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Labor Repair

152B

This fact sheet explains how Sales and Use Tax applies to repair labor. Repair labor is labor to restore an item so that it can be used for its original purpose. For information on installation, fabrication and construction labor see Fact Sheet 152A, Labor Installation, Fabrication and Construction.

applies only to the $200 for materials; if the material and labor charges are lumped together, the entire charge is taxable. If the customer furnishes the material for the sofa, the charge for the repair labor is not taxable. Sometimes the cost of parts or materials is insignificant compared to the total charge for labor. When the parts are insignificant and there is one lump sum price for the repair, the charge is not taxable. In this case, the repairer must pay sales or use tax on the cost of parts used to make the repair. If the amounts are separately stated, the repairer should charge tax only on the materials. The repairer can, however, buy the materials exempt from sales tax for resale. Example. A jeweler uses a $1 spring to repair a watch and bills the customer $10. Since the cost of the spring is insignificant compared to the charge for the repair service, the jeweler does not charge tax on the $10. However, the charge for the spring is taxable if the jeweler itemizes it on the bill. Examples of nontaxable repair labor: Changing a safe combination or lock tumblers by a locksmith so a different key can be used (repair to business related items as previously described is taxable) Recapping tires furnished by the customer Removing dents or replacing fenders at a body shop Repairing a car engine Replacing a heat element in a clothes dryer
References M. S. 297A.61, subd. 3, Sale and purchase M. S. 297A.68, subd. 38, Bundled transaction Other fact sheets you may need: Automotive Repairs and Service, #131 Labor Installation, Fabrication and Construction, #152A Local Sales and Use Taxes, #164 Sales to Government, #142 Use Tax for Businesses, #146 Use Tax for Individuals, #156

Business repair services

Beginning July 1, 2013, Minnesota sales and use taxes apply to business related electronic and precision equipment repair and maintenance services; and commercial and industrial machinery and equipment repair and maintenance services. Sales and use tax applies to repairing and maintaining electronic and precision equipment where the repair service can be deducted as a business expense by the purchaser under the Internal Revenue Code. This includes repair or maintenance of electronic devices, computers and computer peripherals, monitors, computer terminals, storage devices, and CD-ROM drives; other office equipment such as photocopying machines, printers, and facsimile machines; televisions, stereos, sound systems, video or digital recorders and players; two-way radios and other communications equipment; radar and sonar equipment, scientific instruments, microscopes, and medical equipment.. Labor services to repair and maintain commercial and industrial machinery and equipment are taxable. The following items are not commercial or industrial machinery and equipment: motor vehicles, furniture and fixtures, ships, railroad stock, and aircraft. Separately stated labor charges to repair these items remain exempt from sales tax.

Individual repair services

Repair labor that is not business related as previously described is not taxable as long as the repair charges are separately stated. For example, the charge to reupholster a sofa is $400 ($200 materials, $200 labor). The labor is for removing the old fabric and replacing it with new. Since the sofa is being restored to its original form, tax
Sales and Use Tax Division Mail Station 6330 St. Paul, MN 55146-6330 Phone: 651-296-6181 or 1-800-657-3777 Minnesota Relay (TTY) 711 Email: salesuse.tax@state.mn.us

This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or revenue notices. Alternative formats available upon request.

Stock No. 2800152B, Issued 6/13

Minnesota Revenue, Repair