Does a Georgia car wash have to charge sales tax on its washing and waxing packages?

Plain-English summary

A car wash offers four automated tunnel-wash packages, from a basic exterior wash up to a package that adds undercarriage wash, UV protection, wheel cleaning, coatings, wax, and tire gloss. The customer pays, then rides through an enclosed conveyor tunnel where the services are applied. The business also separately sells towels and air fresheners (on which it already charges tax) and offers free vacuums and a free car-mat cleaner. It asked whether the four wash packages are subject to Georgia sales tax.

The Department ruled the wash and wax charges are not taxable. In Georgia, sales of tangible personal property are presumed taxable, but services are taxable only if the law specifically lists them. Car washing and waxing are not among Georgia's enumerated taxable services, and the Department treated them like nontaxable automobile refinishing and painting. Although a bit of wax, coating, or water is left on the car, the customer's real purpose ("true object") is to buy the washing and waxing service -- not to buy tangible property -- so the whole charge is for a nontaxable service.

Two practical caveats came with the ruling: the car wash is itself liable for sales or use tax on the supplies (soap, wax, coatings, etc.) it buys to perform the service, because it consumes that property; and the separately sold towels and air fresheners remain taxable tangible personal property.

What this means for you

Car wash and detailing operators

Your washing and waxing service charges are not subject to Georgia sales tax -- they are nontaxable services, not sales of tangible property. But you are the consumer of the soap, wax, and coatings you buy to do the work, so pay sales or use tax on those supplies. And keep taxing retail goods you sell on the side (towels, air fresheners, fragrances).

Other service businesses that transfer a little property

The "true object" reasoning is broadly useful: when a customer is really buying your service and only incidentally ends up with a small amount of tangible property, the charge can stay a nontaxable service in Georgia -- as long as the service is not one the statute specifically enumerates as taxable.

Accountants and tax professionals

The result rests on Georgia taxing services only when enumerated in O.C.G.A. § 48-8-2, the analogy to nontaxable auto refinishing/painting, and the true-object test. Remember the flip side the ruling states expressly: the provider owes tax on the tangible personal property it purchases to perform an otherwise nontaxable service.

Common questions

Q: Is a car wash taxable in Georgia?
A: No. Charges for car washing and waxing are nontaxable services -- they are not among Georgia's enumerated taxable services, and the small amount of wax or water left on the car does not make the charge a taxable sale of property.

Q: Does the car wash pay any tax at all?
A: Yes -- on the input side. The business owes sales or use tax on the soap, wax, coatings, and other supplies it buys to perform the washes, because it is the consumer of that property.

Q: What about towels and air fresheners sold at the site?
A: Those are taxable tangible personal property and are sold separately from the wash service; the business already collects tax on them.

Q: Can I rely on this ruling for my car wash?
A: Not automatically. A Georgia letter ruling binds the Department only for the taxpayer and facts it was issued to, and no other taxpayer may rely on it. Different service offerings could be analyzed differently.

Citations and references

Statutes:

• O.C.G.A. §§ 48-8-1, 48-8-30 (imposition of sales/use tax on tangible personal property and certain services)
• O.C.G.A. § 48-8-2(31) (definition of "retail sale")
• O.C.G.A. § 48-8-2 (services are taxable only if specifically enumerated; car washing/waxing not listed)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2019-11

