Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
515.0000 SERVICE ENTERPRISES GENERALLY—Regulation 1501
(a) IN GENERAL—SERVICE DISTINGUISHED FROM SALE
515.0011.825 Loan of Sterilization Equipment. A taxpayer manufactures and distributes dispensers for use in cleaning dishes, glasses, and utensils in restaurants and bars. The dispensers mix detergents and germicides with water. The taxpayer enters into agreements with customers to furnish dispensers in return for the promises of the customers to purchase all detergents and germicides from the taxpayer for the period of one year. The agreement provides that the dispensers are not for sale, but are loaned. The taxpayer retains ownership of the dispensers. The taxpayer delivers the detergents and germicides and calibrates and repairs the dispensers. Customers are usually visited at one month intervals to deliver detergents and germicides and to service the dispensers. Special trips are made when necessary. A lump-sum charge is made.
The true objects of the contracts are the dispensers, detergents, and germicides. Any services provided by the taxpayer are rendered incidental to the sale of tangible personal property. The entire charge is taxable. 11/18/93.