Sales tax question - please help!

Jessica&Brett · February 2011

We are dealing with the insurance company as well as all the contractors etc in dealing with water damage that we had to our basement.

The amount that they are paying us is showing up as several hundred dollars different that what we are being charged. Our claims person said that part of the difference in the sales tax. The bill shows tax on the full amount (carpet cleaning, water removal, repair to drywall, reinstallation of carpet, new pad, etc etc etc). He said that we should only be charged tax on materials.

Can anyone tell me if that's correct, or how the sales tax works in Ohio?

Ttimes3 · February 2011

Did the claims rep give you any sort of logical explanation as to WHY you should not have been charged tax on the labor? For the record, I have no idea if what he is saying is legit, but I'd call back and demand that the claims department give you THEIR reasoning before calling the company who did the work for you.

Jessica&Brett · February 2011

Ttimes3:
Did the claims rep give you any sort of logical explanation as to WHY you should not have been charged tax on the labor? For the record, I have no idea if what he is saying is legit, but I'd call back and demand that the claims department give you THEIR reasoning before calling the company who did the work for you.

He just basically said that services are not taxable, only materials, and that unless I can prove otherwise that they won't pay the tax that we are charged.

UGHHHH!!!!! I hate dealing with all these people!

KittahMama · February 2011

I would schedule a conference call with the contractor and the claims rep.

The insurance company needs to put you back to 100% that is their job.

I used to sell insurance- not sure what company you are dealing with but if you need help feel free to let me know. You can always threaten to go to the Dept. of Insurance for Ohio if they don't pay. That always ruffles feathers.

Moesten · February 2011

This might help answer your question

https://tax.ohio.gov/divisions/communications/information_releases/sales/st199401.stm

It looks like the answer is "it depends." It depends on the nature of the sale and the nature of the service being performed. Some services are subject to sales tax and others are not.

Moesten · February 2011

Here is another one speaking directly to work done by contractors

https://tax.ohio.gov/divisions/legal/rules/final/5703_09/5703_9_14.stm

From my *brief* reading of this it looks like the work of a contractor is subject to sales tax.

ETA: Seeing as this link directly quotes state statute you should be able to furnish a copy of this to your (crappy) insurance company as proof.

baze2 · February 2011

From my knowledge of the ohio revised code:

Service is only non-taxable if it is the only thing being provided by the company. (ie. a dog walking service is only providing dog walking service..no product therefore it is not taxable). However if product is also provided the whole amount is taxable. (my business does repairs of medical equipment, if we use parts and charge for the parts, the labor fee is also taxable.)

You my want to find it in the Ohio revised Code. It is not difficult to find. Just google it then search the sight. It is written pretty simply but it does take time to read it as you have to read the whole section!.

HTH

sara401 · February 2011

I have to charge sales tax for my photography business. Also, we paid tax on our fence/installation and sod/installation.

sistrkate · February 2011

Virtually all services in Ohio are taxable. I am charged tax when I get my nails done. I think the insurance co. is trying to screw you.

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