§ 60.1. Building maintenance or building cleaning services.
(a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:
(i) Tangible personal property which is consumed in one of the following manners:
(A) Used but not transferred by a vendor in the performance of this service.
(B) Transferred by a vendor to another party in connection with the performance of the vendors services when the property is not a critical element of the service.
(ii) Examples of the property include sales invoices, receipts, contracts, estimate sheets, confirmations or other similar items.
BoilerA container which is used in the generation of steam from water or the production of hot water which is part of a heat distribution system. The term does not include, as part of the boiler, pipes used to circulate the steam or water, pumps, humidifiers, chimneys, utility lines into the boiler, water makeup systems or hot water heaters which are not part of the heat distribution system.
BuildingA structure which usually has a roof and walls and is intended to be permanently affixed to real property. The term includes equipment which is an integral part of the structure such as centralheating and air conditioning units, electrical substations, fuel tanks, water tanks or chillers. For purposes of this section, an enclosed telephone booth is a building.
Building cleaning servicesThe performance of services which include the removal of dirt, dust, grease or grime on a building or inside of a building and the keeping of the building and its contents in a clean, neat, polished or orderly appearance. The term includes janitorial, maid or housekeeping services, office or building cleaning, window cleaning, floor waxing, chimney cleaning, acoustical tile cleaning, venetian blind cleaning, cleaning or degreasing service stations, or cleaning enclosed telephone booths.
Building maintenance servicesThe performance of routine and periodic services upon a building which keeps a building in a satisfactory operating condition. The term includes cleaning, oiling, greasing and replacing parts. The term does not include building repair services.
Building repair servicesServices to a building which do not qualify as a building maintenance service or building cleaning service.
EmployeA person who is paid for his work or services by a vendor, including persons on the payroll or independent contractors.
Employe costsPayments made or withheld by a vendor to an employe, including wages, salaries, bonuses, commissions, employment benefits, expense reimbursements, payroll and withholding taxes, employer paid Social Security Tax or Federal and Pennsylvania unemployment taxes. The term does not include employe recruiting, training, liability insurance, bonding expenses and other costs.
Employment benefitsPaid leave such as vacation; sick leave; health care such as hospitalization, medical, dental or eye care; retirement benefits; or workers compensation.
Expense reimbursementMeals, lodging, mileage or similar expenses incurred by the employe on behalf of the vendor for which the employe is reimbursed.
FurnaceAn enclosed structure which produces heat and is part of a building heating system such as a central furnace; coal, oil or gas furnace; heat pump; or wood stove. The term does not include, as part of a furnace, the duct work, humidifier, chimney, air cleaner, utility lines into the furnace or similar items. The term does not include radiant heating systems, electric baseboard heating systems, portable heaters, fireplaces or similar systems which are not enclosed structures.
Gross feeThe total amount charged by the vendor excluding sales tax.
Interior office building cleaning servicesBuilding cleaning services which are performed on the interior of an office building.
Office buildingA building which is used predominantly for the transaction of business or the performance of a business service. The term includes manufacturing facilities, processing facilities, research and development facilities, public utility facilities, warehouses, laboratories, hospitals, libraries, retail stores, banks, stock brokerages, service stations, repair garages, parking garages, movie theaters, race tracks, bars, restaurants and hotels. A building is predominantly used for the transaction of business or the performance of a business service if more than 50% of the total square footage of the building is actually used for these purposes. The term does not include apartment houses, retirement homes, condominiums and private residences unless the building is predominantly used for the transaction of business or the performance of a business service.
Service feeGross fees less separately stated employe costs.
(1) Effective October 1, 1991, the sale at retail or the use of building maintenance services or building cleaning services is subject to tax when the services are performed in this Commonwealth. The performance of building repair services on buildings or other property which is permanently affixed to realty are not taxable.
(2) Between October 1, 1991, and January 1, 1992, painting and wallpapering of buildings, other than new construction, and maintenance services or cleaning services of boilers, furnaces or parts thereof were taxable. Effective January 1, 1992, the following services are not taxable: the interior painting, wallpapering and application of other like coverings to walls, ceilings or floors; the exterior painting of buildings; and maintaining, cleaning, or repairing of boilers, furnaces or parts thereof. Effective July 1, 2000, the maintenance or repairs of residential air-conditioning equipment or parts thereof are not taxable.
