Deposits and consumables are taxable in Wyoming
- Oct 5, 2017 | Gail Cole
In the normal course of business, situations arise that call the proper application of tax into question. Is sales tax owed on deposit charges? Must businesses charge customers tax on consumables, items that were taxed when the business purchased them?
The Wyoming Department of Revenue has answers to these questions, and more.
Deposits are taxable
Deposits are collected by many types of businesses. For example, a grocer may collect them on glass milk bottles, a lumberyard on pallets, and a brewery on growlers, kegs, and taps. When separate charges are applied to a deposit, that charge for the deposit is taxable in Wyoming.
In an ideal world, customers return the glass milk bottles, pallets, etc. When they do, they’re entitled to a refund of both the deposit and the tax paid on the deposit.
Should customers keep the deposit items (out of desire or laziness), they forfeit both the deposit and the tax paid.
Consumables are taxable
When businesses in Wyoming purchases products for use in everyday business activities, sales or use tax applies. If the business later charges a customer for some of these products, that charge is also taxable.
Typical consumables include safety equipment, cleaning supplies and tools, trucks and fuel. Businesses must pay sales tax if they purchase such items from a business that collects and remits tax in Wyoming, and use tax if they purchase them from an out-of-state business that doesn’t charge Wyoming tax.
If the business later charges a customer for any of these (e.g., lubricants, fuel), it must also charge the customer tax “as part of the sales price of the taxable sale or service provided.”
The Wyoming Department of Revenue may have been questioned about this policy. It explains, “It is not that the supplies are taxed twice, once to the business, and once to the customer; they are taxed on the customer’s invoice as a charge by the seller to complete the sale or service.”
To defend the practice, it draws a parallel with auto sales: Tax is paid on the sale of a new vehicle; if it is later sold as a used vehicle, the new owner also pays tax. It concludes, “Therefore tax in one transaction dos not affect the imposition of tax in another transaction.”
Additional information is available in the department’s newsletter, Taxing Issues (Vol. 20, Quarter 3).
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