A supplier sells car wash soap, upholstery shampoo, deodorizers, and other supplies to auto dealers, car washes, body shops, and detailers. Which of these items are taxable, can customers just write 'BLANKET' on a resale certificate, and is the supplier covered if a customer just refuses to pay tax?

Plain-English summary

A supplier sells items to auto dealers, car washes, body shops, and polish shops, and asked the Comptroller's office five questions about how to handle resale certificates and the taxability of specific products.

Blanket resale certificates: A customer cannot simply write "BLANKET" on a resale certificate to avoid paying any tax. Under Rule 3.285, a blanket resale certificate must describe the general nature of the taxable items being purchased for resale — the seller can then rely on it until it's revoked in writing, but the single word "Blanket" doesn't meet that description requirement.

Car wash soap and upholstery shampoo: These are taxable when sold to dealers, because they are consumed in use — washed off or vacuumed out — rather than resold to the ultimate customer as part of the vehicle.

Deodorizers: These get a split answer depending on how they're used. A deodorizer that's incorporated into the upholstery or carpet (and stays with the car) is non-taxable. But a deodorizer that's sprayed into the interior air space is taxable. So a deodorizer mixed into upholstery shampoo is non-taxable only if its purpose is to make the carpet smell better (and it isn't just there to add cleaning power) — in that case it can be purchased tax-free with a properly completed resale certificate.

Repeat customers buying new items: If a detail or body shop buys additional items on a second or third visit that weren't listed on their original resale certificate, the seller should have them complete a second (or updated) certificate listing the new items. Most cleaning/make-ready items purchased by a detail or body shop are taxable — auto detailing/polishing itself is not taxable as a service, but sales tax must be paid at the time of purchase on the supplies, materials, and equipment used to perform it. If a lump-sum charge is made for the whole detailing service, a sales tax permit isn't needed for that activity alone; but a business without a sales tax permit cannot issue a valid resale certificate. If a separate charge is made for carpet cleaning, the company can use a resale certificate for chemicals that remain on the carpet.

Customers who refuse to pay tax: A seller is not protected simply by having a purchaser sign a statement refusing to pay the tax. Texas Tax Code 151.052 requires a seller making a taxable sale to add the tax to the sales price; once added, it becomes part of the sales price, is a debt owed by the purchaser to the seller until paid, and is recoverable at law like the original sales price if unpaid. The seller remains responsible for collecting and remitting the tax. To the extent a customer does pay a bill, a pro-rata portion of that payment is treated as payment of the tax. Alternatively, a purchaser who refuses to pay can be directed to contact the Comptroller's office directly for an opinion on the taxability of what they're buying.

What this means for you

Suppliers selling to auto dealers, body shops, and detailers

Don't accept a resale certificate that just says "Blanket" — it needs to describe the general nature of the taxable items being purchased for resale. When a repeat customer buys new categories of items not on their original certificate, get an updated or second certificate covering those new items rather than assuming existing paperwork carries over.

Body shops, detailers, and car wash operators

Car wash soap and upholstery shampoo you buy are taxable because they don't become part of what you resell — they're washed off or vacuumed away. Deodorizers can go either way: tax-free if they're meant to stay incorporated in the upholstery/carpet, taxable if they're sprayed into the air. If you charge a separate fee for carpet cleaning, you may be able to buy the chemicals that remain on the carpet tax-free with a resale certificate.

Anyone tempted to let a customer "just refuse" to pay sales tax

A signed refusal-to-pay form does not protect the seller. Under Tax Code 151.052, the seller is still on the hook to add the tax to the sales price and collect/remit it; the tax becomes a debt of the purchaser that's legally recoverable. The better path for a customer who disputes taxability is to have them contact the Comptroller's office directly.

Common questions

Q: Can a customer just write "Blanket" on a resale certificate instead of listing items?
A: No. Rule 3.285 requires a blanket resale certificate to describe the general nature of the taxable items purchased for resale; the word "Blanket" alone isn't sufficient.

Q: Are car wash soap and upholstery shampoo taxable when sold to a dealer?
A: Yes — they're considered washed off or vacuumed out, so they're taxable to the dealer.

Q: Are deodorizers taxable?
A: It depends on use. Non-taxable if incorporated into upholstery or carpet and intended to make it smell better (not just added for extra cleaning power). Taxable if sprayed into the interior air space.

Q: Does a customer need a new resale certificate every time they buy a new type of item?
A: The letter recommends having the customer complete a second certificate listing the new items when a repeat buyer purchases items not covered by their original certificate.

Q: Is a lump-sum auto detailing/polishing charge taxable?
A: The detailing/polishing service itself is not taxable, but the detailer must pay sales tax at the time of purchase on the supplies, materials, and equipment used to perform it. A lump-sum charge for the whole service doesn't require a sales tax permit for that activity alone, but without a permit the business cannot issue a valid resale certificate.

