Materials used in repairing, for taxing purposes, fall into the
following classes:
(a) Materials which
pass to the repairman's customers and which do not lose their identity when
used by the repairman and which are a substantial part of their repair job
(such as auto repair parts, radio tubes, and condensers) are sold at retail by
the repairman. He must report sales tax on such sales, including tax on the
service incidental thereto. He may, however, if making separate agreements to
sell the repair parts and to perform the labor and service required, remit tax
only upon the price of the parts if his records and his invoices clearly show a
separation of the amounts received from sales of parts and from the rendering
of services.
(b) Materials which
pass to the repairman's customer but which lose their identity when used by the
repairman or which are inconsequential in amount; such as paint, solder, and
tack; are considered to have been used or consumed by the repairman and are
taxable at the time of sale to him.
(c) Materials which are used or consumed by
the repairman and which do not pass on to his customer are supplies and taxable
when sold to the repairman.
(d)
Materials which fall in class (b) or (c) are purchased at wholesale for use by
a repairman who, in addition to using such materials as a repairman, sells the
same kinds of materials for use by others. These materials become subject to
the sales tax upon their withdrawal for use by the repairman. Note, however,
that a repairman is not to be considered a vendor unless he carries a stock of
goods and sells outright therefrom a substantial amount. If the repairman makes
only isolated sales or "accommodation" sales, he is not to be licensed as a
seller under the sales tax law, in which case his supplier is liable for the
tax.
In all instances materials are taxable when sold to repairmen
for use in making repairs where such materials lose their identity as a result
of such use. For instance, solder used in welding, paint used in automobile
refinishing, thread used in mending clothing, cloth used in reupholstering. In
all instances where the shape or composition of the repair material is
materially changed, such altered or changed material is considered to have been
used or consumed by the repairman, and, for that reason, subject to tax when
sold to him. No tax on this material is to be collected by the repairman from
his customer.
In instances where repair materials and repair parts are passed
to the repairman's customers without change, except necessary and customary
minor adjustments, such parts or materials may be purchased at wholesale by the
repairman licensed under the law. The repairman is then liable for sales tax on
such sales of materials and parts to his customers.