How did Texas tax laundromat vending sales, coin-operated washers and dryers, drop-off laundry, and vending commissions?

Plain-English summary

Texas said receipts from coin-operated washers and dryers were not taxable, while charges for drop-off laundry that was washed, dried, folded, and made ready for pickup were taxable. Sales from vending machines the operator could access to restock or collect money also were taxable.

For those accessible machines, the operator could include sales tax in the item price and back it out of gross receipts when filing. At the letter's example 7.25% rate, total receipts were divided by 1.0725. Items stocked in those machines could be bought tax-free with a properly completed resale certificate. A commission paid from receipts of machines the operator could not access was not taxable.

What this means for you

The tax result depended on the activity and the operator's access to the machine. The letter separately addressed self-service laundry, full drop-off service, operator-controlled vending sales, and commissions from third-party-controlled machines.

Common questions

Were coin-operated washer and dryer receipts taxable? No.

Was drop-off wash-dry-fold service taxable? Yes.

Could vending prices include the sales tax? Yes. The letter allowed tax to be included and backed out of gross receipts on the return.

Could vending inventory be bought for resale? Yes, with a properly completed resale certificate.

Was a commission from a machine the operator could not access taxable? No under the stated facts.

Citations and references

• 34 Tex. Admin. Code Rule 3.285 — resale certificates.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9103L1089F14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

JOHN SHARP
Comptroller March 21, 1991

Dear *:

Thank you for your recent letter regarding the taxability of
items sold through vending machines, receipts from coin-operated
washers/dryers, and drop-off laundry service.

Receipts from coin-operated washers and dryers are not taxable.
The charge for customers to dropoff laundry to be washed, dried,
folded and ready to pickup is taxable.

Sales tax is due on the receipts from vending machines which you
can access to restock or collect the money. If I understand your
letter correctly, you have access to the soap, bleach, and
softener vending machines as well as the coke and some of the
candy machines. The sales tax can be included in the sales price
of the vended items and the tax can be backed out of the gross
receipts when filing your sales tax return. For example, if your
tax rate is 7.25%, you should divide total receipts by 1.0725 to
arrive at taxable sales. The items sold through these machines
may be purchased tax free by providing a properly completed resale
certificate to your vendors. See the enclosed Rule 3.285 on
Resale Certificates.

A commission paid to you out of the receipts from vending machines
to which you do not have access is not taxable.

This opinion is based on facts as presented. Different facts may
result in a different opinion.

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Administration
Division.

Sincerely,
Bettie U. Peterson
Tax Administration Division