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The state is
anticipates that the new
sales tax on plantings
will generate 81 million
dollars a year.
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We are dealing with
tangible items that will
not be used again. Once
we put a plant in the
ground it will stay
there. Consider a
builder who nails up a
2x4. The homeowner will
not take it down and use
it in another form. The
contractor therefore is
the last person to use
it. The contractor is
considered the end user.
A nursery is selling
the items to a homeowner
or a contractor. Both
will dig a hole and put
the plant in the ground.
Both the homeowner and
the contractor is the
end user. Both will
install the item. Both
will pay the sales tax
on the material.
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When the tax laws
were established years
ago, this is the way it
was defined. In order to
make changes to it you
would have to rewrite 46
pages of tax law.
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There are 200
auditors in the state.
100 are in the north and
100 are in the south.
Each auditor does on
average 25 audits per
year. That works out to
5000 audits each year in
New Jersey for sales
tax. Each auditor brings
in about 1 million
dollars per year from
the audits they perform.
That works out to be 200
million dollars
generated each year by
the NJ State sales tax
audit department.
In the past our
industry has not been
looked at as a group
worth going after.
Auditors would work with
liquor establishments,
deli’s, etc., places
where there would be a
high return for the work
the auditor would do.
Now, however, our
industry is going to be
looked at as a revenue
builder for taxation.
Audits come directly
from Trenton.
An audit will begin
with a letter from the
state telling you that
they are going to do an
audit of your sales tax
records. You will start
with a Pre Audit
meeting. At this meeting
you will have an
opportunity to explain
your business to the
auditor and educate him
on how you operate. Most
auditors will never have
done a landscape company
before.
10% of audits will
end after the initial
consultation, 90% will
go on to an audit.
As a general rule,
in an audit, the charges
will go back 4 years. If
fraud is suspected they
will go back 7 years. If
no sales tax has been
paid they will go back
to the inception of the
business.
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Keep everything when
it comes to documenting
the sales tax you paid
and the sales tax you
collected and paid to
the State. The more
records you have for an
audit the better off you
will be. If there are no
or poor records, the
auditor will have to
make assumptions and you
will pay based on what
the state calculates,
not what you actually
did.
Always pay tax for
the item and have a
receipt for it. If you
do not pay the tax and
you are a contractor,
when you are audited,
you will pay the tax
with penalties.
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All green or soft
landscaping is taxable.
The planting of trees,
shrubs, hedges, flowers
and plants as well as
seeding, sodding,
planting of any grass or
ground cover.
The clearing and
filling of land
associated with the
planting of any grass or
plants listed above.
Billing
Itemized
bills: Do not charge
the client sales tax on
the cost of the items
you have already paid
tax on. Client only pays
sales tax on that
portion of the bill that
you have not paid tax
on.Markup on any
materials is taxable
just as the labor is
taxed.
Lump sum
bills: Charge the
client sales tax on the
entire amount.
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Hardscaping is still
non-taxable.
Itemized bills:
Do not charge the client
sales tax on the cost of
the items you have
already paid tax on.
Charge sales tax on the
mark up of any hardscape
material. Do not charge
sales tax on labor or
equipment.
Lump sum bill:
Do not charge sales tax
on any of the hardscape
work.
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- Landscaping
on new
homes/construction.
-
Mulch jogging path.
-
Mulching.
-
Repairs and
maintenance of any
kind.
- Soil
stabilization of any
kind whether hydro
seeding, seeding,
plugging or sodding.
-
The markup on
materials you charge
and itemize in any
project.
- Fuel
surcharges.
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- Drainage
systems.
-
Driveways whether
macadam, gravel,
cement or pavers.
-
Fencing.
- Grass
pavers (emergency
vehicle access).
-
Gravel jogging path.
-
Landscape Lighting.
-
Paver walks and
patios.
-
Sprinkler systems.
-
Waterfall and ponds.
-
Walls of any
material.
- The
markup and labor on
any hardscape
project when you
lump sum the bill
and do not itemize
it.
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Is it a structure?
Will the town charge
tax on it?
Is it a ratable? |
