Does Missouri sales tax apply to the charges a self-service car wash imposes on customers who wash their own vehicles?

Plain-English summary

The Missouri Department of Revenue ruled that a self-service car wash does not have to charge Missouri sales tax on the amounts it collects from customers who wash their own vehicles.

The Applicant operates a self-service car wash: it supplies the water and chemicals customers use to wash their own cars, and the Applicant itself pays sales tax on that water and those chemicals when it buys them. The question was whether the fees the Applicant then charges customers for access to wash their cars are themselves subject to sales tax.

The Department's answer turned on Section 144.020.1, RSMo, which taxes retail sales of tangible personal property and a specific, enumerated list of taxable services. Because "washing cars" is not one of the services listed in Section 144.020, RSMo, the Department concluded the Applicant's customer charges fall outside the sales tax altogether — the transaction is a nontaxable service, not a taxable retail sale.

What this means for you

Self-service car wash operators

If your business charges customers a fee to use self-service car wash equipment (water, chemicals, vacuums, etc.) so they can wash their own vehicles, this ruling indicates that fee is not subject to Missouri sales tax, because washing a car is not on the list of taxable services in Section 144.020, RSMo. Note that you, as the operator, still owe sales tax on your own purchases of the water and chemicals you supply — the exemption applies to what you charge customers, not to your own input purchases.

Accountants and tax professionals

The reasoning here is narrow and mechanical: Missouri taxes tangible personal property and only the services specifically enumerated in Section 144.020, RSMo. Car washing services are not on that list, so the charge is nontaxable. This letter ruling is fact-specific to a self-service model where the Applicant supplies water/chemicals but the customer performs the washing; a full-service or automated car wash (where the operator itself performs the washing as a service) was not addressed and could raise different questions.

Common questions

Q: Does this mean car washes never charge Missouri sales tax?
A: This ruling addresses only the specific fact pattern presented — a self-service car wash where the Applicant supplies water and chemicals and the customer washes the vehicle. It concludes those charges aren't taxable because car washing isn't an enumerated taxable service under Section 144.020, RSMo. It does not address other car wash business models.

Q: Does the Applicant still pay any sales tax in this arrangement?
A: Yes. The ruling notes the Applicant is charged sales tax on the water and chemicals at the time it purchases them. The ruling addresses only whether the Applicant must collect sales tax from its customers, not the Applicant's own tax liability as a purchaser.

Q: Can another Missouri car wash business rely on this ruling?
A: No. Under Section 536.021.10, RSMo, and 12 CSR 10-1.020, this letter ruling binds the Department only as to the requesting Applicant, only for three years from its March 25, 2022 date, and only so long as the facts and law remain the same. Another business would need its own ruling or independent advice to rely on this conclusion.

Citations and references

Statutes and rules:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales of tangible personal property and enumerated taxable services)
• Section 536.021.10, RSMo (authority for letter rulings)
• 12 CSR 10-1.020 (letter ruling procedure)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8185

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your request dated February 15, 2022.

The facts as presented in your letter ruling request are summarized as follows:

Applicant is a self-service car wash. Applicant's service provides water and chemicals for customers to wash their cars, and Applicant is charged sales tax on the water and chemicals at the time of purchase.

ISSUE :

Are charges Applicant imposes for customers to wash vehicles subject to Missouri Sales Tax?

RESPONSE :

No. The charges Applicant imposes for customers to wash vehicles are not subject to Missouri Sales Tax.

Section 144.020.1, RSMo, provides, "[a] tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state."

Applicant's charges to customers are for the service of washing cars, which is not one of the enumerated taxable services under section 144.020, RSMo.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Legal Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, (573)-751-0961.

Sincerely,

Wayne Wallingford