Building Cleaning and Maintenance Industry Guide – Minnesota Department of Revenue

Building Cleaning and Maintenance Industry Guide

This information describes the sales and use tax topics related to the building cleaning and maintenance industry. Use the links in the Guide Menu to see information about that topic.

Defining Cleaning and Maintenance

Sales tax applies to building cleaning and maintenance, disinfecting, and exterminating services.

However, sales tax does not apply to building repair services.

Buildings and Structures

A building or structure includes the building or structure itself and all improvements or fixtures annexed to the structure that are both:

Integrated with and of permanent benefit to the building or structure
Cannot be removed without substantial damage to itself or the building or structure

Maintenance

Repair

Repair means to restore an item so it can be used for its original purpose.

Sales – Building Cleaning and Maintenance

Building cleaning and maintenance, disinfecting, and exterminating services are taxable.

Building cleaning and maintenance includes both interior and exterior cleaning of commercial and residential buildings, homes, and apartments to keep them in good upkeep or condition. It does not include repairs to buildings.

Note: Janitorial/housecleaning contracts that include both taxable and nontaxable services are taxed on the full amount unless the nontaxable services are separately stated.

Taxable Services

Carpet cleaning
Ceiling tile cleaning
Chimney cleaning
Disinfecting, exterminating, and pest control
Duct cleaning
Elevator cab cleaning
Floor cleaning, vacuuming, and waxing
Furnace cleaning
Gutter cleaning
Janitorial services
Junk removal services
Lighting maintenance
Office cleaning
Parking ramp cleaning
Pressure washing a building
Restroom cleaning, deodorizing, and sanitizing
Smoke odor counteracting
Swimming pool, spa, and hot tub cleaning, maintenance, and disinfecting
Swimming pool, spa, and hot tub opening and closing services
Venetian blind cleaning
Ventilation system cleaning
Window washing
Wall and woodwork cleaning
Water removal (flood or fire damage)

Nontaxable Services (if separately stated on the invoice)

Cleaning underground tanks
Insulation removal
Maintenance of outdoor parking lots and outdoor mall areas
Painting and wallpapering
Repairs to real property
Repairs to mechanical systems
Sandblasting exteriors of buildings
Septic tank pumping
Sewer and drain cleaning
Snowplowing and removal
Washing dishes, dusting knick-knacks, making beds, picking up, and room straightening

Miscellaneous

Services Performed within a Business

Building cleaning and maintenance services performed within a business are not taxable when:

Services are performed by employees for an employer
Services are provided by one business entity for another when one of the entities owns or controls at least 80% of the other entity
Services are performed between members of an affiliated group of corporations

Sales to Nonprofits

Qualifying nonprofit organizations must give you a completed Form ST3, Certificate of Exemption to purchase services exempt from tax.

Direct Pay Authorization

A Direct Pay authorization cannot be used to buy services exempt from tax. Taxable services provided to businesses that have a direct pay authorization are taxable.

Equipment Sales

If you sell equipment or other items used in your business, the sale may be taxable. For more information, see Isolated and Occasional Sales.

Local Sales Tax

Some cities and counties have local sales and use taxes. If you are located in or make sales into an area with a local tax, you may owe local sales and use tax. For more information, see Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

Sales – Service Contracts

Sales tax applies to some types of service contracts for building cleaning and maintenance.

Contracts for Cleaning Mechanical Systems

Contracts for mechanical systems, such as elevators and HVAC systems, that are for cleaning are taxable building cleaning. Some items used to provide these services are not taxable. See Exempt Purchases.

Contracts for Repairing Mechanical Systems

Contracts for mechanical systems, such as elevators and HVAC systems, that are for repair are not taxable. Repair services must be separately stated.

Repair includes services to:

Restore an item that was broken, worn, damaged, defective, or malfunctioning, to working order or operating condition
Sustain or support safe, efficient, and continuous operations
Prevent decline, failure, lapse, or deterioration. Repair services must be separately stated.

Home Health Care Service Contracts

Home health care services that provide a combination of medical care, personal care, laundry, and cleaning services for one charge are exempt from sales tax. Laundry and cleaning services are considered incidental and are not taxable.

If a third party provides the residential cleaning services, the home health care provider cannot purchase those services exempt for resale.

Combination Contracts

Contracts to construct, repair, alter, or improve real property are not taxable. The contractor must pay sales or use tax on any materials, supplies, equipment, or taxable services used to complete the construction contract. For more information, see Contractor and Other Property Installers.

A lump sum contract that includes items listed under “building cleaning and maintenance,” together with construction, alteration, or improvements to real property is considered a construction contract when 50% or more of the total cost of the contract is for improvement of real property.

Examples

Fire damage requires you to wash walls, clean carpets and Venetian blinds, paint all rooms, and reconstruct several walls. Since 50% or more of the cost of the contract is for improving real property, the contract is not taxable.

Note: If the contractor hires a subcontractor to clean, the contractor must pay tax on the taxable cleaning services. However, if the cleaning is done by the contractor’s crew, no tax applies.

Fire damage requires you to wash walls, clean carpets and Venetian blinds, and paint one of several rooms. Painting walls is not taxable if separately stated. Cleaning carpets, Venetian blinds, and washing walls are taxable. However, if the customer is billed a lump-sum amount for painting walls and the taxable services, the entire amount is taxable, since more than 50% of the contract is for taxable services.

Lighting Maintenance

Sales – Disinfecting, Exterminating, Pest Control

Disinfecting, exterminating, and pest control services are taxable. These services include fumigating, eradicating, or preventing the infestation of termites, bugs, roaches, moths, birds, and all other living pests.

