A new advisory opinion issued last month by the New York Department of Taxation and Finance provides guidance on an important issue affecting all real estate ownersthe imposition of sales tax on cleaning and maintenance services at real properties. The opinion focuses on an exemption to the sales tax applicable where such services are performed by building staff, and reaffirms helpful guidance previously issued by the Department.
Background
Generally, sales tax1 is imposed on receipts from the sale of cleaning, maintenance, and repair services provided to real property. However, there is an exception to this general rule which provides that where cleaning, maintenance and repair services are rendered by an employee for his or her employer, compensation paid to the employee by the employer for such services is exempt from sales tax (the "employee wage exemption"). Thus, if a real estate owner’s employees provide cleaning or maintenance services at the building, any salaries paid to the employees for such services will not be subject to sales tax.
