(a) Repairers . A repair service shall collect a tax on parts or any materials which it furnishes in connection with repair work, where the value of the parts or materials is not inconsequential. This applies, for example, to the repairer of a motor vehicle, airplane, bicycle, machine, musical instrument, radio, television set, boat, or furniture. If the repair service does not separate on its customer invoices and in its records, the fair retail selling price of the parts or materials from the charge for labor, installation or other services, the Commissioner presumes that the entire charge represents the sales price of the property (See 830 CMR 64H.1.1(2)(b)2.).
If the value of the property used in repair work is inconsequential and the repairer makes no separate charge for such property, the repair service enterprise is the consumer and pays the sales tax when it purchases the property. The repairer does not collect a tax from the customer. (See 830 CMR 64H.1.1(2)(a)1.). For example, a watch or a jewelry repair service enterprise pays a sales tax when it purchases a repair part such as a crystal, finding, or chain link.
A repairer is also a retailer of property which it sells in the regular course of business. Thus, when a watch repairer sells a wristwatch strap, metal band, watch or clock, the sale is taxable. In this case, the repairer gives a resale certificate to the vendor and collects the sales tax from the customer.
(b) Barbers, Beauty Shop Operators, Launderers and Cleaners . A barber, beauty shop operator, launderer or cleaner is a consumer of the supplies which such an enterprise uses in rendering its service. It does not collect a tax from its customer. However, if it sells any tangible personal property at retail, this service enterprise collects a sales tax from the customer.
(c) Shoe Repairers . A shoe repair service consumes leather, rubber, heels, soles, thread, nails and other material which it uses in rendering its service. It does not collect a sales tax from its customer when it provides such an item of property as part of its service. If the repair service enterprise sells laces, polish, dye, a cleaner, or any other item of property which is part of a retail sale, the repairer collects a sales tax from the customer.
(d) Linen Services . A linen service is a consumer of linen supplies and of other tangible personal property, including towels, uniforms, coveralls, shop coats and laboratory coats which it rents to others. A linen service does not collect a sales tax from its customer because an essential part of the contract for rental of the property is that the linen service launder or clean the rented articles on a recurring basis.
(e) Reupholsterers . The reupholstering of furniture, including the making of a new slipcover, is a fabrication. A fabrication is subject to the sales tax. The reupholsterer shall collect the sales tax from the customer. The tax applies to the total amount which the reupholsterer charges the customer, whether or not the reupholsterer states the material charge and labor charge separately in the bill. This is also true if the customer furnishes the material. Where a reupholstering business performs a job which involves essentially a mechanical or structural repair, the transaction is a repair and is taxable as a repair , not as a fabrication.
(f) Draperies and Drapery Hardware . Custom-made draperies are a fabrication and the purchaser pays a sales tax in this situation. The customer pays the tax on the total amount of the bill, whether or not the retailer separately states the charge for material and for labor in the bill. This is also true if the customer furnishes material for the draperies.
A business which contracts to sell and install draperies, including drapery hardware such as brackets, rods and tracks, and other items, is a retailer of the items which it furnishes and installs. The tax applies to the entire contract price, including the charge for installation, unless the customer receives a separate statement of the installation charge.
(g) Service Contracts . The term "service contract" means, in 830 CMR 64H.1.1(5)(g), a contract for a specified period of time to repair, service or otherwise maintain tangible personal property which another person owns. Under the terms of a "service contract", the service enterprise also agrees to supply the necessary parts and material, as well as labor, for a specified contract price. The sale of a service contract is not subject to the sales or use tax.
A service enterprise is the consumer of parts, material and other tangible personal property which it purchases for use primarily under a service contract and such enterprise shall pay the sales tax upon its purchase of such property. A service enterprise does not collect the sales tax from its customer on property which the service enterprise provides under a service contract.
A service enterprise shall collect the sales tax on any tangible personal property which the original contract price does not include and for which the service enterprise makes a separate charge. This is true even though the service enterprise pays the sales tax when it purchases the property. In this case, the service enterprise may then supply its vendor with a resale certificate and request that the vendor refund the sales tax paid on that property. The vendor may seek an abatement of the sales tax previously collected and remitted within the time limitations of G.L. c. 62C, § 37. With respect to sales or use tax paid on or after January 1, 2001, the service enterprise may not recover the tax by making an adjustment to its gross sales on its next sales tax return.
If a service enterprise purchases tangible personal property which is primarily for resale, or if such enterprise customarily makes a separate charge for such property to its customer, the service enterprise may give a resale certificate to its vendor. If a service enterprise purchases any property under a resale certificate, such property is subject to the sales or use tax if the service enterprise subsequently uses the property under a service contract, and makes no separate charge for such property to the customer.
830 CMR 64H.1.1: Service Enterprises (old number 64H.03)
Date of Promulgation: 8/30/79
Amended: 12/21/01 - section (5)(g)
Amended: 12/19/03 - sections (4) and (5)(g)