Was auto detailing taxable in Texas, and did separately charging for carpet cleaning change the answer?

Plain-English summary

An auto-detailing business washed and waxed vehicles and shampooed their carpets and upholstery without selling products. The Comptroller said a single lump-sum charge for the complete detailing service was nontaxable. If that was the company's only activity, it did not need a sales tax permit.

Billing components separately changed part of the result. A separately stated charge for cleaning automobile upholstery was still nontaxable, but a separately stated charge for cleaning automobile carpet was taxable and required the business to hold a sales tax permit.

When separately charging for taxable carpet cleaning, the company could issue a resale certificate for chemicals that remained on the carpet. For the broader nontaxable detailing service, it had to pay tax when purchasing supplies, materials, and equipment.

What this means for you

Auto-detailing businesses

Invoice structure mattered under this letter. A bundled detailing charge received different treatment from a separately stated carpet-cleaning line.

Accountants and tax professionals

Track both customer billing and supply use. Chemicals remaining on carpet qualified for resale treatment only in connection with the separately stated taxable carpet service described.

Common questions

Was a lump-sum auto-detailing charge taxable? No.

Was separately stated upholstery cleaning taxable? No.

Was separately stated carpet cleaning taxable? Yes, and the business needed a sales tax permit.

Who paid tax on supplies for nontaxable detailing? The detailer paid tax when buying its supplies, materials, and equipment.

Citations and references

The letter cited no specific statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9202L1156F05

Original ruling text

February 19, 1992

Dear **:

Thank you for your letter regarding the taxability of auto detailing.

You state that your auto detailing service consists of waxing, washing
and shampooing carpets and upholstery. You asked about the taxability of your
service and if you would need a sales tax permit. It is my understanding that
your company does not sell any products.

Auto detailing is not taxable. Sales tax must be paid at the time of
purchase on all supplies, materials, and equipment used to perform the service.
If a lump-sum charge is made for the entire auto detailing service, a sales
tax permit would not be needed for that activity alone.

Although a separate charge for cleaning upholstery in an automobile is
not taxable, a separate charge for cleaning the carpet in an automobile is
taxable. If you were to separately state a carpet cleaning charge, the charge
would be taxable and your company would need a sales tax permit. When
separately stating the carpet cleaning charge, your company would be allowed to
use a resale certificate when purchasing chemicals that will remain on the
carpet.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion could change.

If you have any questions, please don't hesitate to write the Tax
Administration Division or call one of our tax specialists toll-free at
1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division