Sales Tax Articles
Sales Tax State Activity Update - July 2008
Pennsylvania Polishes Their Exemption on House Construction Cleaning
Only the final cleaning services performed by a construction contractor on a house under construction are subject to Pennsylvania Sales and Use Tax.
Background
The taxpayer is engaged in the business of constructing houses. During the construction process, as work is completed, the taxpayer contracts with a cleaning service to remove the debris from the house under construction to ensure safety and to keep the construction process going. These "Rough Stage" clean-ups are broken into seven stages listed below:
- Stage 1 - Remove all scrap lumber and rough framing material from the structure.
- Stage 2 - Remove all scrap lumber, exterior millwork scraps, window cartons and collect debris from roofing operation.
- Stage 3 - Remove all scrap materials from siding and rough mechanicals.
- Stage 4 - Remove sheet rock and cardboard and other siding and roofing material.
- Stage 5 - Scrape all floors. Power vacuum all miscellaneous debris and police interior and lot for any debris.
- Stage 6 - After the tile and cabinets are installed remove all trash and debris
- Stage 7 - After flooring remove all debris such as wood, matting and other items
Opinion
The Rough Stage cleaning process, in the opinion of the Department of Revenue do not fall within the definition of taxable cleaning services. The work represented by these services is construction labor and is a part of the construction process. One of the last steps before a house receives a certificate of occupancy is the Final Cleaning Process which includes dusting, polishing, vacuuming, cleaning windows and the like and is clearly meant to maintain a building and are taxable and within the meaning of Section 201(aa) of the TRC, 72 P.S. ยง7201(aa).
The full ruling can be accessed on the Pennsylvania Department of Revenue Web site.
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