Are water, gas, and electricity used by a car wash exempt as consumables, and which uses remain taxable?

Plain-English summary

A correspondent asked whether a car wash's purchases of water and utilities received the same consumed-in-production treatment as soap, wax, and cleaning chemicals. The Department answered yes.

The guidance applied to coin-operated, automatic, hand-held-wand, and employee-operated car washes. Water and productive utility use were exempt consumables.

Exempt electricity included power for pumps, mechanical washing equipment, and coin-operated vacuums. The exemption did not cover lighting in wash stalls or the surrounding lot, advertising signs, separate workrooms, or office space.

When one meter supplied both taxable and exempt electricity, gas, or water, the car wash used Form ST-28B to claim the exempt portion. If a utility purchase through a meter was entirely exempt, Form ST-28C applied to the full purchase.

What this means for you

Car-wash owners

Separate productive washing and vacuum use from lighting, signage, office, and other nonqualifying consumption.

Utility accountants

Use the mixed-meter form when one meter serves both categories; use the full-exemption form only when the purchase is entirely exempt.

Tax professionals

The opinion applies across car-wash formats, including self-service and employee-operated facilities.

Common questions

Q: Is water used to wash vehicles exempt?
A: Yes. The Department treated it as a consumed input.

Q: Is electricity for pumps and mechanical washers exempt?
A: Yes, as was electricity for coin-operated vacuums.

Q: Is lighting electricity exempt?
A: No. Stall, lot, sign, workroom, and office lighting were excluded.

Q: Which certificates did the letter identify?
A: ST-28B for mixed taxable and exempt use and ST-28C for a 100% exempt meter.

Citations and references

• Forms ST-28B and ST-28C — mixed-use and full utility exemption certificates identified by the Department
• Kansas Policy Information Library car-wash Q&A — enclosure referenced by the opinion

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2002-002

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

January 15, 2002

XXXX
XXXX
XXXX

RE: Your recent e-mail

Dear XXXX:

Thank you for your recent inquiry. You ask whether Kansas sales tax law treats a car wash's purchases of water and utilities like it treats a car wash's purchases of other consumables, such as soap, wax, and cleaning chemicals. The answer is yes. These consumable are all exempt from Kansas sales tax.

I have enclosed a Question and Answer from our Policy Information Library that explains how the consumed-in-production exemption applies to car washes. The discussions in the Q & A apply to all types of car washes, including coin-operated washes, both automatic and hand-held wand washes, and those where employees perform manual labor to wash or wax the vehicle.

I have also enclosed a copy of the exemption certificate (ST-28B) that a car wash can use to claim exemption when both taxable and exempt electricity, gas, or water is furnished through a single meter. For electricity, exempt use would include electricity used to power the pumps and mechanical washers, along with electricity consumed in any coin-operated vacuums. The exemption would not extend to lighting, including lighting in the stall, for the surrounding lot, for advertising signs, or for any separate work rooms or office space. If any of the purchases of gas, electricity, or water are 100% exempt, you should use form ST-28C to claim exemption on the total purchase.

I believe that the enclosed information will provides you all the material you need to claim exemption. Please note, the enclosures are available at our web site: www.ksrevenue.org. The Q & A is located in the Policy Information Library. The exemption certificate can be accessed under "Forms," which I believe is listed on the left side of the first viewing screen that opens.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosures

Date Composed: 01/17/2002 Date Modified: 01/22/2002

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