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How does SalesTaxII handle Labor Rates?

Overview

I need more information on how SalesTaxII handles labor rates.

Environment

SalesTaxII 

Resolution

Sales and/or use tax is levied on Services or Labor in about half of the states in the U.S.

 

SalesTaxII will make the Labor or Services tax/no tax decision for you based on the guidelines outlined

below:

 

A ‘CALLing’ program must pass ‘LABOR’ in the ‘Exempt Product Code’ parameter (Parameter

PEXMP) when passing a labor line item amount to SalesTaxII. Pass ‘SERVC’ in Parameter PEXMP when

processing Services.

 

Our definition of Labor includes install, repair, or maintain tangible personal property. Our definition of

Services includes professional services such as accounting or attorney fees.

We use a very broad definition of services or labor (the same broad definition that states use). If a state

has a tax on services or labor, it is taxed at the same rate as tangible personal property. If a state does

not tax labor, the amount is treated as exempt.

 

If you have concerns regarding taxability of labor we suggest that you talk to the Revenue Department in

any state in question.

Your own company’s particular method of performing labor or services and other factors can influence

taxability of labor. If you find that your company and its method of performing labor or services are treated

differently than our interpretation, add or remove the affected states in our exemption file (file TAXID).

 

For those states that do not tax labor or service charges:

  1. Separate labor or service charges and tangible personal property on the invoice.
  2. If possible, do not bill service charges or labor on the same invoice as the sale of TPP.

 

 

 

 

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