Taking Valentine’s Day gifts outside the box – Wacky Tax Wednesday

If you’re going to give someone special a gift on Valentine’s Day, consider stepping away from the tried and true. Sure, chocolate is sweet and flowers are pretty, but what about a more permanent gift, like a tattoo? Or something silkier, like hair removal services? Or more daring, like a haircut?

Whatever you choose will be either subject to sales tax or exempt from sales tax — taxability varies depending on the location of the sale. What’s taxable in California may well be exempt in Washington state. Stranger still, what’s taxable in New York, New York, may be exempt in Schenectady, New York.

Ink my whole body

Tattoo and permanent makeup services are subject to local but not state sales tax in New York City, and are exempt in the rest of the state. Furthermore, they’re exempt from the local NYC tax when the provider is licensed under Title VIII of the Education Law and the services are provided for medical reasons, such as to camouflage burn scars or cancer treatment. 

Equipment purchased to provide these services is taxable in New York state, meaning both state and local sales tax apply. However, products bought to resell may be exempt if purchased with a resale certificate.

In Massachusetts, tattoo enthusiasts surely celebrated the removal of the statutory ban on tattooing back in 2001. More good news for Bay State lovers of ink: Tattoo services are exempt from Massachusetts sales tax provided they’re sold separately or separately stated on a receipt or invoice. However, if an exempt tattoo service is sold in combination with taxable goods such as jewelry, the whole transaction is taxable if the cost of the tangible personal property (TPP) is 10 percent or more of the total cost of the sale; it’s exempt if the cost of the TPP is less than 10 percent of the total cost.

Tattoo services are generally subject to state and local taxes in Hawaii, New Mexico, South Dakota, and Washington state. They’re exempt in Georgia and West Virginia, although the latter taxes more services than many other states. Lawmakers in West Virginia discussed taxing sales of tattoos in 2017, and the issue may arise again this year. 

Smooth operator

If you haven’t been able to find the words to express your desire for less hirsute conditions, a gift of hair removal services may be just the thing. As with tattoo services, electrolysis, laser treatments, waxing services, and their kin are exempt from state and local sales tax in most parts of New York state. Yet if those services are provided in New York City, the city’s local sales tax applies.

Hair removal service providers are required to pay sales tax on their purchases of equipment (i.e., epilators, hair trimmers, and wax warmers). Likewise, tax must be paid on the purchase of products used in providing the service, such as wax or strips. However, items purchased to resell to customers may be purchased tax free with a resale certificate (Form ST-120). And neither state nor local sales tax applies in New York to charges for the use of a booth in which to perform hair removal. 

The way you flip your hair …

Hair styling services offered by beauticians, barbers, and hair stylists follow the same rules in The Empire State: They’re subject to New York City local tax when performed in the city but are otherwise exempt from local tax. New York state sales tax never applies. 

Haircuts and styling services aren’t taxed anywhere in my home state of Washington, and they’re exempt in California as well — at least for now. Last year, California lawmakers considered a measure that would impose “a modest tax” on many non-essential services, such as those provided by hair salons. Although it died last year, the idea is back on the table in 2018. Senate Bill 993 would tax most services as of January 1, 2019, but exempt from the tax “a business with gross receipts of less than $100,000 in the previous four quarters.”

Whatever you decide to offer your one-and-only next week, if your sweetheart likes it, it’s probably worth any tax that applies. But if you’re a service provider, you can be sure that state and local tax authorities want you to get tax right.

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