Is money collected from coin-operated laundry machines subject to Missouri sales tax, and are wash/dry/fold service sales taxable?

Plain-English summary

The Missouri Department of Revenue ruled on two separate questions for a business that runs a coin-operated laundromat and also offers a separate wash, dry, and fold service.

Coin-operated laundry machines -- it depends. Section 144.020.1, RSMo, taxes retail sales of tangible personal property, and rentals of tangible personal property are taxed the same as sales. Whether the money customers put into the machines is taxable turns on how the business acquired the machines in the first place. If the business gave its supplier a resale exemption certificate and did not pay sales tax when it bought the machines, then the money customers pay to use those machines is subject to Missouri sales tax. But if the business already paid sales tax on its original purchase of the machines, then no additional tax is due on what customers pay to use them -- this prevents the same property from being taxed twice.

Wash, dry, and fold service -- not taxable. Section 144.020.1, RSMo, also taxes rendering "taxable service" at retail, but sales of services are only taxed if a specific statute says so. Wash, dry, and fold is a pure labor service, and no statute makes it taxable, so the business's sales of that service are not subject to Missouri sales tax.

What this means for you

Laundromat and similar coin-machine operators

Check how you acquired your coin-operated machines. If you bought them using a resale exemption certificate (i.e., you didn't pay sales tax on the purchase), you need to be collecting and remitting Missouri sales tax on the coins/payments customers put into the machines. If you instead paid sales tax when you bought the machines, you should not also be charging tax on customer use -- doing so would tax the same property twice.

Businesses offering wash/dry/fold or similar labor services

A pure labor service like wash, dry, and fold is not subject to Missouri sales tax unless a specific statute makes that particular service taxable. Don't assume all revenue from a laundry-related business is taxed the same way -- machine-rental income and labor-service income can be treated very differently.

Accountants and tax professionals

This ruling illustrates Missouri's general rule that rentals of tangible personal property are taxed like sales (so the tax treatment traces back to whether tax was paid on the underlying equipment purchase), while services are taxable only when specifically enumerated by statute. Confirm which category each revenue stream falls into before advising a client on collection obligations.

Common questions

Q: My laundromat bought its machines tax-free with a resale certificate. Do I owe sales tax on the coins customers put in?
A: Yes. Under this ruling, if you didn't pay sales tax when you purchased the machines, the money customers pay to use them is subject to Missouri sales tax.

Q: I already paid sales tax when I bought my laundry machines. Do I still have to charge tax on customer use?
A: No. If tax was paid on the original purchase of the machines, no additional tax is due on what customers pay to use them.

Q: Is my wash, dry, and fold service subject to Missouri sales tax?
A: No. Sales of services are only taxable in Missouri if a specific statute includes that service, and wash, dry, and fold is a labor service with no such statute, so it is not taxed.

Q: Can I rely on this ruling for my own laundromat business?
A: A Missouri letter ruling binds the Department only as to the requesting Applicant, only for three years, and only while the facts and law don't change. Other businesses should confirm their own facts match and consult a tax professional before relying on it.

Citations and references

Statutes and cases:

• Section 144.020.1, RSMo (rentals of tangible personal property taxed the same as sales)
• Section 144.020.1, RSMo (sales of services at retail taxed only if included in a specific statute)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8298

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated January 19, 2024.

The facts as presented in your letter ruling request are summarized as follows:

Applicant operates a coin operated laundry mat as well as offering a wash, dry, and fold service.

ISSUE 1:

Are Applicant's collection of money for the use of coin operated laundry machines subject to Missouri sales tax?

RESPONSE 1:

Yes. If the Applicant did not pay tax on the  purchase of the machines and instead gave the seller a resale exemption  certificate, then Applicant's collection of money is subject to Missouri sales  tax. In such case sales tax must be paid on the amounts paid by customers to use the machines.  If tax was paid by Applicant on the original  purchase of the machines, then no tax is due on the amounts paid by customers  to use the machines

Section 144.020.1, RSMo, provides:

A tax is hereby levied and imposed [...] upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state. Sales of tangible personal property are subject to tax unless a specific exemption applies.  Rentals of tangible personal property are taxed the same as sales of tangible personal property.

Applicant's collection of money in exchange for the right to use coin operated laundry machines are a sale of tangible personal property subject to sales tax except as stated above.

ISSUE 2:

Are Applicant's sales of their wash, dry, and fold services subject to Missouri sales tax?

RESPONSE 2:

No. Applicant's sales of their wash, dry, and fold services are not subject to Missouri sales tax.

Section 144.020.1, RSMo, provides:

A tax is hereby levied and imposed [...] upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state.

Sales of services at retail are subject to tax only if included in a statute.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest, and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Senior Counsel Kent L. Brown, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Wayne Wallingford