NE 01-02-8 Sales and Use Tax 2002-09-30

Is installation or application labor taxable in Nebraska, and what about agricultural chemicals and landscaping?

Short answer: It is taxable when the underlying property sale is taxable. Under Revenue Ruling 01-02-8, Laws 2002, LB 1085 repealed the exemption for separately stated labor or services to install or apply property sold, so beginning October 1, 2002 charges for installation and application labor are taxable when associated with the sale of property that is subject to tax (including installing computer software), whether the labor is performed by the seller or another person and whether or not separately itemized or invoiced. Two carve-outs remain: labor to apply agricultural chemicals (as defined in Regulations 1-061 and 1-063) to land or crops in commercial agriculture or to food-producing animals is not taxable, and labor to apply fertilizers and weed control products by a lawn care service provider is not taxable. Every person -- including a contractor -- who plants live plants such as trees, sod, or shrubs is a retailer and must collect tax on both the live plants and the installation/planting charges (even if separately itemized), and a person paid to install or plant live plants owned by another is also a retailer collecting tax on that labor. This supersedes Regulations 1-017.11 and 1-082.03(B).

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This page answers the general question as of 2002. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Before October 2002, Nebraska exempted installation or application labor when it was separately stated from the price of the property sold. Nebraska's 2002 tax bill LB 1085 repealed that exemption, so beginning October 1, 2002, charges for installation and application labor are taxable when the sale of the property is taxable — including installing computer software.

The labor is taxable whether performed by the seller of the property or another person, and whether or not separately itemized or invoiced.

Agricultural and lawn-care carve-outs. Some application labor is not taxable:

labor to apply agricultural chemicals (as defined in Regulations 1-061 and 1-063) to land or crops in commercial agriculture, or to food-producing animals; and
labor to apply fertilizers and weed control products by a lawn care service provider.

Live plants / landscaping. Every person — including a contractor — who plants live plants such as trees, sod, or shrubs is a retailer and must collect sales tax on the total charged for both the live plants and the installation or planting, even if separately itemized or invoiced. And anyone paid to install or plant live plants owned by another person is also a retailer who must collect tax on that labor.

This supersedes Sales and Use Tax Regulations 1-017.11 and 1-082.03(B).

What this means for you

A retailer or contractor who installs what they sell

From October 1, 2002, charge sales tax on installation and application labor whenever the property being installed is taxable — you can't exempt it by billing labor separately. This includes installing computer software.

An agricultural applicator or lawn-care provider

Your application labor stays exempt in the specific cases the ruling names: applying qualifying agricultural chemicals in commercial agriculture (or to food-producing animals), and applying fertilizer/weed-control products as a lawn care service. Note the difference between those exempt applications and taxable landscaping below.

A landscaper planting trees, sod, or shrubs

You're a retailer. Collect tax on the plants and the planting labor, itemized or not — including when you're planting live plants the customer already owns.

Common questions

Q: Is installation labor taxable if I state it separately on the invoice?
A: Yes. Effective October 1, 2002, installation/application labor is taxable when the property sale is taxable, whether or not separately itemized.

Q: Is applying agricultural chemicals taxable?
A: No — applying agricultural chemicals (per Regs 1-061 and 1-063) to land or crops in commercial agriculture or to food-producing animals isn't taxable, and neither is applying fertilizer/weed control as a lawn care service.

Q: I plant trees and sod — do I charge tax on the planting labor?
A: Yes. A person who plants live plants is a retailer and must collect tax on the plants and the planting charges, even if separately itemized, and even when planting plants owned by another person.

Citations and references

Laws 2002, LB 1085 — repealed the exemption for separately stated installation/application labor, effective October 1, 2002.
Regs 1-061 and 1-063 — define the agricultural chemicals whose application labor remains non-taxable.
Regs 1-017.11 and 1-082.03(B) — superseded by LB 1085.

Source

Original ruling text

REVENUE RULING 1-02-8
September 30, 2002
Sales and Use Tax - Installation Labor. EFFECTIVE OCTOBER 1, 2002, THE GROSS RECEIPTS
FOR INSTALLING AND APPLYING TANGIBLE PERSONAL PROPERTY ARE SUBJECT TO
TAX WHEN THE SALE OF THE PROPERTY IS TAXABLE.
Laws 2002, LB 1085, repealed the exemption for labor or services rendered in installing or applying
property sold when such amount is separately stated from the selling price of the property. Beginning
October 1, 2002, charges for installation and application labor are taxable when associated with
the sale of property that is subject to tax. Charges for installing computer software are taxable. The
labor charges are taxable whether performed by the seller of the property or another person and
whether separately itemized or separately invoiced.
Labor to apply agricultural chemicals as deﬁned in Sales and Use Tax Regulations 1-061 and 1063 is not taxable when the chemicals are applied to land or crops in commercial agriculture or
to food-producing animals. Labor to apply fertilizers and weed control products by a lawn care
service provider is not subject to tax.
Every person, including a contractor, who plants live plants such as trees, sod, or shrubs, is a
retailer and is required to collect sales tax on the total amount charged for the live plants and the
installation or planting charges. The installation or planting charges are taxable even if the charges
are separately itemized or separately invoiced. In addition, every person who is paid to install or
plant live plants owned by another person is a retailer and must collect sales tax on his or her labor
charges.
Sales and Use Tax Regulations 1–017.11 and 1-082.03(B) are superseded by the provisions of
Laws 2002, LB 1085.
APPROVED:

Mary Jane Egr
State Tax Commissioner
September 30, 2002

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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