(3) Between October 1, 1991, and March 31, 1995, the entire purchase price of interior office building cleaning services was taxable. Effective April 1, 1995, separately stated employe costs related to interior office building cleaning services are not taxable if these costs are specifically itemized or listed in aggregate on the invoice.
Example: An attorney practices law from an office located in a private residence. The office, which has its own entrance and is a separate area in the private residence, comprises less than 50% of the total square footage of the private residence. The attorney contracts with a cleaning service to clean only the office portion of the private residence. Because the private residence is not predominantly used as an office building, employe costs related to the building cleaning services, even if separately stated, are subject to sales tax.
(4) When interior office building cleaning services are provided by a sole proprietor, employe costs also include net profit or loss as reportable on the sole proprietors Pennsylvania or Federal Schedule C for the prior year. When interior office building cleaning services are provided by a partnership, employe costs also include the partners net profits from business and guaranteed payments for services rendered as reportable for purposes of Pennsylvania individual income tax for the prior year. Gross sales minus net profit divided by gross sales equals the ratio which is applied to invoices to determine the taxable amount of the sale by a sole proprietor or a partnership.
Example: In 1994, A, a sole proprietor, reported gross sales of $50,000 and a net profit of $20,000. The amount of As gross sales which is subject to tax is $30,000 or 60%. During 1995, A shall collect tax on 60% of the amount invoiced for interior office building cleaning services.
(5) When building maintenance services or building cleaning services are provided by a lessor to a lessee, the providing of the services, including separately stated employe costs, is taxable unless the services are incidental to the value of the lease. For purposes of this section, incidental services would be the performance of building maintenance services or building cleaning services to the area outside of the building being leased or the common areas within the building.
Example: An apartment complex is comprised of 100 separate units and the apartment owner provides general maintenance and cleaning outside the building and the hallways inside the building. The providing of these maintenance and cleaning services is not taxable because the services are incidental to the providing of an apartment.
(c) Building cleaning services. Building cleaning services include:
(1) Housekeeping services.
(2) Office cleaning, such as window cleaning, carpet cleaning, floor waxing and furniture polishing.
(3) Chimney and fireplace cleaning, inside and outside of the building.
(4) Cleaning light fixtures.
(5) Telephone booth cleaning.
(6) Cleaning and degreasing of service stations equipment and areas.
(7) Indoor pool cleaning.
(8) Fire restoration cleaning services, not including building repair services.
(9) Siding or exterior cleaning of a building, including the pressure washing of a building.
(10) Duct work cleaning.
(11) Acoustical tile cleaning.
(12) Venetian blind cleaning.
(i) A contractor performs fire restoration services on a building. These services include both cleaning the building and repairing it. The invoice separately states the charges for cleaning services and the charges for repair services. Only the charges for cleaning services are subject to sales tax. The charges for repair services are not taxable.
(ii) A contractor performs fire restoration services on a building. These services include both cleaning the building and repairing it. The invoice does not separately state the charges for cleaning services and the charges for repair services. All of the charges are subject to sales tax.
(d) Building maintenance services. Building maintenance services include:
(1) General maintenance of an apartment building.
(2) Replacing light bulbs.
(3) Elevator maintenance, and burglar and security alarm maintenance.
(4) Inspections in connection with maintenance services.
(5) Central air conditioning maintenance.
(6) Changing of air filters.
(e) Examples of services which are not building maintenance services or building cleaning services. The following are examples of services which are not building maintenance services or building cleaning services:
(1) Building repair services to buildings.
(2) Maintenance of boilers, furnace or parts thereof (effective January 1, 1992).
(3) Cleaning of outdoor in-ground pools.
(4) Painting or wallpapering interior walls, ceilings or floors.
(5) Exterior building painting.
(6) Sandblasting real property; pointing of bricks.
(7) Carpet dying.
(8) Snow plowing.
(9) Plumbing repairs, such as opening drains or repairing water leaks.
(10) Driveway sealing.
