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Lawn Mowing Tax Comes to Kentucky in Growing Trend of State’s Taxing Services Businesses


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6/19/2018
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Lawn Mowing Tax Comes to Kentucky in Growing Trend of State’s Taxing Services Businesses

With the 144th Kentucky Derby behind us, Kentucky is facing scrutiny for expanding its sales tax law to cover an array of services from mowing lawns to auto repairs to veterinary and janitorial services.

The new law goes into effect on July 1st, and Kentucky businesses are scrambling to adjust their accounting to comply with the new law.

Traditionally, an auto shop would itemize the bill and charge sales tax on parts, but not on labor, which would be charged separately at an hourly rate.  Not any more.  At least in Kentucky.  So the impact on automobile service shops is going to factor prominently in the discussion of the Kentucky “services sales tax.”

Commentators question whether the new law is fair, even constitutional.  Veterinary services (small animals), pet grooming and pet boarding are all taxed.  But horse and cattle veterinary services are not taxed.  Zoos and horseback are also still tax free.  Gym membership services are taxed as are weight loss centers, but not spas and massage parlors.  Golf courses and country clubs are taxed, but not tennis training centers.

The Kentucky Sales Tax may not be relevant to most of us in the Northeast, but the growing trend of Sales Tax On Services (“STOS”) is a key feature of the New York, New Jersey, Pennsylvania and Connecticut state tax codes.

Some states are even taxing digital products and downloads!  Connecticut, for instance, taxes digital downloads at a rate of 1%.  New Jersey also imposes a sales tax on digital books and downloads, but excepts streaming services.  New York, on the other hand, exempts digital downloads and information products like movies, books, music & ringtones.

http://www.wdrb.com/story/37871182/lawmakers-broaden-kentuckys-sales-tax-to-include-services-such-as-auto-repairs-and-landscaping

https://www.usnews.com/news/best-states/kentucky/articles/2018-04-02/kentucky-residents-could-pay-sales-taxes-on-some-services

http://www.kentucky.com/news/politics-government/article207840804.html

https://www.bna.com/sales-tax-slice-b57982092459/

http://news.cchgroup.com/2018/04/17/kentucky-broadens-sales-tax-base-hikes-cigarette-tax-makes-other-changes/

http://www.lao.ca.gov/LAOEconTax/Article/Detail/99

https://www.forbes.com/sites/taxanalysts/2015/09/24/dont-be-fooled-services-should-be-subject-to-sales-tax/#68a0cec650e7

https://blog.taxjar.com/sales-tax-digital-products/

https://www.cbpp.org/sites/default/files/atoms/files/8-10-09sfp.pdf

https://www.forbes.com/sites/howardgleckman/2018/06/14/from-head-taxes-to-parcel-taxes-cities-and-states-are-looking-for-new-ways-to-raise-revenue/#6200ec7b37fa



Category: Tax Law


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