ARE CLEANING SERVICES TAXABLE IN FLORIDA?
I get calls several times a month from nervous owners of cleaning companies and suspicious customers of cleaning companies, both asking the same question: Are cleaning services subject to Florida Sales Tax? Far too many people have the impression that services are never subject to sales tax in Florida and, unfortunately, that simply is not true. There are four types of services that are subject to sales tax in Florida. It surprises many people to learn that some cleaning services are taxable in Florida – but not all cleaning services are taxable. The taxability depends on what is being cleaned and who the customer is.
Florida Statute 212.05(1)(i), F.S., provides “nonresidential cleaning” services are subject to sales tax and goes on to reference the specific NAICS code 561720, which is defined as:
Janitorial Services: This industry comprises establishments primarily engaged in cleaning building interiors, interiors of transportation equipment (e.g. aircraft, rail cars, ships), and windows.
So, any cleaning services that fall within the definition of nonresidential cleaning service and NAICS code 561720 are subject to sales tax in Florida UNLESS the customer is otherwise exempt. So a cleaning service for hire in a commercial building would be subject to sales tax. However, a cleaning service performed on a church would meet the definition of a nonresidential cleaning service, but the church itself can provide an exemption certificate from sales tax.
SLEEPING ACCOMMODATIONS
When a cleaning company is hired to clean any type of sleeping accommodation, then the service is not taxable because it falls outside the definition of “nonresidential cleaning.” That means that the cleaning of your home is not subject to sales tax. However, the Department of Revenue takes a hard line stance that cleaning services performed for hotels (aka transient accommodations) is subject to sales tax (although there may be a argument to take that hotel cleaning isn't taxable, if you get hit with this issue on an audit). Furthermore, as confusing as this might be, when a hotel charges a guest a non-avoidable “cleaning fee” to clean the room, then that is subject to sales tax as part of the rent paid for the room.
CLEANING BY EMPLOYEES
Cleaning services provided by employees are not taxable. So, for example, if a commercial building hired employees to clean its own offices, then the salaries of those employees would not be subject to sales tax.
OTHER TYPES OF CLEANING THAT ARE NOT SUBJECT TO SALES TAX
For those of us lunatic enough to practice in the area of sales and use tax every day, we run into other types of cleaning services that are surprisingly not subject to sales tax. For example, you would think carpet cleaning in a commercial building would be subject to sales tax right? Strangely enough, the answer is no. Remember, the taxing statute refers to a specific industry standard code – 561720 Janitorial Services. However, carpet cleaning has its own industry standard code – 561740. So carpet cleaning falls outside the realm of taxable 561720 services and is, therefore, not subject to Florida sales tax. The same is true of restaurant ventilation hood cleaning services, which falls under the non-taxable industry standard code 561790 for chimney cleaning services. The residential construction industry hires cleaning companies to clean throughout the building process. I have personally run into auditors trying to claim that these types of services are subject to sales tax. However, construction cleaning of a building during and at the end of the construction process has its own non-taxable industry standard code as well – 238990. These are just some of the specific instances that I’ve run into during my practice. I make it standard practice to review the NAICS codes when dealing with cleaning companies to make sure there is not another, more specific industry code that would make a particular company’s services not taxable.
COMMERCIAL COMPANY PAYING FOR CLEANING DOES NOT
AUTOMATICALLY MAKE CLEANING TAXABLE
I have run into several auditors over the years that are under the mistaken belief that when a commercial company pays for a cleaning service, then that service automatically becomes a taxable “nonresidential cleaning service.” Time and time again, we have to hold educational classes for auditors to teach them the law. Whether a service is within the scope of “nonresidential cleaning” provided by section 212.05(1)(i), F.S., has absolutely nothing to do with who cuts the check for the cleaning service. It is true that who cuts the check, such as a church, might make the service exempt from tax, but whether the service is within the scope of a taxable nonresidential cleaning service in the first place has nothing to do with who pays for the service. This issue has surfaced in during instances such as when a construction company hires a cleaning company. The auditor presumes because a commercial company hired the cleaning company, the service much be taxable as non-residential cleaning company. As discussed above, it is the nature of what is being cleaned that determines whether the service is subject to sales tax. We have also run into Florida counties falling into the mistaken belief that the fact a commercial company cuts the check for a cleaning service makes the service taxable. See, for example, Sarasota Surf & Racquet Club Condominium Association, Inc. v Sarasota County, Florida and Florida Department of Revenue, Case No. 2015 CA 002612 NC (Fla. 12th Cir, July 11, 2016), in which we had to take a county taxing authority before a Judge to help the county understand that the payer of the cleaning service has nothing to do with the taxability of such service. The taxability is determined by what is being cleaned and, it this case, what was being cleaned were nontaxable sleeping accommodations.
SUMMARY
In summary, nonresidential cleaning services are subject to sales tax in Florida unless otherwise exempt. However, the concept of what is a nonresidential cleaning service is not as clear cut as one would expect. Unless the cleaning service is the run of the mill commercial office space cleaning, it is worth exploring whether the cleaning service falls outside the scope of the taxing statute. If you have any questions about whether a particular type of cleaning service is subject to sales tax in Florida, then don’t hesitate taking advantage of our FREE INITIAL CONSULTATION policy to get quick answers to your questions.
About the author: Mr. Sutton is a Florida licensed CPA and Attorney and a shareholder in the law firm Moffa, Sutton, & Donnini, PA. Mr. Sutton’s primary practice is Florida tax controversy, with an almost exclusive focus on Florida sales and use tax. Mr. Sutton worked for in the State and Local Tax department of one of the Big Five accounting firms for a number of years and has been an adjunct professor of law at Stetson University College of Law since 2002 teaching State and Local Tax and at Boston University College of Law in 2014 teaching Sales and Use Tax. Mr. Sutton is a frequent speaker on Florida sales and use taxes for the FICPA, Lorman Education, NBI, AAA-CPA, and the Florida Society of Accountants. Mr. Sutton is also co-author of CCH's Sales and Use Tax Treatise. You can contact Mr. Sutton at 813-775-2131 or JamesSutton@FloridaSalesTax.com or his firm bio.
AUTHORITY
FLORIDA STATUTE 212.05, F.S. (TAXABLE SERVICES)
RULE 12A-1.091(b), F.A.C. (charges for cleaning residential facilities are not subject to tax)
ADDITIONAL RESOURCES
FL TAX – VOLUNTARY DISCLOSURE CAN BE THE PERFECT SOLUTION, published October 5, 2012, by Jerry Donnini, Esq.
GOING TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.
FLORIDA SALES TAX AUDIT HELP, published July 14, 2013, by James Sutton, CPA, Esq.
FLORIDA CPAs – YOUR CLIENT OWES SALES TAX AND THEY WILL BLAME YOU, published July 18, 2016, by James Sutton, CPA, Esq.
CLOSE A BUSINESS TO AVOID LARGE FL SALES TAX ASSESSMENTS?, published March 24, 2013, by James Sutton, CPA, Esq.
FL SALES TAX – TAA 14A-020 – NAICS CODES VERSUS NONRESIDENTIAL CLEANING SERVICES, published October 8, 2014, by James Sutton, CPA, Esq.
(c) 2016 James H Sutton, Jr. - all rights reserved -