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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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I am opening an insurance restoration business in Ohio and

Customer Question

I am opening an insurance restoration business in Ohio and have a question regarding sales tax law. I want to ensure that I am billing my customers the appropriate sales tax and it seems that with the industry I am in there is not a cut an dry answer. We will perform mitigation services for the insurance industry which include drying out properties that have been damaged by water. In order to dry the properties we will use water extraction, demolition of construction materials, industrial fans, industrial dehumidifiers and monitoring of the equipment. We will also clean up fire damage by cleaning the structure, contents and clothing. Finally, we will provide mold remediation services which involves cleaning and demolition. Along with the fire mitigation we will store a customers contents at our facility until their home or business is rebuilt. We will not perform any reconstruction or remodeling services. It seems that some of these services are taxed and others are not but I am looking for guidance. Thank you in advance and please let me know if there is anything else needed in order to be able to answer my question.
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

Your question is not an easy one because as you have figured out, there is not a straight forward answer. I have reviewed the taxable and non-taxable items on the Ohio Dept. Taxation website and other sources. Based on the following information, it appears that the services that your company provides are not taxable. SEE BELOW:

Most Services Exempt

Ohio generally does not tax sales of professional, personal or insurance services. But the state legislature has designated a select group of services as taxable. Services subject to sales tax include rental of hotel and motel rooms, rental of personal property, landscaping, security services, janitorial and exterminating services, employment services, health and recreation clubs, installation and repair services, laundry and dry cleaning, towing, telephone services including prepaid phone cards, 900-number services, Internet and data networking services, satellite TV, snow removal, storage lockers, and personal appearance services other than hair care.

REFERENCE SOURCE:

http://finance.zacks.com/ohio-sales-tax-exemption-explanation-3721.html

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Taxable services subject to sales tax in Ohio:

Refer to following link: http://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?QuestionID=434&AFMID=11354

My thought is that if all of the services provided relate to an insurance claim, those services would not be taxable. I don't see the taxation department separating out all of the services relating to individual insurance claims. To be on the safe side, my suggestion is to call the Dept. of Taxation and speak to a specialist in the sales tax deparment to find out for certain.

Let me know if I can be of further assistance to you regarding this matter.