Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
295.0646 Sales of Gasoline and Car Washes. The following explains the application of tax to situations involving the sales of gasoline and car washes.
(1) A customer is given a "free" car wash provided a stipulated amount of gasoline is purchased.
The free car wash is considered a service that is part of the sale of gasoline. The gross receipts from the sale of gasoline should not be reduced. The car wash is seen as analogous to the washing of the windshields or pumping air into tires.
(2) A customer is given a reduced charge for the car wash based on the number of gallons of gasoline purchased.
The reduced charge should be treated as a nontaxable charge for an optional service, similar to the Board's policy on optional warranty charges.
(3) A customer is given a reduced price for the gasoline provided a car wash is purchased for a fixed price. The car wash price is the same whether or not the customer purchased gasoline.
Since the reduced charge of the gasoline is above cost and is posted on the pumps, the reduced price should be accepted as the selling price of the gasoline. To include the car wash price, or part of it, as receipts from gasoline sales would be to dictate the selling price to the dealer for sales tax purposes. The dealer should be free to stimulate car wash sales by reducing the price of the gasoline. 5/30/73.