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Ohio considers collecting sales tax on SNOW Services

Discussion in 'Business Fundamentals' started by Lawn Lad, May 20, 2003.

  1. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    House Bill 95 proposes adding snow plowing services to the list of services where sales tax would be collected. This is a bad idea and needs to be stopped in its tracks now.

    Because snow plowing revenue comes from an irregular and unpredictable source (weather), revenue will be unpredictable. As well, as a smaller cottage industry and unregulated, operators who often just strap a plow on their trucks for a few extra dollars are difficult to track down. Such independent operators would be difficult to locate in order to enforce a snow removal tax.

    If you live in Ohio please contact either SIMA or the ONLA (Ohio Nusery Landscape Association) to get more information on how you can contact your state legislators to voice your opinion on how sales tax on snow services is a bad idea.

    SIMA: (814) 835-3577 (www.sima.org)
    ONLA: (800) 825-5062 (www.onla.org)
  2. Chuck Smith

    Chuck Smith 2000 Club Member
    from NJ
    Messages: 2,317

    Snowplowing is taxable in NJ (and other States I am sure), and has been for a long time. I agree, it sucks, but it is the law. No way to stop it here now. Best of luck to you boys in Ohio. :waving:

    I'm curious as to why weather being unpredictable is a problem when it comes to sales tax? Sales in general are unpredictable (somewhat) too, no?

  3. Ohiosnow

    Ohiosnow Senior Member
    from Ohio
    Messages: 415

    Lawn Lad

    One good winter in the last 7 yrs. & some state legislator wants to see if they can get some extra $$ :rolleyes: so they can pi$$ it away on some porkbarrel projects :realmad: Just what we need more paper work :gunsfiring:
  4. Snow Biz Inc.

    Snow Biz Inc. Junior Member
    Messages: 8

    Lawn Lad,
    Got the same fax today as you, we all need to write our State Senators and Reps. Customers are not going to be too happy having to pay more for any reason

    Tom Beyer
  5. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Chuck... in answer to why the unpredictable nature of snow fall makes for a poor revenue stream - I was paraphrasing a letter faxed out by SIMA and I believe ONLA. But I would answer it this way because I believe that snow services make for unpredictable revenue.

    Since revenue is generally tied to work being performed and work is based on quantity and frequency of snow fall, the volume of snow greatly affects the revenue by which sales tax is calculated. Once the budget makers begin counting on or betting on sales tax generated by snow fall they will be making bets as to how much snow fall will occur. What happens in a short fall snow year? What happens if for five years straight snow fall is below average? We know what will happen. There will be a budget shortfall since they don't understand or care to understand the nature of snow fall.

    I also think the tax unfairly penalizes businesses for operating a more snowy environment. The northern half of the state will paying a larger portion of any tax dollars collected than the southern half of the state. Will the northern half of the state benefit proportionately when tax dollars are budgeted? One could argue that we already do as a result of increased services when snow falls the state has to pay out $$ for trucks, drivers, salt and additional repairs to roads in those areas that get more snow. But I wonder how the dollars really balance out. And I don't hear this as a reason or argument for adding the tax. It's simply a money grab.
  6. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    For those of you in Ohio.... attached is a letter addressed to each of the senators on the finance committee and the leadership of the senate. If you want to use this letter you simply need to insert your name and position on each page and print the letter off on your letter head.

    Attached Files:

  7. Chuck Smith

    Chuck Smith 2000 Club Member
    from NJ
    Messages: 2,317

    Ok, that explains why it would be a problem counting on sales tax revenue. I thought it would somehow be harder for you as a business to manage it because it is unpredictable revenue. Your explaination makes perfect sense, I was not thinking of it that way.


    EDIT: Here in NJ, Sales & Use Tax is 6%. What is the rate in Ohio? Just curious.
    Last edited: May 20, 2003
  8. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Depends on the county. Cuyahoga is 7%. I think it is as low as 5.25 state sales tax and then each county can add to it for their tax and spend plans.
  9. CT18fireman

    CT18fireman Banned
    Messages: 2,133

    I don't see what the big deal is. I tax my customers (as do all contractors here) and pass the tax onto the state. When I go to pay income tax my sales payments go with my receipts to my accountant. You are not fotting the bill and if all contractors face the same tax then the field is still level.
  10. wxmn6

    wxmn6 PlowSite.com Addict
    Messages: 1,037

    I don't think this is a real big deal as you may thought. Here in NYS, if you have DBA, you need to collect sales tax. If not, you don't have to collect sales tax (you can't, it is illegal). I explained to all of my customers and they all understood that I charge sales tax. You either have to file quarterly or annually, depending on your business income. Nope, I don't like doing paperwork, but it is part of doing busiess. Just have to live with it.
  11. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    It's not that we pay sales tax out of our pockets perse. Ultimately we do, but that's another point.

    First and foremost raising taxes is not the solution to state budgetary problems. What do we do as business owners when our revenue is down as a result of a sluggish economy or other factors? You cut expenses until you can increase revenues through increased efficiency or growth. The politicians don't see cutting costs as an option - they only say raising taxes as the solution since they don't want to slice programs and pork that bring them votes. Personally, I'm opposed to any more taxes than we already have to pay.

    Second, the collection of sales tax from "independent" snow plow businesses will be difficult and sporadic. Therefore the additional overhead from paper pushing falls on the responsible, established contractor which does not represent the industry as a whole. Further, the 7% or so automatic increase in cost to the customer might encourage them to seek snow plow operators who fly under the radar scope to avoid paying taxes. These are the same contractors who likely don't carry liability insurance and workers' comp, etc. Those who hire legitimate contractors (by choice or not) will be those that must pay the tax. The tax will not be evenly distributed as a result.

