Are you a plumber wondering if your services are taxable? You're not alone. Many plumbers are uncertain about the tax implications of their services. In this article, we'll explain the rules and regulations surrounding plumbing services and taxes in Tennessee. Retail taxed services in Tennessee include plumbing, heating, air conditioning, excavation, landscaping, electrical work, sheet metal work, insulation, elevator and escalator services, and welding.
Generally speaking, services are not taxable in Tennessee. However, if the service you offer includes the repair, creation, or installation of a product, you may have to pay sales tax on the products. No sales tax is charged on gross income or gross revenues from residential construction. A work bond, Form 72-4, must be issued for each contract and filed with the Department of Revenue (DOR).
The bond must be sufficient to cover liability for sales, use, income, deductibles, withholding and other taxes on motor fuel (diesel fuel). The effective date of a global bond must be earlier than the estimated start date of the contracts it covers. If the property has been used in another state, the regular retail Mississippi Use Tax must be paid on the fair market or net book value of the property at the time of import. Cars and trucks (10,000 pounds or less) without special equipment are subject to the 5% special use tax.
Cars and trucks over £10,000 are taxed at the 3% tax rate. The net book value will be calculated using only linear depreciation and will not be less than 20% of the original cost. That means plumbers are required to pay sales tax on materials and send them to the Department of Revenue. The landlord cannot pay taxes for plumbing services performed on your rental property, but they can reimburse you for these expenses.
Additionally, consider whether your plumbing services are necessary before you can deduct them from your taxes. Most plumbers don't have to worry about sales taxes, but certain situations could make your plumbing services taxable. Landlords may contract for plumbing, heating, air conditioning, excavation, landscaping, electrical work, sheet metal work, insulation, painting, masonry, carpentry, structural steel, concrete foundation etc. If the plumbing connection is included in an appliance bill, you could end up paying sales tax.
Fortunately for plumbers in Tennessee, they can purchase certain construction materials and supplies for certain projects without having to pay sales tax.