February 8, 1985

You inquire as to the proper sales taxation of the services and parts described in the following transaction.

A customer receives a bill from an automobile repairer which includes charges for parts and service (labor). On the bill to the customer the charges for tires and valve stems (parts) are separately stated from the charges for wheel balancing, tire rotation and front end alignment (service). However, the charge for wheel balancing includes the cost of lead weights (parts which is not separately stated on the bill to the customer.

Massachusetts imposes an excise on sales at retail of tangible personal property in Massachusetts by a vendor. (G.L. c. 64H, § 2). Excluded from the definition of "sale at retail" are personal service transactions which involve no sale or which involve sales as inconsequential elements for which no separate charges are made. (G.L. c. 64H, § 1(13)(c)).

Sales and Use Tax Regulation 64H.03 (Service Enterprises) explains the application of the Massachusetts sales and use tax to service enterprises. The Regulation specifically includes a repairer of automobiles as an example of a service enterprise. For purposes of 64H.03 the term "inconsequential" generally means a value of less than ten percent of the total charges.

Regulation 64H.03 provides in pertinent part that:

(1) A service transaction is not subject to the sales tax where the real object of the transaction is the service itself and no transfer of tangible personal property takes place.

(2) If the real object of a service transaction is the service itself and an inconsequential transfer of tangible personal property takes place and the service enterprise does not separately state the purchase price of the property on the bill to the customer, the total charge which includes the service and property is exempt from the sales tax.

(3) If the transfer of tangible personal property occurs and the value of the property is not inconsequential in relation to the total charge (for service and property) and the charge for the property is not separately stated on the bill to the customer then the service enterprise must collect a sales tax from the customer on the total amount charged (for service plus property).


(4) If the transfer of tangible personal property occurs and the charge for the property is separately stated from the charge for service on the bill to the customer then the service enterprise collects a sales tax from its customer based only on the amount charged for the property whether or not the value of the property is inconsequential in relation to the total charge.

If the real object of the balancing of wheels of an automobile is the service itself and the value of the lead weights transferred is inconsequential in relation to the entire charge for wheel balancing and the service enterprise does not separately state the purchase price of the lead weights on the bill to the customer, then the total charge for wheel balancing is exempt from the sales tax.

In the situation described above the automobile repairer is the consumer of the lead weights and must pay the sales tax upon the purchase of the weights.

If the service enterprise separately states charges for service and parts on the bill to the customers the service enterprise collects a sales tax from its customer based only on the amount charged for parts.

The charges made for wheel balancing, tire rotation and front end alignment are separately stated from the charges made for parts. Therefore, charges for these services are not subject to the Massachusetts sales tax.

Charges made for tires and valve stems are subject to the Massachusetts sales tax.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue

IAJ:SFR:loc

LR 85-19