    Third, collecting sales tax from a business that is dependent on the irregular snow fall does not make fiscal sense. The sales tax will be an inconsistent revenue source for the government. The very lack of predictability makes it a poor choice to tax.

    Lastly, ultimately the consumer pays the bill. As a consumer I do not want to pay more for goods and services because the state has increased taxes. It does not directly come out of my pocket as a contractor when I collect the sales tax and pass it on to the Governor. Rather, I pay it when businesses must increase their prices to cover the increased costs as a result of the taxes.

    I find it disheartening that some would use the justification of "I have to collect sales tax, why not you?". Just because some states have already passed laws allowing it does not make it right or just.

    Unfortunetly Ohio carries the not so distinct honor of having one of the highest tax rates in the country while ranking at the bottom of the list when it comes to growth and development. What the folks in Columbus and other state captials fail to understand is that no state, country or government entity can tax it citizens into prosperity.

    At what point in time do we as individuals stand up and say enough is enough. Tax amnesty day is nearly around the corner. On the average, each American works 5 months of each year to pay their "fair" share of taxes. Until this point in time we have been working to pay taxes. Come June you will be working for yourself. I simply am tired of having to earn $1.50 to spend $1.00 on something. When does it end? It won't unless as individuals we send the message to our elected officials that increasing taxes is not the solution to the current problems.
    Last edited: May 20, 2003
  12. Pelican

    Pelican 2000 Club Member
    Messages: 2,075

    Stephen, you've oversimplified your statement a bit. Those who perform a taxable service and do not collect sales tax are in violation of the law. That's the trouble with the system, those who abide by the law have to do all the bookkeeping involved with the sales tax collection while those who do not escape the inconvenience. Who do you think the Department of Taxation is going to audit? Not the guy they know nothing about!

    In my County the rate is 7.25%, soon to increase to 8.5%. I'm required to make quarterly statements which take about 6 hours to complete, and require logging my receipts for the deductions and keeping them on file, all with no compensation.

    Add to this the hassle of collecting tax from those who feel they do not need to pay it, it's just a plain nuisance. Again, with no compensation and you are acting as an agent of the State.

    Best of luck to you Ohio guys fighting this.

    This Bill wouldn't happen to be sponsored by a Democrat?;)
  13. wxmn6

    wxmn6 PlowSite.com Addict
    Messages: 1,037

    Pelican, here in NYS, if you do not have DBA (no offical business name), you are not required to collect sales tax. Yep, that is correct, no need to collect sales tax. You MUST collect sales tax if you have DBA. Alot of residential snowplowers here are just plowing for extra cash, they don't collect sales tax, and don't always report on their income tax. They are supposed to report on their income, but are not required to collect sales tax. They even cannot collect sales tax at all or it would be illegal (such as collecting "sales tax" money as extra profit). But once again, if you have DBA, you MUST collect sales tax.

    I have been in lawn biz for many years and I report them on my annual income tax, but never collect sales tax until my business became offical two years ago.
  14. No Pelican, We get to blame the "tax cut and spend" republican govenor "taxin" bob taft for this one.

  15. Pelican

    Pelican 2000 Club Member
    Messages: 2,075

    Too bad, Great Lakes, sounds like he's Republican in name only!

    Stephen, my point is these "unofficial" businesses (or gypsies) are in violation of various laws including tax laws just by their existence and should not be providing services in the first place. I understand that you must have a tax ID number to collect sales tax, but without this ID number, you may not legally provide a taxable good or service. This is called the "underground market".

    The other point I made is the State has no interest in investigating these gypsies, but be a couple weeks late in filing your return as a registered business and they're all over you.
  16. Big Nate's Plowing

    Big Nate's Plowing PlowSite.com Addict
    Messages: 1,266

    I wish that we still had Voinivitch as govenor:cool:
  17. Michael F

    Michael F Senior Member
    Messages: 203

    Pelican & Stephen as for debate about sales tax if I recall, if you have a DBA your tax ID number is your social security number. A friends accountant tried to tell him no sales tax on snow services here in NY a couple years ago, I called to double check with state they said its taxable.
    I just called to check with state social secuity number is no longer tax ID #, BUT I asked about no DBA =no sales tax collecting. Said you still have to collect tax, & get number you might want to check their # is 1-800-225-5829. Will they chatch you probably not, is it fair to all the legal contractors that yor price is 8.5% lower, right off the top I don't think so. Good luck.
  18. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    I thought that "no d/b/a - no sales tax" thing sounded wrong, so I had our financial guy call NY Dept of Revenue. Sales tax is sales tax - don't matter what you call yourself, or how you're set up. It's collectable and owed. Don't collect it ? It's still owed - by you.

    By the way, we just got our notification that the NY Sales tax went up 1/4 percent across the board.
  19. CT18fireman

    CT18fireman Banned
    Messages: 2,133

    It does mean a bit of extra paperwork, but IMO it makes you look more professional. Your customers will know that you are following the rules and paying the tax. Many customers want to be sure they are doing business with "good" companies.
  20. wxmn6

    wxmn6 PlowSite.com Addict
    Messages: 1,037

    Ok, I am sorry if I misunderstood the way the law is for here in NYS regarding sales tax. If that is the way it is supposed to be, that's fine. But I did not know that, until now. But heck, I was doing lawn care and snow removal since before I was teen, so who expected them to collect sales tax then send to the state? :rolleyes: Does not really matter anyway because I was not making that much money at that time to make a difference in sales tax.

    But ever since I offically started my own business (DBA), I have been collecting sales tax. Recently the state (NYS) has raisen the sales tax by 0.25% thanks to state's 6 billion dollars budget deflect. Sales tax right now are at 8.25% :eek: