Taxable v. Non-Taxable Repairs

The Repair department manages repair jobs and determines whether or not the repair is taxable. If you get stuck ringing something up and aren’t sure if the amounts are taxable, here is the somewhat complex guide.

Generally speaking, if in doubt, tax it! It’s better to tax something that you didn’t have to rather than not tax something that you did have to.

PARTS: Repair parts are generally taxable, unless the retail value of the parts is less than 10 percent of the total repair charge. This includes watch batteries.

If the parts are taxable and the labor is not, we must separate charges for parts and materials from any labor charges on our invoice.

REPAIR LABOR: Labor charges are sometimes taxable and sometimes not. Generally, it depends on whether we are creating something new, or just restoring something the customer owns to its original condition.

NOT TAXABLE LABOR

• Sizing or engraving a ring belonging to the customer (that they bought from us in the past or bought somewhere else)
• Overhaul on a watch (any parts used are still taxable)
• Repairing broken cases or bracelets
• Refinishing
• Repairing broken or damaged jewelry to its original condition
• Installing (or swapping) a watch dial (but the dial is taxable of course.)

TAXABLE LABOR

Labor charges to create or produce items for customers are taxable, whether the materials are supplied by us or provided by the customer. Labor charges for individual steps in a creative process, such as engraving and sizing jewelry you sell, are also subject to tax.

Some examples of taxable labor include:

• Manufacturing custom-made jewelry
• Engraving on jewelry that we are selling to the customer
• Sizing rings that we are selling to the customer

SUMMARY: Parts are almost always taxed. Sizing and engraving are taxed on everything we sell, both new and used. Labor to set diamonds is taxed. Watch batteries are taxed.

Only labor to recondition or restore a piece that is previously owned by the customer is not taxed.