Making Snow, Removing Snow, and Green Snow – Wacky Tax Wednesday

The Puget Sound area has had delightfully balmy weather for the past couple of weeks, which makes me pine for the snowy winters of my New England youth. News of East Coast blizzards takes me back to extended snow days filled with sledding and snow forts, warm fires and hot chocolate. In addition to inspiring envy, the news makes me wonder how sales tax applies to snow-related services.

Removing snow

To say “sales tax” and “rule of thumb” in the same breath is unwise. That caveat aside, consider the following sales tax rule of thumb: the more essential a product, the less likely it is to be taxed (or taxed at a high rate).

Using that as a vector, one could say that snow removal services are considered essential in Wisconsin, Minnesota and Pennsylvania, where they are not subject to sales tax.

In Ohio, however, they are subject to sales tax provided the snow remover uses “any mechanized means” and makes at least $5,000 in sales of such service during the calendar year.” (The neighbor kid shoveling snow with only a shovel does not need to charge sales tax for her services.)

Snow removal is also a taxable service in Connecticut. And although "[o]nly certain services are subject to tax” in New York, snowplowing is one of them. Charges for spreading rock salt on snow and ice, “including any separately stated charges for supplies such as rock salt,” are taxable in New York, too.

Does this mean Connecticut, New York and Ohio don’t consider removing snow essential? Hmmm.

Making snow

People are funny. We get rid of snow when it falls from the sky. When it doesn’t, we make it.

In California, sales tax applies to retail sales of tangible personal property and service and labor costs that “result in the creation of tangible personal property.” Accordingly,

“The manufacture of artificial snow at the customer's site is a sale of tangible personal property subject to sales tax. The true object desired by the customer is the snow rather than the service of making the snow. Items incorporated into the snow and sold in the form of snow may be purchased for resale.”

In Maine, where “sales of services in general are not taxable” but “certain services” are subject to tax, lawmakers eliminated a proposed sales tax exemption for “businesses that make snow for skiing, snowmobiling or similar activities of electricity or fuel used to make snow, machinery or equipment that is used for making snow and snow-grooming equipment.” They also eliminated “the proposed sales tax on fees charged for … ski lifts….”

Snowmaking is often heralded in Vermont for allowing the ski industry to “maintain winter conditions in a low-snow year,” which helps keep tourism revenue strong and in recent years created “a combined year-over-year increase of 2.5% in collections from the rooms & meals tax and the sales tax.” Maybe that’s why for more than a decade, “[p]ersonal property, machinery, inventory, and equipment, including ski-lifts and snow-making equipment” has been exempt from Vermont property tax.

Green snow

Green snow making incentive programs are thriving in both Maine and Vermont, which provide tax incentives for snow making facilities that replace old inefficient snow making equipment with new, high efficiency snow guns.

The moral: if you have a portable snow making machine and travel from state to state selling your services, you’d be well advised to move sales tax management to the cloud. Where the real stuff originates.

Wacky.

photo credit: May 10, 2012 via photopin (license)[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]