35 Miss. Admin. Code Pt. IV, Subpt. 5, Ch. 08 — Grading, Ditching, Dredging or Landscaping

100 Levy
101 Pursuant to Miss. Code Ann. Section 27 -65-23, persons engaged in the business of
performing services of grading, excavating, ditching, dredging, or landscaping are liable
for sales tax at the regular rate of tax on gross income except as otherwise provided.
102 The total compensation received from grading, excavating, ditching, dredging, or
landscaping activities performed as a prime contractor, for commercial purposes and
exceeding $10,000.00 is subject to the contractor's tax provided for in Miss. Code Ann.
Section 27-65-21.
103 (Reserved)
200 Definitions
201 Grading means any activity where an improvement is made to a road, land surface, or
other job site such as, but not limited to, the grading of streets, highways, foundation
pads, commercial projects, and building lots. Grading also includes the terracing of land,
land leveling and land forming for farm, commercial, industrial, or residential purposes.
Grading does not include land clearing and grubbing services when these services are not
performed in conjunction with any other taxable services such as those activities listed
above.
202 Excavating means any activity where something is created through excavation such as,
but not limited to, a swimming pool, basement for a building, pond, underground storage
silo, or other similar or related facility.
203 Ditching embraces any activity where a trench, furrow, canal, dredge ditch, or irrigation
canal is made or constructed for irrigation, drainage or a boundary line, but is not limited
to these activities.
204 Dredging means any activity of constructing, repairing, improving, or removing sediment
from any ditch, irrigation canal, navigation channel, trench, drainage ditch, or any other
body of water.
205 Landscaping means any activity that modifies the grounds of any house, building or area
of land by contouring, forming or functional alteration of the land and includes the
planting of flowers, shrubs or trees and the establishment of lawns and gardens.
Landscaping also includes the building of landforms, retaining walls, flower beds, water
features and other similar structures. Landscaping does not include tree trimming, grass
cutting, hedge trimming, or similar maintenance activities; nor does it include the
planting or spreading of materials provided by the owner when the charges for the non -
taxable activities are listed separately on the invoice given to the customer.
206 Agricultural or soil erosion activities include items such as terracing, land leveling for
purposes of growing crops, preparation of pasture land, creation or deepening of farm
ponds, irrigation or drainage ditches, and other similar activities where the purpose of
such activity is to improve land where crops are grown or where livestock is allowed to
roam or graze. Agricultural or soil erosion activities do not include activities which are
part of a commercial construction activity such as the building or improving of poultry
houses, barns, sheds, roads, foundation pads or other similar structures.
207 (Reserved)
300 Taxability
301 Sales tax is not due on contracts entered into with farmers for the clearing of trees and
underbrush when the principle activity contracted for is for land clearing. Contracts that
principally involve grading, excavating, ditching, dredging, or landscaping are subject to
tax unless such activity is exempted under Miss. Code Ann. Section 27-65-103 (d).
302 Miss. Code Ann. Section 27 -65-103 (d) exempts gross income from grading, excavating,
ditching, dredging or landscaping activities performed for a farmer on a farm for
agricultural or soil erosion purposes when such income does not exceed $10,000.00.
Contracts in excess of $10,000.00 for grading, excavating, ditching, dredging or
landscaping services are taxable even when the payment for such activities is paid for in
full or in part by the United States, State of Mississippi, or other governmental entity, or
when the landowner is reimbursed in full or in part by a governmental entity.
303 No sales tax is due on a contract to fill in a hole, trench, ditch or other cavity in the earth
where the principle activity performed is the transportation of fill dirt to the job site, the
service of compacting and leveling being an inconsequential element of the transaction,
even though the total compensation received is in excess of $10,000.00. If, on the other
hand, the principal activity performed is the grading or land forming of the job site with
the service of removing excess dirt or placement of fill dirt being an inconsequential
element of the transaction, sales tax or contractor's tax is due on the total compensation
received.
304 Compensation received from the drilling and installation of the well for an irrigation
system is taxable for contractor's tax when the income exceeds $10,000.00.
305 The activities of a person engaged in the stripping of top soil or the mining, loading, and
hauling of a natural resource product are not grading or excavating within the scope of
Miss. Code Ann. Section 27-65-23 and as such is not subject to sales or contractor's tax.
306 Contracts for remediation or excavation and removal of contaminated soil for
environmental purposes are subject to sales or contractor's tax.
307 (Reserved)
35.IV.05.03 revised effective July 1, 2009