Wisconsin: Car Wash Services Subject to Sales Tax
- Jun 10, 2015 | Gail Cole
Many services are sales tax exempt in some states, but a growing number of states subject an increasing array of services to sales tax. In Wisconsin Department of Revenue reminds, several services provided by car wash operators fall under the taxable category.
- Car wash services (automatic, coin-operated, manual, and self-service)
- Oil and filter changes
- Tire and rim cleaning
- Vacuuming and shampooing upholstery
- Waxing and polishing cars
- Window cleaning
So long as the purchaser provides the seller with a properly completed exemption certificate, car wash services for the following are exempt:
- Farm machines used exclusively and directly in farming
- Motor trucks, tractors, trailers used exclusively in common or contract carriage by common or contract carriers
- Motor vehicles held for sale by a retailer
Sales to exempt organizations, such as Wisconsin governmental agencies and Wisconsin Native American Tribes or Bands, are also exempt. All exempt sales must be documented.
Alas, sales tax is rarely so simple as “taxable” and “exempt” (which can be complicated enough). When a business sells both gasoline and car wash services, the following rules apply:
- When a car wash is provided free of charge with the purchase of gasoline, no sales tax applies.
- When a car wash is purchased at a discount with the purchase of gasoline, the discounted sales price is subject to tax. For example:
- If a car wash purchased on its own is $6 but sells for $4 with a 10-gallon minimum purchase of gasoline, sales tax applies to the $4 charge.
- If gasoline sells for $3.50 per gallon without a car wash but $3.75 per gallon (with an eight gallon minimum) with a car wash, sales tax is due on the $0.25 per gallon difference in price.
- Discounts and coupons: When a discounted sale is reimbursed by a third-party, sales tax is due on the full amount of the sale. For example:
- A customer brings in a coupon for $5 off a car wash that normally sells for $12. The customer pays $7 and the Coupon provider reimburses the seller the $5. The seller should charge the customer sales tax on the full cost of the car wash, or $12.
- Discounts and coupons, seller provided: However, when a seller provides customers a coupon for $5 off a car wash that normally sells for $12, sales tax is due on the amount of the taxable receipt. Since the seller is not being reimbursed for the coupon, that amount is $7.
For additional information, including how tax applies to discount cards and the like, please see Fact Sheet 2108.
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