Agricultural Production Exemption

Disinfecting and exterminating services are exempt from sales tax when the services are used to:

Prevent or destroy insect infestation of growing crops
Control or eradicate insects, predators, and other animal pests for the health and protection of agricultural animals

Disinfectants applied to agricultural animals or their environment for the control or eradication of animal diseases or pests are also exempt from sales tax.

The purchaser musts give you a completed Form ST3, Certificate of Exemption.

Junk Removal

Junk removal service providers pick up and remove unwanted items in buildings. Items are generally sent to a recycling center, a second use store, or a disposal station.

Junk removal is the first step in cleaning a building and is a taxable service.

Taxable Junk Removal Services

The following types of junk removal services are taxable:

Removal of household contents or discarded items from buildings, including garages, abandoned buildings and storage units
Cleaning and removal of household waste
Periodic cleaning
Maintenance of the building
Lawn care and maintenance
Removal of twigs and grass clippings
Tree, bush, and stump removal

For information, see Lawn and Garden Maintenance, Tree, and Shrub Services.

Nontaxable Junk Removal Services

The following junk removal services are not subject to sales tax:

Waste management services provided by the city sanitation department, solid waste management service providers, or the waste control department (may be subject to Solid Waste Management Tax)
Curbside pickup of items placed by the property owner, including yard waste (may be subject to Solid Waste Management Tax)
Removal of appliances when being replaced, if removal service is optional
Charges for the removal of dumpsters or dumpster bags

Note: Nontaxable services must be listed separately on the customer’s invoice.

Examples

A bank hires a junk removal service provider to clean out a foreclosed residential property. The service provider removes abandoned property from the home and cleans out household debris. Cleaning out the contents of the building is taxable.

A construction company removes old carpet to install a new wood floor in a home. They remove the old carpeting and haul it away. Hauling away the old carpeting is not taxable since the construction company is not in the business of junk removal.

A contractor hires a demolition company to tear down two office buildings so an apartment building can be built on the property. The contractor hires a separate company to remove the demolition debris. The removal of the demolition debris is not taxable. The debris removal is not considered part of building and residential cleaning as long as no building remains.

A homeowner buys a new refrigerator and pays the appliance company to deliver and install it and to remove and haul away the old refrigerator. The removal of the old refrigerator is not taxable because the appliance company is not in the business of junk removal and the removal is optional. (Removal is taxable if required.)

A moving service provider is hired to pack the contents of a customer’s home and move them to a new home. The contents of the home are not disposed of as the mover sees fit, but are delivered to the location the customer determines. The moving service does not vacuum, sweep, or clean the customer’s home. The moving service is not taxable.

Exempt Purchases

Items that are consumed while providing a taxable service can be purchased, exempt from sales tax. Separate detachable units used to provide taxable services can also be exempt from sales tax.

Consumable Materials

Examples include:

Chemicals to clean swimming pools
Chemicals to treat waste generated as a result of providing the taxable service
Cleaners, disinfectants, degreasers
Deodorizers
Disposable rags, paper towels
Exterminating chemicals
Furnace filters
Garbage bags
Mothballs
Lubricants and antifreeze for vehicles used while directly providing taxable services (i.e. furnace cleaning machines)
Pesticides
Soaps, detergents, waxes, shampoos
Traps (one-time use)
Window cleaner

To purchase these materials exempt, give your vendor a completed Form ST3, Certificate of Exemption, specifying the Resale exemption.

Note: If you purchase materials exempt from tax but use the materials to provide a nontaxable service for general business, or personal use, you owe use tax on your cost of the materials.

Separate Detachable Units

It must be used in providing a direct effect for a taxable service.
It must be an accessory or other item that attaches to a machine while in use.
Its ordinary useful life must be less than 12 months when used continuously in normal use by the taxable service provider.

Separate detachable units do not include the basic machine or any components included in the original purchase price. Hand tools are not separate detachable units and are taxable. Repair parts are also taxable.

Examples of separate detachable units:

Abrasive and polishing belts
Disposable vacuum bags, brushes, and filters (if purchased separately from the vacuum cleaner)
Mop heads (if purchased separately from the handle)
Polishing strips and buffers

Taxable Purchases and Use Tax

Items you use to operate your business are taxable unless an exemption applies. Several services are also taxable.

If you do not pay sales tax on a taxable purchase, then use tax is due.

Examples of Taxable Purchases

Taxable Purchases	Examples
General items	Furniture and fixtures Office equipment and supplies Lubricants and antifreeze for vehicles used to haul equipment or employees to job sites Specialty advertising materials Training materials and supplies
Taxable services	Detective and security Lawn and garden maintenance Linen supply or other laundry services For more information, see Taxable Services.
Equipment and tools	Belts, bolts, and nuts for equipment Equipment Hand tools (hammers, pliers, screwdrivers) Repair parts Vacuum cleaners Vacuum cleaner lights
Utilities	Electricity Gas Telephone service Water

Use Tax

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

You buy taxable items or services online without paying sales tax
You withdraw an item from inventory to use (instead of selling it), donate, or give away
You buy taxable items outside of Minnesota
You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Use Tax for Businesses and Local Sales and Use Taxes.

Filing Returns and Record-Keeping

When filing your return, you must report all sales tax collected and use tax you owe.

Filing Returns

How to Report Sales and Use Tax

Record-Keeping

It is important to keep good records to determine the correct amount of state and local tax you owe.

Your records should include:

bills, receipts, invoices, cash-register tapes, and any other documents that support the entries in your books
exemption certificates
shipping documents
worksheets used to prepare your tax returns

For more detailed and specific information on Building Cleaning and Maintenance Services, you can visit the Building Cleaning and Maintenance Industry Guide – Minnesota Department of Revenue