Does a beauty salon or aesthetician owe Texas sales tax on shampoo, tonics, and conditioners it buys and uses on customers?

Plain-English summary

The Comptroller's office answered a question from a seller of supplies (things like shampoo, tonics, and conditioners) to aestheticians and beauty salons: are those supplies taxable?

The answer has two parts, because the same product can be taxed in two different ways depending on who ends up using it and how.

First, the supplies themselves are taxable items. If you sell them to a beauty salon or aesthetician, you must collect sales tax on the sale — unless the buyer gives you a valid, properly completed resale or exemption certificate (the letter points to Rule 3.285 on resale certificates).

Second, a beauty salon or aesthetician can use a resale certificate to buy those same supplies tax-free if they intend to resell the items. But if the salon instead pulls an item out of that tax-free inventory to use it while performing a nontaxable service — the letter gives facials as the example — Texas use tax becomes due on that item at that point, because it was actually consumed by the business rather than resold. And separately, if the salon turns around and sells supplies to its own customers, it must collect and remit sales tax on those sales.

What this means for you

Sellers of salon and barber shop supplies

When you sell shampoo, tonics, conditioners, or similar supplies to a salon, barber shop, or aesthetician, charge sales tax by default. You only skip the tax if the buyer hands you a valid, properly completed resale or exemption certificate.

Beauty salons, barber shops, and aestheticians

If you buy supplies tax-free with a resale certificate, track how you actually use them. Supplies you resell to your customers are fine to have bought tax-free, but you must then collect and remit sales tax when you sell them. Supplies you use up while performing a nontaxable service (the letter's example is facials) trigger Texas use tax the moment you take them out of that tax-free inventory for your own use — you can't buy tax-free and then use the item in your own service without the tax eventually applying.

Accountants and tax professionals

This is a straightforward application of the resale-certificate/use-tax pairing: tax-free purchase under a resale certificate is conditioned on resale, and use for any other purpose (including consumption in performing a nontaxable service) converts the purchase into a taxable use. Rule 3.285 (referenced in the letter, though not independently detailed here) governs the resale certificate mechanics.

Common questions

Q: Do I have to charge sales tax when I sell shampoo and tonics to a beauty salon?
A: Yes, unless the salon gives you a valid and properly completed resale or exemption certificate.

Q: If my salon buys supplies tax-free with a resale certificate, am I in the clear?
A: Only for supplies you actually resell. If you instead use an item from that tax-free inventory to perform a nontaxable service like a facial, you owe Texas use tax on it.

Q: My salon sells retail products to customers — do I need to collect sales tax on those sales?
A: Yes. The letter says salons must collect and remit sales tax on supplies they sell to their own customers.

Q: Can I rely on this letter for my own salon or supply business?
A: Not directly. This letter states it "is based on the facts presented" and that "other facts, though similar, may yield a different response." It also can only be relied on by the taxpayer it was issued to.

Citations and references

No statutes or administrative rules were cited by number in the text of this letter beyond a reference to "our Rule 3.285 on resale certificates," which was enclosed with the original letter but not reproduced in the text made available here.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9304L1234E13

Original ruling text

April 16, 1993

Dear **:

Thank you for your letter regarding the taxability of supplies sold to
aestheticians, or beauty salons.

The supplies are taxable items and you must collect sales tax when you sell
them unless a valid and properly completed resale or exemption certificate is
received from the purchaser. I have enclosed a copy of our Rule 3.285 on resale
certificates for your information.

An aesthetician or beauty salon may issue a resale certificate in lieu of
paying the tax if they intend to resell the taxable item. When an item is
removed from a valid tax-free inventory for use in Texas, Texas sales tax is
due. In this case, the aesthetician or beauty salon will owe sales tax on the
supplies they use to perform nontaxable services such as facials. They will
also be required to collect and remit sales tax on supplies they sell.

This opinion is based on the facts presented. Other facts, though similar, may
yield a different response.

If you have any other questions concerning this, please give me a call at our
toll-free number 1-800-531-5441, extension 3-4635. For answers to general
questions, call 1-800-252-5555.

Sincerely,

Hayden Denham
Tax Administration Division

NOTE: Previous Accession Number 9304102L