61 Pa. Code § 31.5 - Persons rendering taxable services
(a)
Imposition. The following services rendered upon tangible
personal property are "taxable services" whether or not tangible personal
property is transferred in conjunction with the rendition of the services:
(1) Repairing, altering, mending, pressing,
fitting, dyeing, laundering, drycleaning or cleaning tangible personal property
other than clothing or footwear. Effective July 1, 1971, charges for repairing,
altering, mending, pressing, fitting, dyeing, laundering, drycleaning or
cleaning clothing or footwear are exempt from tax. For example, if a bookcase
is taken to a carpenter to have a defective shelf repaired, the charge for the
repair is subject to tax. However, if a shoe is taken to a shoe repairperson to
have a heel fixed, the charge for the repair is not subject to tax.
(2) Applying or installing tangible personal
property as a repair or replacement part of other tangible personal property.
For example, if a garage employe replaces a tire on an automobile with a new
one, the installation charge plus the price of the new tire is subject to tax.
If the garage employe merely replaces the old tire with a spare belonging to
the car owner, the installation charge is nevertheless subject to
tax.
(3) Labor or services billed
by the vendor for delivering, installing or applying tangible personal property
sold by the vendor even if the services are contracted for separately. The
taxability of these services is effective March 4, 1971. For example, if a
dealer delivers and installs a gas range which the dealer has sold, the charges
for delivery and installation, as well as the price of the range, are taxable.
The delivery and installation charges are taxable whether or not they are
invoiced separately from the price of the range.
(4) Inspecting, altering, cleaning,
lubricating, polishing, repairing or waxing motor vehicles.
(5) Printing or imprinting tangible personal
property for persons furnishing the materials used in the operations. The
services shall be taxable whether the person for whom they are rendered or the
person's agent supplies the materials. When the person for whom taxable
services are rendered fails to pay the tax to the person rendering the taxable
services, the Commonwealth may collect tax from either party.
(b)
Services when
performed by coin-operated self-service laundry equipment. Effective
July 1, 1971, charges for the services of repairing, altering, mending,
pressing, fitting, dyeing, laundering, drycleaning or cleaning of clothing and
household goods by means of coin-operated self-service laundry equipment shall
be exempt from tax. Laundry equipment includes washing and drycleaning
machines. Included within this exemption are services performed on the
following types of property: clothing, sheets, towels, rugs, drapes or other
household goods. Charges for similar equipment for use in conjunction with
motor vehicles are subject to tax. Charges by a laundry for the services in the
subsection performed upon household goods are subject to tax.
(c)
Tangible personal property
subsequently affixed to real estate. The vendor shall collect and
remit tax on the vendor's rendition of services even though the tangible
personal property upon which the taxable services are performed will later be
affixed to the real estate so as to become a permanent part thereof. For
example, when a lighting fixture is temporarily removed from a home and taken
to a silversmith to be electroplated, tax shall be collected on the entire
charge for the electroplating.
(d)
Tangible personal property belonging to a third person. The
vendor shall collect tax from persons paying the purchase price for taxable
services even though the tangible personal property on which the services are
performed belongs to another. For example, when an insurance company has a car
repaired for an insured person the person rendering the service shall collect
tax from the insurance company on the total charge.
(e)
Application of tax to service or
maintenance agreement. Persons who enter into "service" agreements to
render a taxable service are making "sales at retail" and shall collect sales
tax on the entire charge made under the agreement. The fact that the agreement
may be designated "Inspection," "Maintenance" or by any other name does not
change this rule if, under the terms of the agreement, the persons shall be
obligated to render taxable service upon the tangible personal property of
their customers. For example, when a firm enters into agreements with a
serviceman to have its office equipment inspected, repaired and cleaned, the
entire charge, without any deduction for separately stated items, is subject to
tax.
