landscaping services.

Key guidance from the webinar: - Landscaping and lawn care: the department cited its administrative rule defining landscaping and listed typical lawn-care activities (mowing, trimming, watering, fertilizing, seeding, weed/fungus/insect control) as taxable. Lawn-care services are taxable regardless of the age of the person providing them and apply to residential and commercial properties, parks, cemeteries and golf courses. - Landscaping materials: sod, dirt, trees, shrubbery, bulbs, sand, rocks, wood chips and similar materials used for landscaping and sold to final consumers are taxable. If a landscaper purchases materials for resale and properly claims the resale exemption, the landscaper must itemize the invoice to the customer to reflect the exemption. - Construction-related items: when landscaping work includes erection of a structure (retaining walls, lawn lighting systems, irrigation systems, pools, walkways or other permanently attached items), that portion is generally treated as construction contracting and is not a taxable landscaping service—provided the invoice separately states the construction-contract charges from landscaping charges. - Tree trimming and removal: trimming or removal of trees (including trunks, branches and stumps) and similar woody shrubs are taxable services; sale of wood cut during the work is treated as a sale of tangible personal property and is taxable. - Snow removal: by contrast, snow-plowing, sanding or salting roads, sidewalks, and parking lots is not a taxable service in Iowa. However, materials used for snow removal (salt, sand, brine) and tools/equipment (plows, snowblowers) are taxable as tangible personal property; the service provider is the consumer of those items and must account for sales or use tax on them.

The department illustrated these rules with billing examples and recommended landscapers and contractors consult the department—s sales/use guidance and the administrative rules cited on slides for detail. Presenters also said their contractors guide and website guidance are being updated and encouraged practitioners to contact the Department of Revenue for specific, binding determinations.