Is toner sold to a commercial printing or copy company exempt from Utah sales tax as a component part of the copies they resell, and is the labor to refill a toner cartridge taxable?

Plain-English summary

A business that repairs copiers and recharges toner cartridges (replacing used toner with new toner) asked the Commission whether toner sold to its printing-company customers -- who resell the copies they make -- is taxable, since the requester had been told by phone that "ink is not taxable" and wondered if toner counted as ink, and whether labor to refill the cartridge would be taxed.

The Commission's answer, more nuanced than a flat "toner is ink so it's exempt":

• Commercial printers and copy service businesses may purchase materials and supplies tax-free if those materials become a component part of finished goods produced for resale. Toner qualifies under this component-part exemption -- but only:
  1. When sold to a client who uses it to produce copies/printed material for resale (the toner becomes part of the taxable final product they sell), and
  2. The seller obtains and retains a resale tax exemption certificate from that client.
• The exemption does NOT apply to companies that aren't in the printing/copying business -- for them, toner is just an ordinary office supply purchased for their own consumption, and is taxable.
• The exemption never applies to labor -- charges for labor to refill toner cartridges are taxable regardless of who the customer is.
• Separate statement requirement: any tax-exempt toner charges must be separately stated on the invoice from taxable labor (e.g., copier repair or cartridge-refill labor) -- if they aren't broken out, the entire charge becomes taxable.

What this means for you

Copier repair and toner-recharge businesses

Whether your toner sale is exempt depends entirely on your customer's business and what they do with the copies -- get a resale exemption certificate from any printing/copy-service client and keep it on file. For any other customer (one using copies internally, not reselling them), charge tax on the toner like any office supply.

Commercial printers and copy shops buying toner

Provide your toner supplier with a resale exemption certificate to keep your toner purchases tax-free, since you're producing copies for resale -- but expect the supplier's labor charge for refilling/repair to be taxed regardless.

Accountants billing mixed supply-and-labor invoices

This ruling is a clean example of the "separately state it or the whole thing is taxed" rule: bundle exempt toner into an undifferentiated repair invoice and you risk losing the exemption on the entire bill, not just the labor portion.

Common questions

Q: Is toner the same as tax-exempt "ink"?
A: This ruling doesn't adopt a blanket "toner = exempt ink" rule -- instead it analyzes toner under the component-part/resale exemption, which depends on the buyer's business and use, not a general ink exemption.

Q: Is toner sold to a printing company that resells copies exempt from sales tax?
A: Yes, per this ruling, if the toner becomes a component part of the copies/printed material the buyer resells, and the seller holds a resale exemption certificate from that buyer.

Q: Is toner sold to a regular business (not a printer/copy shop) exempt?
A: No, per this ruling -- it's taxable like ordinary office supplies for a company using copies internally rather than reselling them.

Q: Is the labor to refill a toner cartridge or repair a copier taxable?
A: Yes, per this ruling -- labor charges are always taxable, regardless of the customer.

Q: What happens if I bill toner and labor together without separating them?
A: Per this ruling, the entire charge becomes taxable if the exempt toner portion isn't separately stated.

Q: Can another toner/copier business rely on this ruling directly?
A: Not automatically -- it binds the Commission only for the taxpayer and facts described. Different customer relationships or invoicing practices would need their own analysis.

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/95-081.pdf

Original ruling text

95-081

Response
November 16, 1995

Request

TAX
COMMISSION

210
NO. 1950 W.

SALT
LAKE CITY, UT 84134

ATTN:
XXXXX

DEAR
XXXXX

I
WORK FOR A COMPANY NAMED XXXXX. PART OF
OUR BUSINESS IS REPAIRING COPIERS, AND ALSO RECHARGING TONER CARTRIDGES. THIS PROCESS INVOLVES REPLACING USED TONER
WITH NEW TONER.

SOME
OF OUR CUSTOMERS ARE PRINTING COMPANIES AND SELL THE COPIES THAT THEY MAKE ON
THEIR COPIER.

I
UNDERSTAND THAT THE WORK PERFORMED ON THE COPIER ITSELF IS TAXABLE BUT WOULD
THE TONER BE TAXABLE? I CALLED THE TAX
COMMISSION AND THEY SAID THAT INK IS NOT TAXABLE. TONER, I WOULD IMAGINE, WOULD BE CONSIDERED AN INK. IS THIS CORRECT? ALSO WOULD THE WORK PERFORMED ON THE CARTRIDGE TO REFILL THE
TONER BE TAXABLE?

I
WOULD APPRECIATE A RESPONSE TO MY QUESTIONS AS SOON AS POSSIBLE DUE TO THE FACT
THAT WE ARE HOLDING OFF ON BILLING SOME OF OUR CUSTOMERS.

THANK
YOU.

XXXXX

XXXXX

RE:
Advisory Opinion - Application of sales tax to toner and other supplies sold to
printing companies and other customers.

Dear
XXXXX

We
have received your request for information regarding the application of sales
tax to your sales of toner and toner cartridges. We find as follows:

Under
Utah law, commercial printers and copy service business are entitled to
purchase certain materials and supplies tax free if those materials become a
component part of finished goods produced for resale. Copy machine toner fits within the category of tax-exempt
supplies if the following conditions are met.

1.
The exemption applies to purchases by a commercial printer or copy service that
uses the toner to produce copies or printed material for resale. The exemption applies because the toner
becomes a component part of the final taxable product. You must obtain resale tax exemption
certificates from your clients to document their tax exempt purchases. Retain the exemption certificates with your
tax records.

The
exemption does not apply to purchases by companies that are not in the business
of selling copying or printing services.
For these companies, the purchase of toner or toner cartridges is like
the purchase of other office supplies used by the companies for their own
consumption.

The
exemption does not apply to charges for your labor to refill the cartridges.

2.
Tax-exempt portions of a transaction must be separately stated on the receipt
or invoice or the entire charge is taxable.
If you are billing your commercial printing and copy service clients for
both taxable services, such as labor to repair a copier or to refill a toner
cartridge, and non- taxable purchases of toner or toner cartridges, the
non-taxable charges must be separately stated or the entire amount is taxable.

Please
let us know if you have further questions.

For
the Commission,

Alice
Shearer

Commissioner