Are a moving company's charges for packing taxable, and does the mover owe tax on the boxes, wrapping paper, and tape it uses?

Plain-English summary

When a moving company packs and moves a customer's belongings, is the charge taxable, and who pays tax on all the boxes and tape? This ruling splits the answer: the service is nontaxable, but the mover owes tax on the packing materials it buys.

The core holding: a moving company is the consumer of the containers, wrapping paper, tape, and other packing materials used in the performance of its nontaxable service.

The Department's reasoning:

• A moving company provides a nontaxable service when it packs and moves a customer's property, and its total charge for that service is not subject to tax.
• As part of performing the service, the mover uses boxes, containers, wrapping paper, tape, and other materials to protect the goods. Those materials are used and consumed by the mover in performing the service.
• Because the mover is the one who uses them up, the mover is the ultimate consumer -- so those packing materials are subject to sales or use tax when the mover purchases them.

The tax does not disappear; it simply attaches to the mover's purchase of supplies rather than to the customer's moving bill.

What this means for you

Moving and packing companies

Do not charge sales tax on your packing and moving service, but do pay sales or use tax on the boxes, wrapping paper, tape, and other packing supplies you buy. If a supplier does not charge you Nebraska sales tax on those materials, you owe use tax on them, because you consume them in performing your service.

Customers hiring a mover

Your moving and packing service charge is not itself subject to Nebraska sales and use tax under this ruling. The tax on the packing supplies is the mover's responsibility, built into its cost of doing business.

Accountants and tax professionals

This is a classic service-provider-as-consumer ruling: the service is exempt, so the provider cannot buy the consumed materials tax-free for resale -- it owes tax on them as the end user. Watch for movers who also sell boxes or supplies separately to customers, which is a different, taxable retail sale. Because the ruling dates to 1978, confirm current law before relying on it.

Common questions

Q: Is a moving company's packing charge taxable in Nebraska?
A: No. The Department treats packing and moving as a nontaxable service, so the mover's total service charge is not subject to sales and use tax.

Q: So nothing is taxed?
A: Not quite. The mover owes sales or use tax on the boxes, containers, wrapping paper, tape, and other packing materials it buys and consumes in performing the service.

Q: What if the supplier didn't charge the mover sales tax on the materials?
A: Then the mover owes Nebraska use tax on them, because it is the ultimate consumer of those materials.

Q: Can I rely on this 1978 ruling today?
A: It states the Department's position and is "binding on the Nebraska Department of Revenue until amended," but it is decades old. Verify current law and consult a Nebraska tax professional.

Citations and references

• Nebraska Revenue Ruling 01-78-9, "Sales and Use Tax -- Moving Companies" (Nebraska Department of Revenue, issued May 1978; approved by the State Tax Commissioner).
• Nebraska sales and use tax treatment of a nontaxable service, and the "ultimate consumer" rule taxing tangible personal property consumed by the service provider (Nebraska Revenue Act of 1967, as amended).

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr017809_moving_companies.pdf

Source-quality note: This ruling survives only as a low-quality scan, and the machine-extracted text below is badly garbled in places, including the heading and holding line. The two operative points -- that packing/moving is a nontaxable service and that the mover owes tax on the packing materials it uses and consumes -- are legible in the body of the ruling and are the basis for this summary.

Original ruling text

Revenue Ru1ing I-78-9

Sales and Use Tax -- Movj.

anicS. A MOVTNG COMPAIüY TS
, CoNTATNE RS, WRå,PPING

PAPER, TAPE, AND OTHER PACKING MATERIALS USED TN PERF ORMANCE
OF ITS NONTAX.ABLE SERVÏCE.

for boxes t
Advice has been requested as to whether charges.
packing
materials
other
and
containers, wrappirig paper, tape
pack
tangibre
ro
Éy- moving- company
ánd
;";;ñ;ed property
""Ëäa
for shipment or storage are
oÈhers
of
þ"r=on"l
subject to sales and use tax.
when packing
A moving company provides a nontaxable service
charge is
total
its
and moving prã;äriy of its customers and
service,
this
of
tax. As Part

êsr containers, wrapPing
aterials to Protect the goods
ials are used and consuned bY
and are subject
the mover 1n the performance of the service
to sales or use tãx when purchased by the mover'
APPROVED:

May 11

, 1978