Tax on Labor

[dw11023]

Hello everyone! This is my first time posting on this site. Also my first time owning/running my own business.

I have many questions but I'm gonna start with my most recent thought. I own and operate an auto repair business in the state of KY. Should I charge tax on labor? I tried reading laws but found them very confusing. Any help would be greatly appreciated.

[Business Attorney]

You don't have to collect sales tax on labor if it is separately stated on the invoice:



An automotive body shop shall collect sales tax on charges for materials and parts sold to customers. They shall separately state on the customer invoice and in their records the sales price of the parts and materials from the charges for repair and installation labor. If the labor charges are not separately stated, the presumption shall be that the entire charge represents the sales price of tangible personal property sold with the applicable tax due from the seller. 103 KAR 27:230.

[Steve B]

I'm also in KY and I end up charging tax on my labor, but that's because I don't list it separately on the invoice. I don't want my customers to second guess how much my labor portion is - so I wrap it up in one price and tax it all. This is typical for my industry. I would guess the opposite is true in the auto repair business.

Thanks for looking that up for me David - I've been going by what my accountant had told me, but it's nice to see it in writing.

[jamesray50]

Hi, I'm in Kentucky too. Welcome to our forum. I don't charge any sales tax because all I have are services. Where in KY are you? Don't hesitate to ask more questions, we are here to help. :)