Q: Is a seller protected if a customer signs a form refusing to pay sales tax?
A: No. Under Texas Tax Code 151.052, the seller must still add the tax to the sales price and collect it; it becomes a debt of the purchaser recoverable at law if unpaid. The seller can direct a disputing customer to contact the Comptroller's office for an opinion.

Citations and references

• Rule 3.285 (concerning resale certificates, including blanket resale certificates)
• Texas Tax Code 151.052, Collection by Retailer

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9606L1419A03

Original ruling text

June 12, 1996

Dear ***:

Your letter to Mrs. JoAnn Dieck, has been assigned to me for response. You are
asking about the taxability of items that you sell to auto dealers, car washes,
body shops and polish shops.

1. You asked if a car dealer or body shop may simply write BLANKET on resale
   certificate if they do not wish to pay any tax at all.

Response: Subsection (c) of Rule 3.285, concerning resale certificates
provides:

A blanket resale certificate describing the general nature of the taxable items
purchased for resale may be issued to a seller by a purchaser who purchases
only items for resale. The seller may rely on the blanket certificate until it
is revoked in writing. Emphasis added.

Therefore, the general nature of the taxable items must be stated on the
certificate. The words Blanket will not be sufficient.

2. You also asked about the taxability of car wash soap and upholstery shampoo
   sold to dealers?

Response: The soap and shampoo are considered to be washed off or vacuumed out
and are therefore taxable to the dealer.

3. Deodorizers are another question that you are not sure about. You sell
   deodorizers that mix with the upholstery shampoo to give the solution more
   cleaning power. You also sell deodorizers that spray into the care to make the
   car smell nice.

Response: As footnoted in Mrs. Dieck's letter to you of October 28, 1990,
deodorizers are non-taxable if incorporated into upholstery or carpets.
Deodorizers are taxable if sprayed into interior air space. Therefore, if the
deodorizer mixed with the shampoo is intended to make the carpet smell better
and is not only used to provide more cleaning power, the deodorizer will not be
taxable when a properly completed resale certificate is issued.

4. If first time buyers, such as detail or body shops buy items and list these
   items on the tax form as tax exempt (for resale) and on the second or third
   visit, buy items not sold to them on the first visit, are you required to have
   them issue a new resale certificate listing these additional items or can these
   items be listed as cleaning or make ready or resale and cover all items sold to
   them?

Response: I would ask them to complete a second certificate listing the new
items. The majority of cleaning or make-ready items purchased by a detail or
body shop will be taxable as evidenced by the listing of taxable nontaxable
provided to you by Mrs. Dieck in her earlier letter.

Auto detailing/polishing is not taxable. Sales tax must be paid at the time of
purchase on all supplies, materials, and equipment used by the
detailer/polisher 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. If a company does not have a sales tax permit is cannot issue a
valid resale certificate. If a separate charge is made for the carpet cleaning
the company would be allowed to use a resale certificate when purchasing
chemicals that will remain on the carpet.

5. You are sometimes faced with dealers and body shops who refuse to pay tax.
   In these cases, you are asking if your company is covered if you just have them
   sign a form saying they do not want to pay the tax? You are placed in the
   middle and do not want to antagonize your customers, but on the other hand, you
   wish to do what is correct on the collection of the tax.

Response: You would not be covered by having the purchaser sign a statement
that they refuse to pay the tax. Texas Tax Code 151.052. Collection by
Retailer, provides:

A seller who makes a sale subject to the sales tax imposed by this chapter
shall add the amount of the tax to the sales price, and when the amount of the
tax is added:

(1) it becomes a part of the sales price;
(2) it is a debt of the purchaser to the seller until paid; and
(3) if unpaid, it is recoverable at law in the same manner as the original
sales price.

As a seller, you are responsible for collecting the tax and remitting it to the
state. When an individual sells taxable goods or services, they are required to
add tax to the sales price. The tax then becomes part of the sales price and,
if the purchaser refuses to pay, it is recoverable at law in the same manner as
the original sales price. To the extent that a customer does pay his bill, a
pro-rata portion of the payment is considered to be payment of the tax. See
Section 151.052 of the Texas Tax Code. Alternatively, you can have the
purchaser who refuses to pay the tax to call or write in to this office and
request an opinion of the taxability of the products that they are purchasing
for their business.

I have addressed the taxability of the list of products that you provided.
Footnotes to items that may or may not be taxable are as follows:

1. Non-taxable if incorporated into upholstery or carpets. Taxable if sprayed
   into interior air space.
2. Non-taxable if remains with automobile.
3. Non-taxable if applied to upholstery, carpet, dash and remains with
   automobile.
4. Additional information needed.

This opinion is based on the facts presented. Other facts though similar may
provide a different result. You may call me toll-free at 1-800-531-5441,
extension 3-4502. The direct line is 512/463-4502. You may also write to Tax
Policy Division, Comptroller of Public Accounts.

Sincerely,

Gilbert Zamora
Tax Policy Division

NOTE: Previous Accession Number 9606365L