Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 515.0062


515.0062 Water Treatment—Sale or Service. A company offers a contract for water treatment which includes extensive testing of items such as cooling towers and boilers, as well as efficiency studies, inspections, training, special studies as needed, etc. As part of the program, the company provides all chemicals necessary for the treatment of the water in the system. In addition, there is a one time charge for test kits and solution. Some contracts require the company to feed the chemicals into the system, and some contracts require that the chemicals be delivered, with the customer being responsible for feeding the system. All contracts are on a lump-sum basis, with no amount specified for the chemicals provided. Neither the chemical element or the service element of the contract is insignificant.

When the company feeds the system, it is the consumer of the chemicals provided and the retailer of the test kits and solution. When the customer feeds the system with the chemicals delivered by the company, the company is the retailer of the chemicals as well as the test kits. The gross receipts from the sale of chemicals is the list price at which they would be sold to others not under a service contract. 4/8/94.