As a coin-operated laundromat, which of my charges are taxable — the wash-and-fold service, vending-machine sales, and cleaning supplies sold by attendants?

Plain-English summary

Coin-operated laundromats often do more than run washers and dryers — they offer wash-and-fold service and sell detergent, snacks, and drinks from vending machines and by attendants. Revenue Ruling 88-7 sorts out which of these are taxable, answering three questions.

The backdrop is a 1986 phase-out. Act 540 of 1986 amended § 12-35-1130 to (A) apply the sales/use tax to the business of furnishing laundering, dry cleaning, dyeing, or pressing services, while (B) phasing out the sales tax on the gross receipts of coin-operated washing and drying machines — 4% in FY 1986-87, 2% in FY 1987-88, and none from FY 1988-89 onward. The key is that the phase-out applies to the machines, not to laundering services.

1. Wash-and-fold service — taxable. Because § 12-35-1130(B) only phases out the tax on the coin-operated machines, and does not touch the tax on "gross proceeds from the business of furnishing laundering services," a laundromat's wash-and-fold service is a taxable service under § 12-35-1130(A).

2. Vending-machine sales — usually taxed at the wholesale level, with exceptions. Under § 12-35-110, a vendor who sells tangible personal property through vending machines (other than cigarettes and soft drinks in closed containers) is treated as the user/consumer of that property. So when a laundromat buys cleaning supplies to resell from a vending machine, that purchase is subject to sales/use tax — but the later sale from the machine to the customer is not taxed again. The exception: cigarettes and soft drinks in closed containers sold from a machine are taxable retail sales.

3. Supplies sold by an attendant — taxable retail sales. When an attendant sells cleaning supplies to a customer, that is an ordinary retail sale taxed under § 12-35-510. It is not "supplies used by laundries," so the § 12-35-550(23) laundry-supply exemption does not apply — and note that exemption expressly does not cover coin-operated laundromats anyway.

What this means for you

Coin-operated laundromat operators

Separate your self-service machine receipts (the washers and dryers — tax phased out) from everything else. Your wash-and-fold and other laundering services are taxable. For products you sell, how you sell them matters: goods sold through a vending machine are generally taxed when you buy them (you're the consumer), so you don't charge tax at the machine — except cigarettes and soft drinks in closed containers, which are taxable retail sales. Products handed over by an attendant are taxable retail sales you collect tax on.

Why the vending-machine rule looks upside-down

For most vending-machine goods, § 12-35-110 shifts the taxable event to the operator's purchase of the goods rather than the customer's coin. That's why there's no tax at the machine for detergent, but there is tax when you buy the detergent to stock it. Cigarettes and closed-container soft drinks are carved out and taxed at the point of the retail sale instead.

A note on current law

This is 1988 guidance under the pre-recodification sales-tax sections. The tax was later moved into Title 12, Chapter 36, and rates, exemptions, and the vending-machine rules have changed. Use 88-7 for the structure of the analysis, but confirm the current statutes before applying any specific result.

Common questions

Q: Is wash-and-fold service taxable?
A: Yes. The 1986 phase-out removed the tax only on the coin-operated washing and drying machines, not on laundering services, so wash-and-fold is taxable under § 12-35-1130(A).

Q: Do I charge sales tax on detergent sold from my vending machine?
A: No — you're treated as the consumer of vending-machine goods, so you pay the tax when you buy the detergent, and the machine sale to the customer isn't taxed again. But cigarettes and soft drinks in closed containers sold from a machine are taxable retail sales.

Q: What about supplies my attendant sells directly to customers?
A: Those are taxable retail sales under § 12-35-510. The laundry-supply exemption doesn't apply — and it doesn't cover coin-operated laundromats in any event.

Q: Are the self-service washer and dryer receipts taxable?
A: No. The sales tax on gross receipts from coin-operated washing and drying machines was phased out, reaching zero for fiscal year 1988-89 and after.

Citations and references

Statutes:

• S.C. Code Ann. § 12-35-1130 (1987 Supp.) — taxes the business of furnishing laundering/dry cleaning services; phases out the tax on coin-operated washing and drying machines (Act 540 of 1986, § 14)
• S.C. Code Ann. § 12-35-550(23) (1987 Supp.) — laundry-supply exemption that does not apply to coin-operated laundromats
• S.C. Code Ann. § 12-35-110 (1987 Supp.) — vendor selling through vending machines is the user/consumer, except cigarettes and closed-container soft drinks
• S.C. Code Ann. § 12-35-510 (1976) — imposes the sales tax on retail sales

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR88-7.pdf

Original ruling text

SC REVENUE RULING #88-7

SUBJECT:

Coin-Operated Laundromats
(Sales Tax)

EFFECTIVE DATE:

June 1, 1988

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-35-550(23) (1987 Supp.)
S.C. Coce Ann. Section 12-35-1130 (1987 Supp.)
S.C. Code Ann. Section 12-35-110 (1987 Supp.)
S.C. Code Ann. Section 12-35-510 (1976)
Act 540 of 1986, Section 14

AUTHORITY:

S.C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how
tax law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until
superseded by a Regulation or is rescinded by a subsequent Revenue
Ruling.

