Do I charge sales tax on cleaning services

We are a cleaning company operating in Southern California. Can you please tell me if we should be charging sales tax on our invoices?

I assume you are a cleaning and janitorial service.

Under California sales tax rules, cleaning or janitorial services are exempt from having to charge sales tax even when certain products (cleaning products and supplies) are used incidentally in connection with the services. If, however, you should sell and separately bill for cleaning supplies or products, you should charge sales tax for that portion of the sale on invoices.

California State Board of Equalization’s Publication 61, “Sales and Use Taxes: Exemptions and Exclusions,” states: “SERVICES—The sale of services where no tangible personal property is transferred or where the transfer of property is incidental, are not subject to sales and use taxes. Persons providing services are consumers of property used in their business activities. However, persons who engage in service operations are retailers of any supplies or other tangible personal property sold to their customers or clients, and tax applies to gross receipts from such sales. Certain services, however, are deemed as sales of tangible personal property. For example, the fabrication of tangible personal property for a consumer is deemed as a 'sale' even when the consumer provides all the tangible personal property used to fabricate the end product.”

California sales tax rules can be confusing and complex. So you might want to seek the advice of a knowledgeable certified public accountant (CPA) to be sure that your services are tax exempt or that you need to charge sales tax.

Mitchell Freedman, CPA, PFS, is the owner of MFAC Financial Advisors, Inc., and Mitchell Freedman Accountancy Corporation in Westlake Village, Calif. You can reach him at (818) 905-0321.

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In accordance with IRS Circular 230, the information on this website is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.