Original ruling text

Georgia Letter Ruling: LR SUT-2019-11
Topic: Car Wash Service
Date Issued: December 5, 2019
This letter is in response to your request for guidance on the application of Georgia sales and use tax to charges by
Taxpayer for washing and/or waxing cars.
Facts Presented by Taxpayer
Taxpayer is engaged in the car wash business. Taxpayer sells four wash services, which are itemized as follows in
ascending cost order. First, Taxpayer offers a basic exterior wash of the car. Second, is a service including the basic
wash plus washing the undercarriage as well as UV protection for the car. Third, not only are the previously
described services included, but also included are a wheel cleaning and a specific type of coating on the car. The
fourth package includes the other packages plus wax and tire gloss.
A customer will drive up to an entrance to select the type of car wash service the customer desires. After paying for
the service, the customer drives to the entrance of the "tunnel." The tunnel is an enclosed area where all aspects of
the service (wash, wax, etc.) take place. The car is pulled through the tunnel on a conveyor belt. The belt requires
the car to be in "neutral" and for the driver to release his or her grip of the steering wheel. The belt moves the car to
each service in the tunnel - from the water application to the soap and rinse, as well as any waxing or tire
cleaning/gloss if purchased. Once a customer's car has received all its wash services, the car is moved to the end of
the tunnel where the belt ends. At that point, the driver must place the car in "drive" and retake control of the car to
fully and properly exit the tunnel. At no time throughout the entire process of the car being in the tunnel does a
customer leave the car.
Regardless of whether a wash is purchased, customers have the option of using vacuums that are provided free of
charge on the side of the property. Here, in addition to the vacuums, a vending machine styled device is available for
customers to purchase towels as well as air fresheners. Purchases of towels and air fresheners are not related to the
car wash sale. In other words, the towels and air fresheners are not sold in conjunction with a car wash, as customers
can bypass the car wash altogether to purchase a towel and/or air fresher or use the free vacuums. Taxpayer
currently charges tax on the sale of the towels and air fresheners. Taxpayer also has a free car mat cleaning service.
In a central area by the vacuums, Taxpayer has a machine customers may use, free of charge. The machine shakes
the car mat to loosen particles trapped and embedded in the car mat. The machine will then wash the car mat. Like
the vacuums, towels, and air fresheners, the car mat cleaners are independent of the wash service - i.e., the car mat
cleaning is not tied to whether a customer purchases anything from Taxpayer, as customers may enter the premises
solely to clean their car mats.
Issue
Are the charges by Taxpayer for the four car washing and/or waxing transactions described above subject to Georgia
sales and use tax?
Analysis
Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage,
use, or consumption of tangible personal property and on certain enumerated services. 1 A “retail sale” is any sale,
lease, or rental for any purpose other than for resale, sublease, or subrent. 2 Unlike sales of tangible personal
property, which are generally presumed taxable, sales of services are not subject to the tax unless the service is
specifically designated as taxable.

1
2

O.C.G.A. §§ 48-8-1 and 48-8-30.
O.C.G.A. § 48-8-2(31).

Georgia Letter Ruling: LR SUT-2019-11
Topic: Car Wash Service
Date Issued: December 5, 2019
Page 2 of 2
While the transactions described above might leave a small amount of tangible personal property (e.g., wax,
coatings, water, etc.) on the cars being washed and waxed, and, thus, a small amount of tangible personal property
might be transferred to customers, a customer’s purpose in entering into the transaction is to buy Taxpayer’s
washing and waxing services presumably because the customer lacks the requisite equipment, time or skill. 3 These
washing and waxing services are not among the enumerated taxable services in O.C.G.A. §48-8-2, and they are akin
to automobile refinishing and painting, which are nontaxable personal services. 4
Ruling
The charges by Taxpayer for the four car washing and/or waxing transactions described above are not subject to
Georgia sales and use tax. Such charges are for nontaxable services and not for the sale of tangible personal
property. Taxpayer is liable for sales and use tax on any tangible personal property that it purchases to perform these
services.
The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances and taxpayer in question. The facts herein are those presented by the
taxpayer and the Department accepts them as true for this ruling. If the facts presented herein change, are not true,
are different, or material facts have been omitted, the conclusions reached in this ruling may change. In addition,
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different tax treatment than that expressed in this ruling.

See Craig-Tourial Leather Co. v. Reynolds, 87 Ga App. 360 (1952) (providing that in the context of shoe repairs,
the main consideration should be the purpose of the customer and concluding that the customer’s purpose was to
obtain repair services and that the tangible personal property in the transaction was only incidental to the service).
4
Ga. Comp. R. & Regs. 560-12-2-.08.
3