Information Release

Personal Care Services  - July 11, 2003

Am. Sub. H.B. 95 of the 125th Ohio General Assembly expanded the tax base for the Ohio sales tax. In that bill, a new Revised Code ("R.C.") section 5739.01(B)(3)(r) was enacted, which includes within the definition of a taxable "sale" all transactions by which:

On and after August 1, 2003, personal care service is or is to be provided to an individual. As used in this division, "personal care service" includes skin care, the application of cosmetics, manicuring, pedicuring, hair removal, tattooing, body piercing, tanning, massage, and other similar services. "Personal care service" does not include a service provided by or on the order of a licensed physician or licensed chiropractor, or the cutting, coloring, or styling of an individual’s hair.

Persons providing personal care service must collect and remit Ohio sales tax on all such services provided on or after August 1, 2003. The purpose of this release is to provide guidance to service providers to assist them in complying with the tax law.

  1. What type of license do I need as provider of personal care service?

    A provider of personal care service is required to obtain a vendor’s license for each fixed location from which the service is provided. A county vendor’s license must be obtained from the county auditor of the county in which the place of business is located. The application form for a vendor’s license is available on the website of the Ohio Department of Taxation: http://tax.ohio.gov/ under the "FORMS" tab. Examples of a fixed location would be a store, office or salon at which the services are regularly performed.

    Vendors that do not have a fixed location in this state such as vendors located outside of this state that are providing the personal care service in this state or persons providing services at temporary locations such as fairs, shows or festivals, or that travel to customers’ locations to perform their services should obtain a transient vendor’s license. Transient licenses are obtained from the Ohio Department of Taxation and the application form for a transient license is also available on the Department’s website.

  2. What are some examples of taxable personal care services?

    Taxable "personal care services" include such services as:

    Skin care, including facials and exfoliation
    Cosmetics application
    The application of false eyelashes
    Manicures, including the application of polish
    The application of artificial nails
    Pedicures
    Hair removal by any means, including electrolysis, plucking or the application of depilatory products
    Body piercing and branding
    Tattooing, including permanent and temporary tattoos
    Massage, all types
    Tanning, whether done using light or chemical means

  3. What services are not "personal care services"?

    Examples of services that are not taxable "personal care services" include:

    Hair cutting, coloring or styling
    Pet grooming
    Application of cosmetics performed as a part of mortuary services
    Face painting at fairs or festivals
    Any service that would otherwise be a taxable "personal care service" when that service is performed by or on the order of a licensed physician or chiropractor

  4. I provide personal care services in a beauty salon that already has a vendor’s license. Do I need a vendor’s license?

    This would depend on your relationship with the salon. If you operate as an independent contractor and your clients deal with and pay you directly, you should be licensed and should collect and remit tax on your services. If you are an employee of the salon, or if the customers make their payments to the salon, the salon should collect and remit the tax on its vendor’s license.

  5. I have a shop where I perform body piercing and I also sell jewelry. I already have a vendor’s license to sell jewelry. Do I need an additional license to perform personal care service?

    No. You should report the tax collected on your personal care services on your existing vendor’s license.

  6. I am a massage therapist licensed by the Ohio State Medical Board. Is my service taxable?

    Yes, unless the services are being provided on the order of a licensed physician or chiropractor. In such a case, you should retain sufficient information in your records to verify the exempt sales.

  7. I am employed by a company to provide massages to other employees of the company? Do I need to collect tax?

    An employee performing his or her duties for the employer is not making a sale. In such a case there would be no sales tax. However, if the service provider were an independent contractor, and not an employee of the company, the services would be taxable. In that case, the service provider should collect tax on the amount it is paid by the company for the service.

  8. Are tips taxable?

    If a client voluntarily gives a tip or gratuity, it is not part of the taxable price for sales tax purposes.

  9. What rate of tax do I collect?

    For services performed at a fixed place of business, the tax rate will be the rate in effect for that location.

    For services performed under a transient license, the tax rate will be the rate in effect where the customer receives the service. For example, a tattoo artist that travels to various events in Ohio would collect the tax rate applicable on any transaction at the rate applicable in the location where the service is provided.

  10. Can I claim a sales tax exemption on any of the supplies or equipment I use in performing a personal care service?

    Under Ohio law, service providers are the consumers of all items they use in performing their services. However, R.C. 5739.02(B)(43)(m) provides an exemption for purchases by a service provider of tangible personal property that the service provider permanently transfers to the consumer as an integral part of the performance of the service. For example:

    A tattoo artist may claim exemption on the purchase of inks that are transferred permanently to the consumer as part of the tattoo. No exemption is allowed for purchases of needles used to perform the tattooing.

    A skin care provider may claim exemption on purchases of lotions, creams, or cosmetics that are applied to the consumer and are not removed as part of the service. No exemption for items that are applied and removed, such as masks, or for items used to apply any creams, lotions or cosmetics.

    A provider of massage may claim exemption on the purchase of oils or lotions applied to the consumer of the massage. Tax must be paid on items such as massage tables, towels, or sheets.

  11. Is shaving hair a taxable service?

    While R.C. 5739.01(B)(3)(r) requires that tax be applied to hair removal, the tax does not apply to the cutting, coloring or styling of an individual’s hair. Shaving involves the cutting of hair rather than its removal. Therefore, shaving is not subject to the tax.

  12. I sold a gift certificate to a client prior to August 1, 2003. The recipient of that certificate comes in to have the service performed after August 1. Does the tax apply?

    If the certificate is for the performance of a specified service (i.e. a certificate for a manicure or a one-hour massage) you need not collect tax from the recipient when that service is performed. Such certificates sold on and after August 1, 2003 are subject to sales tax when the certificate is sold. Any additional amount you charge the recipient for additional services would be taxable.

    If the certificate is for a specified dollar value (i. e. fifty dollars toward any product or service at a salon), the certificate is treated the same as cash. When such a certificate is used to purchase taxable property or services, tax should be charged on the full price of the property or service.

  13. Are personal care services provided by an agency of the state of Ohio (such as a state college or university) or a political subdivision of the state subject to tax?

No. R.C. 5739.02(B)(22) provides an exemption when these services are provided by the State of Ohio or any of its political subdivisions, agencies, instrumentalities, institutions, or authorities. This exemption applies only to the provision of services and not to any sales of tangible personal property a personal care service provider may make.

If you have questions regarding any matter covered in this release, please call 1-888-405-4039 (Ohio Relay Service for the Speech or Hearing Impaired: 1-800-750-0750).