(f)
Taxable services
performed outside Pennsylvania on tangible personal property used in this
Commonwealth. When taxable services are performed outside of this
Commonwealth on tangible personal property brought into this Commonwealth for
use in this Commonwealth, the services shall be subject to the use tax, based
upon the entire charge made by the vendor. If the tax is not collected by the
vendor, the purchaser of the services shall report and pay use tax directly to
the Commonwealth. For example, when a resident of this Commonwealth has his
automobile repaired outside of this Commonwealth, tax shall be paid directly to
the Commonwealth by the person for whom the services were rendered, or
alternatively to the person rendering the services if the person is
"maintaining a place of business within the Commonwealth." A tax credit shall
be permitted for taxes paid to most other states. See §
31.7 (relating to use
tax).
(g)
Services
performed in this Commonwealth on tangible personal property to be used by
nonresidents outside of this Commonwealth. Services performed in this
Commonwealth on tangible personal property to be used by nonresidents outside
of this Commonwealth shall conform with the following:
(1) The vendor shall collect tax on services
if the tangible personal property on which the services have been performed is
delivered to the purchaser or the purchaser's agent in this Commonwealth, even
though the purchaser will subsequently use the services and tangible personal
property outside of this Commonwealth. The fact that the purchaser is a
nonresident and the services will be used outside of this Commonwealth does not
in itself make the transaction exempt. For example, when a nonresident of this
Commonwealth has his car repaired in this Commonwealth while vacationing, the
garage employe shall collect tax on the entire charge. A person rendering a
taxable service need not collect sales tax on the rendition of services for a
nonresident when the agreement between the vendor and the purchaser requires
the vendor to deliver or provide delivery of the tangible personal property at
a destination outside of this Commonwealth for use outside of this
Commonwealth, and when the delivery is in fact made. For example, when a
laundry in this Commonwealth picks up soiled drapes from a Maryland customer
and delivers the clean laundry in Maryland to the customer, the laundry is not
required to collect tax. Similarly, when a nonresident has his car repaired
while on vacation in this Commonwealth and directs the garage employe to
deliver his car to his out-of-State residence, the garage employe is not
required to collect tax.
(h)
Exemptions. The TRC
grants certain purchasers an exemption from tax not only on tangible personal
property purchased for use in exempt activities but also on services which may
be performed on the exempt tangible personal property. Therefore, the fact that
the TRC now imposes tax upon the full charge for taxable services rendered does
not affect the use of the Exemption Certificate by purchasers who are entitled
to an exemption from tax under the act. Thus, persons engaged in activities
such as farming, dairying, manufacturing and mining may, upon their purchases
of services on exempt tangible personal property, use an exemption certificate
applicable to their particular activity. For example, when a manufacturing firm
has a machine repaired which is directly used in its manufacturing operations,
the charge for the rendition of such service is not subject to tax. When the
same firm has a filing cabinet repaired, the charge for the repairs is subject
to tax, since the filing cabinet is not directly used in
manufacturing.
(i)
Purchase
of equipment and materials used in taxable services. Persons rendering
taxable services shall be considered the consumers of all tangible personal
property which they use but do not transfer to their customers. Therefore, all
machinery, equipment, tools, supplies, materials or other tangible personal
property, or services performed thereon, purchased for this type of use is
subject to tax. They are entitled to use the "resale" exemption with respect to
purchases of tangible personal property or services which they will transfer to
their customers. The following examples illustrate these rules:
(1) A furniture repair shop purchases sand
paper and paint brushes to be used in refinishing the furniture. The shop
cannot claim a "resale" exemption for the purchases but shall pay tax thereon.
When a furniture repair shop purchases finishing nails and varnish to be
incorporated into its customer's furniture in connection with the rendition of
repair services, the shop may give a "resale" exemption certificate on its
purchases of such materials.
(2) An
auto repair shop shall pay tax on purchases of brushes, sandpaper, masking tape
and other equipment and supplies used in rendering its repair services but not
transferred to its customers. On paint, parts and other property which is
transferred to the customer as part of the repair service, the shop may give a
resale exemption to its suppliers.
Notes
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