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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
G
295.0000 Gross Receipts
Annotation 295.1804
(g) Service Charges Generally
295.1804 Tire Removal Fees. At an auto dismantler's yard a customer selects a tire which is mounted on the original wheel. The dismantler charges a few dollars for the removal of the tire from that wheel. The customer pays for this service in advance. The customer then has the option to purchase the removed tire or not. The taxpayer's procedure generally destroys the rim so it can no longer be used or resold.
Separately stated charges for removing used tires from their rims, which tires are then sold to the customer, are charges for a service which is part of the sale of the tangible personal property, i.e., the tire. In that case, the tire removal fee is taxable. On the other hand, if the customer pays the removal fee and then rejects the tire, the fee constitutes a charge for a nontaxable service.
Lastly, if title to the tire and wheel is passed to the customer prior to their separation and the separation is truly optional, the charge for the separation of the tire from the wheel is not subject to sales tax. The separation of the tire from the wheel is a service performed on the customer's property that does not constitute taxable fabrication labor. 2/20/96.