Questions:

1. Are the gross receipts from a "wash and fold" service provided by a coin-operated
   laundromat subject to the sales tax, pursuant to Section 12-35-1130?
2. Are vending machine sales by coin-operated laundromats subject to the state's sales tax?
3. Are sales of cleaning supplies to customers, by attendants at a coin-operated laundromat,
   subject to the state's sales tax?
   Facts:
   Coin-operated laundromats are expanding their services in order to meet the needs of their
   customers. In addition to their normal business, such laundromats will provide a "wash and fold"
   service, for a fee. Customers may also purchase their cleaning supplies from attendants or
   vending machines at the laundromat.

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Code Section 12-35-1130 was amended by Act 540 of 1986, Section 14, (effective June 18,
1986) to read:
(A) Notwithstanding any other provision of law, the license and the sales or use tax
imposed by this chapter shall apply with respect to the gross proceeds accruing or
proceeding from the business of providing or furnishing any laundering, dry cleaning,
dyeing, or pressing service.
(B) For fiscal year 1986-87, a 4 percent sales tax is assessed on the gross receipts from
coin-operated laundromats and dry cleaning machines. For fiscal year 1987-88, a 2
percent sales tax shall be assessed on the gross receipts from coin-operated Laundromats
and dry cleaning machines and for fiscal year 1988-89 and thereafter, no sales tax may be
assessed on the gross receipts derived from coin-operated Laundromats and dry cleaning
machines."
Code Section 12-35-550(23) was amended (effective June 18, 1986) and now exempts:
The gross proceeds of the sale of supplies and machinery used by laundries, launderettes,
cleaning, dyeing or pressing establishments in the direct performance of their primary
function. This exemption does not apply to the gross proceeds of sales of supplies and
machinery used by coin operated laundromats."
Discussion:
The title to Section 14, Act 540 of 1986 reads:
To amend item (23) of Section 12-35-550 of the 1976 Code, relating to sales and use
taxes, so as to provide that the gross proceeds of all supplies and machinery used by coinoperated laundromats is subject to the license and sales and use tax; and to amend Section
12-35-1130, relating to the requirement that Chapter 35 of Title 12 shall apply with
respect to the gross proceeds accruing or proceeding from the business of providing or
furnishing any laundering, dry cleaning, dyeing, or pressing service, so as to provide for
the phaseout of a sales tax imposed on the gross proceeds of sales from coin-operated
washing and drying machines." (Emphasis added.)
Even though the title of an act is regarded as no part thereof, it is recognized that it is not to be
wholly disregarded in its interpretation, and it is a generally accepted view in the United States
that resort may be had to the title of an act as an aid in its interpretation." 73 Am.Jur.2d, Statutes,
Section 98.
Act 540 of 1986, (effective July 1, 1986) provides, in part, that "no sales tax may be assessed on
the gross receipts derived from coin-operated laundromats and dry cleaning machines." The act,
as well as the title to the act, specifically states that the intent of the legislature was to exempt
from the tax the gross receipts from coin-operated laundry machines. "When the title of an act
corresponds with the intention deduced from the body of the act and is not antagonistic thereto, it
is common practice of courts to refer to the title as emphasizing that intention or not detracting
from it, as the case may be." 73 Am.Jur.2d, Statutes, Section 98.

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In summary, Code Section 12-35-1130(B) only concerns the phase out of the sales tax on the
gross receipts from coin operated laundry machines.
The questions concerning the taxability of supplies sold from vending machines or by attendants
requires a review of Code Sections 12-35-110 and 12-35-510.
Code Section 12-35-110 reads, in part, that "[w]here a vendor makes sales of tangible personal
property through vending machines, not including vending machine sales of cigarettes and soft
drinks in closed containers, the vendor is deemed to be the user or consumer of the tangible
personal property."
Code Section 12-35-510 imposes the sales tax "upon every person engaged or continuing within
this State in the business of selling at retail any tangible personal property whatsoever...."
Conclusions:

1. Code Section 12-35-1130(B) provides for a phaseout of the sales tax on the gross
   proceeds from coin-operated washing and drying machines. This section does not phase
   out the sales tax on the "gross proceeds...from the business of...furnishing
   laundering...services"; therefore, the "wash and fold" services provided by a coinoperated laundry are subject to the tax, pursuant to Code Section 12-35-1130(A).
2. Code Section 12-35-110 considers vendors who sell tangible personal property (not
   including cigarettes and soft drinks in closed containers) from vending machines to be the
   users or consumers of such property. Sales of supplies to coin-operated laundries, to be
   sold from vending machines, are subject to the sales or use tax; however, sales of such
   supplies from vending machines to customers are not subject to the tax. Sales of
   cigarettes and soft drinks in closed containers, from vending machines by coin-operated
   laundromats, are taxable retail sales.
3. Sales of supplies to customers by attendants of a coin-operated laundromat do not
   constitute "supplies...used by laundries" under Code Section 12-35-550(23) and are
   therefore subject to the sales tax, pursuant to Code Section 12-35-510. (June 1, 1988)
   SOUTH CAROLINA TAX COMMISSION
   s/S. Hunter Howard Jr.
   S. Hunter Howard, Jr., Chairman
   s/John M. Rucker
   John M. Rucker, Commissioner
   s/A. Crawford Clarkson Jr.
   A. Crawford Clarkson, Jr., Commissioner
   Columbia, South Carolina
   June 1,
   , 1988

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