(11) Drapery and upholstery cleaning which are otherwise taxable as services to tangible personal property.
(12) Maid services performed in accordance with a two party transaction where the individual for whom the services are performed is required to withhold Federal Income and Social Security Taxes.
(13) Maintenance of residential air-conditioning equipment or parts thereof (effective July 1, 2000).
(f) Interior office building cleaning services. When a taxable building cleaning service enumerated in subsection (c) is performed on the interior of an office building, the purchase price is computed in accordance with subsection (g).
(g) Purchase price.
(1) Building maintenance and cleaning services. The total amount charged for performing building maintenance services or building cleaning services is subject to tax. The failure to separately state taxable building maintenance services or building cleaning services from other nontaxable services on the invoice requires the charging of tax on the total invoice amount.
Example: The lease of offices within a building includes the providing of janitorial services for each of the offices. Since the janitorial services are not incidental to the lease of the offices, the janitorial services are taxable and if the services are not separately stated, the entire lease amount is taxable.
(2) Interior office building cleaning services.
(i) There are three methods to compute the purchase price of interior office building cleaning services:
(A) Gross fee method. To the extent that employe costs are not separately stated on the invoice, the purchase price is the gross fee charged by the vendor.
(B) Actual service fee method. To the extent that employe costs are separately stated on the invoice, the purchase price is the actual service fee charged by the vendor.
(C) Average employe cost or average service fee method. A vendor may, at its own risk, calculate the purchase price based upon the average employe cost or average service fee applicable to its total Pennsylvania business during a prior representative period. If it is determined that the average employe cost reported was higher than the actual employe cost or if the average service fee reported was less than the actual service fee, the vendor will be assessed a tax deficiency plus interest and penalties.
(ii) If either the actual service fee, average employe cost or average service fee method is used, at a minimum, the invoice provided to the purchaser shall contain the following information:
Gross Fee $xxxxx $xxxxx Less: Employe Costs -xxxxx Taxable Service Fee xxxxx PA Sales Tax Rate xxxxx PA Sales Tax Due $xxxxx xxxxx Total Invoice Amount $xxxxx
(3) Taxable portion of purchase price. The taxable portion of the purchase price for interior office building cleaning services shall be computed in accordance with this section. Chapter 33 (relating to computation of tax) does not apply to the extent that Chapter 33 is inconsistent with this section.
(1) Building maintenance services or building cleaning services are exempt if purchased by qualified charitable organizations, volunteer fire companies, religious organizations and nonprofit educational institutions, except if used in an unrelated trade or business. The services are also exempt if purchased by the Federal government or its instrumentalities; or the Commonwealth, its instrumentalities or subdivisions including public school districts. The manufacturing, mining, processing, public utility, farming, dairying, agriculture, horticulture or floriculture exclusion does not apply.
(2) The vendor of building maintenance services or building cleaning services may claim the resale exemption upon its purchase of tangible personal property which is transferred to its purchaser or a third party in the performance of its building maintenance services or building cleaning services. The vendor may also purchase building maintenance services or building cleaning services from another provider which the vendor resells to its customer. The vendor may not claim the resale exemption upon its purchase of administrative supplies or the purchase of another taxable service which it may use in the performance of its building maintenance services or building cleaning services.
(i) The following are examples of property which may be purchased exempt for resale when used in the performing of building maintenance services or building cleaning services:
(A) Polishes, waxes and air fresheners.
(B) Parts, belts, freon, filters and fittings.
(C) Light bulbs.
(ii) The following are examples of property which is taxable when used in the performing of building maintenance services or building cleaning services:
(A) Cleaners and soaps.
(B) Brooms, mops, brushes, dust rags, buckets, polishers, scrubbers and ladders.
(C) Grease guns, oil cans, testing and inspection equipment.
(D) Administrative supplies.
The provisions of this § 60.1 adopted January 8, 1993, effective January 9, 1993, 23 Pa.B. 176; amended October 6, 1995, effective October 7, 1995, 25 Pa.B. 4233; amended March 10, 2006, effective March 11, 2006, 36 Pa.B. 1130. Immediately preceding text appears at serial pages (268443) to (268444), (200673) to (200676) and (268445).
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