I own a small house cleaning service in New Mexico and have been charging customers tax. Can I do this?

The following is letter from a customer in Colorado...

I agree to pay the agreed upon $125 for 5 hours of cleaning of my sisters house. Julie.

You said there would be tax, however I understand that tax would not apply to a service, only a purchase.

Housekeeping is a service. Please clarify.

Update:

Hi Guys, Thanks for all your great answers. I spoke to my lawyer & accountant. You can charge state taxes in the State of New Mexico under gross receipt taxes. Here's the link http://www.tax.newmexico.gov/Businesses/Gross-Rece...

However many businesses pay the state taxes on their own because it is assumed by customers that that you shouldn't pay the taxes on service. If you requesting service from another state, I have every right to charge you taxes from the state I'm in. Any way we waved the taxes and request they sign a letter of intent to pay. They never called back or answer our calls. It may be they never intended to pay us. If this was the cases it was better that way.

7 Answers

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  • Jeff S
    Lv 4
    9 years ago
    Favorite Answer

    What does your accountant say about this? In most states, services such as landscaping, plumbing, housekeeping, etc are not taxed because they are services and not tangible goods. I assume if you've been charging taxes, you have gone to the state of New Mexico to complete the necessary paperwork so you can properly forward that money to the state. If you've been charging tax incorrectly, it is vital to refund the money to your customers.

  • ?
    Lv 5
    9 years ago

    You cannot charge tax for a service performed. Only materials and supplies that customers pay for.

  • David
    Lv 5
    9 years ago

    It's up to your state. Where's the "Service Tax" liability for a business owner. There's none, that I know of, on the federal.

  • 9 years ago

    You need to go and seek professional tax advice, even if you have to pay for it. Yahoo Answers isn't enough. If you charge people tax erroneously and it comes back to bite you, you'll have no business any longer.

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  • dagmar
    Lv 4
    4 years ago

    I run my own agency besides. you'll favor to get along with your community tax place of work to be functional, yet the following (San Antonio Texas) tax is charged for facilities ... relying on the provider that that's. seeing that your provider is the product then you fairly will in all likelihood can charge tax for it. What i'd do for now could be keep song of what you're sending out and both A. can charge tax and have the ability to pay it back if it replaced into charged in mistakes. B. do no longer can charge the tax and have the ability to owe it out of your pocket come next 3 hundred and sixty 5 days. I many times run specials the position I pay the tax. this provides my customers a destroy of 50 - 100 funds and will strengthen my sales. so long because the tax is paid the comptroller doesnt care who pays it.

  • tro
    Lv 7
    9 years ago

    you don't charge the people you work for taxes

    but this is self employment for you and you claim the income and business expenses on Sch C and probably SE as well where you calculate the self employment tax you are responsible for

  • 9 years ago

    You wouldn't charge sales tax for a service, they are correct.

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