Key takeaways
- Repair labor is generally a nontaxable service when it is separated from parts on the bill.
- Parts and materials used in a repair are generally taxable.
- A single lump charge for a repair is generally taxable in full.
- Fabrication labor that creates a new item is generally part of the taxable selling price.
- General information, not tax advice. Ask your tax adviser.
This is general information, not tax advice. Ask your tax adviser. Buyers of machine work often ask why one invoice shows sales tax on some lines and not others. The Nevada Department of Taxation publishes guidance called Repairs and Reconditioning that answers part of it. This post reads that guidance in plain language. It describes the state's rule, not how any shop invoices, and it does not replace the guidance itself.
What the guidance says about repairs
The Department of Taxation guidance says repair labor is considered a service and is not subject to sales tax. It also says labor and parts must be separated on the invoice for tax to apply to the parts only. If a single charge is listed on the bill, the entire amount is taxable.
In plain terms: the way a bill is itemized matters as much as the work. A repair billed as one figure and the same repair billed as labor and parts can be treated differently.
How fabrication differs
The guidance treats fabrication labor differently. Labor used to change tangible personal property into another form and billed as a retail sale is part of the total selling price, and the total is taxable. Making a new bracket, a new shaft or a new chute is changing raw material into something new. Refurbishing an existing item is repair.
The same dividing line appears in the state's administrative code, in section 372.390, which the guidance refers to.
Where a job sits between the two
Some jobs blend both. Generally, a worn shaft journal built up by metal spray and machined back to size is a repair of the original shaft, and a replacement shaft made from bar stock to match the old one is a new item. Your tax adviser decides how a particular job is classified. Our repair-or-replace guide sets out how to think about the technical side of that choice, and the tax side follows from how the work is classified.
If you start from a sample, see parts made from samples.
Reading an invoice for a repair
When you compare repair invoices from any shop, look at whether labor and parts appear on separate lines, and whether anything on the bill is a new item made for you. Under the guidance, that presentation affects which amounts are taxable. It is a question for your tax adviser and your purchasing records, and nothing here describes the practice of any particular shop.
Keep the drawing, photos and quote request together with the invoice. If the work was a repair of your own equipment, the paperwork shows that, and it is useful at tax time.
What this post does not cover
The guidance has more detail than this post: exemptions, resale, out-of-state buyers and special cases. Read the Department of Taxation document linked in the sources, and ask your tax adviser how it applies to your purchase. We describe the state's published guidance and not how any invoice is prepared.
For a quote on the work itself, send photos or a drawing with a quote request or call (775) 359-5570, Monday to Friday, 7:00 am to 3:30 pm.
