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[2013 | Keywords: Sales Tax, Service]

A local sales and service tax may be imposed by a jurisdiction on the gross receipts taxed by the state. A local sales and service tax shall be imposed on the same basis as the state sales and service tax and may not be imposed on the sale of any property or on any service not taxed by the state.

Point of service and point of delivery constitute the point of sale.
Therefore, the local option sales tax applies if service is performed or a taxable product is delivered within a local option jurisdiction. “Delivery” is the location in which the ownership of the goods is transferred from the seller to the buyer and where the service is rendered, furnished, or performed.

In most instances, the transfer takes place at the seller’s place of business. However, if the seller transfers the property to the buyer from the seller’s own vehicle, then the transfer usually takes place at the buyer’s residence or place of business.

Example 1 – Delivering Equipment
If a dealer delivers a lawn mower to a customer in a local option jurisdiction, the point of sale resides in that jurisdiction. Therefore, the dealer must collect both the local option tax and the state sales tax. However, if the customer picks up the lawn mower at the dealer’s facility (located in a jurisdiction that does not have a local option tax), only the state sales tax needs to be collected. Dealers are advised to indicate the point of sale (whether delivered or picked-up by the customer) on the retail order.

Example 2 – Service Calls
Using the same scenario, if a dealer makes a service call in a jurisdiction that has a local option tax, the dealer needs to collect the state sales tax on labor along with the local option tax. However, if that same service is performed at the dealer’s facility, only the state sales tax has to be collected (non-local option jurisdiction).