Sales and use overview of repair and maintenance

The various ways that states distinguish between nontaxable and taxable services allow for very few generalizations to be made. Sales of repair services are taxed unless an exemption applies. Usually the service must be separately stated to be covered under this exemption. Lump-sum repairs including materials and labor are treated differently depending on how the state treats labor. Repair return rules vary when tangible personal property is sent out of state for repair and then returned. Some states require collection of tax where the item was repaired while others allow the tax in the destination state. Maintenance and service contract treatment often varies from state to state as well. Additionally, whether the contract involves just parts, just repair, or both will impact the treatment. The tax treatment of repair and maintenance in Ohio, Illinois, Florida, and Wisconsin is discussed.