Publication 125, Dry Cleaners
Sales

Do you need a seller’s permit?

If you only provide cleaning and preservation services and do not sell items or perform alterations, then you do not need a seller’s permit. You may, however, be required to have a permit for use tax, as explained under “Do you need a use tax permit?” If you sell tangible personal property in California, you are generally required to register for a seller’s permit and pay sales tax on your taxable sales.

You need a seller’s permit if you:

• Sell miscellaneous merchandise
• Alter new household or nonclothing items

You may need a seller’s permit if you:

• Alter used household or nonclothing items
• Alter clothing

Selling miscellaneous items. You need a seller’s permit if you sell miscellaneous items such as lint brushes, collar stays, sweater combs, laundry bags, stain protection products, sewing kits, ties, or other items such as jewelry.

Your sales of these items are subject to tax even if your sales are minimal. Visit Tax-paid purchases resold deduction for information about sales of items that you purchased tax-paid; you may be able to take a deduction for the cost of those items.

Altering new household or nonclothing items. You need a seller’s permit if you alter new household or nonclothing items such as draperies. If you cut and re-sew the item into a different shape or length, you are performing a step in the process of creating a “new” product. Your charges for these alterations are subject to tax.

Notes

1. An item is considered “new” when it is brought in by the customer with store tags or labels still attached, or without finished hems, or the item is clearly new and unused to the observer.

Altering used household or nonclothing items. Charges for repairing or altering used items are not subject to tax. Generally, if you alter used items, you are a consumer, not a retailer, of the supplies and materials (for example, zippers and fasteners) furnished in connection with the alterations, and tax applies to the sale of supplies and materials to you. However, you are the retailer of the supplies and materials furnished in connection with the alterations when the retail value of the supplies and materials is more than ten percent of the total charge for the alterations, or if your invoice to the customer includes a separate charge for such materials and supplies. If you are a retailer, you need a seller’s permit and tax applies to the fair retail selling price of the supplies and materials furnished to the customer.

Altering clothing. In most cases, dry cleaners’ charges for repairing and altering clothing are not taxable. If you alter new and used clothing, you do not need a seller’s permit if your charges meet the gross receipts tests in Regulation 1506, Miscellaneous Service Enterprises. The tests provide that you are a consumer of the materials and supplies used in the alteration of new clothing if:

• 75 percent or more of your establishment’s total gross receipts represent charges for clothes cleaning or dyeing services, and
• No more than 20 percent of your establishment’s total gross receipts during the preceding calendar year were from clothing alterations.

Since the cleaner’s receipts from its cleaning operations are greater than 75 percent ($85,000 ÷ $87,300 = 97%) and the amounts received in the prior year from altering clothing were less than 20 percent of the prior year’s total gross receipts ($1,000 ÷ $81,100 = 1%); the cleaner is considered a consumer, not a retailer, of the alterations to new clothing.

However, since the cleaner made sales of miscellaneous merchandise, the cleaner must obtain a seller’s permit and report the taxes due on its sales of the miscellaneous items. The cleaner’s charges for altering new clothing are not subject to tax, because the cleaner met the tests in Regulation 1506. However, the cleaner must pay the applicable tax on the purchase of supplies and materials used in the alteration of the clothing.

Alterations of clothing by a third party. When a dry cleaner meets the Regulation 1506 tests and contracts with a third party such as a tailor for the alteration of clothing instead of performing the alterations itself, the cleaner is a consumer of the alterations provided by the third party. The cleaner may not issue a resale certificate for such alterations. Tax applies to the third party’s charges to the cleaner as explained in the next section.

Clothing alterations by cleaners that do not meet the Regulation 1506 tests

A dry cleaner who does not meet the Regulation 1506 tests is required to hold a seller’s permit and must report tax on his or her charges for alterations of new clothing. Charges for altering or repairing used clothing are not subject to tax.

Examples of new clothing alterations (charges are taxable):

• A customer brings in a suit to have the pants hemmed and the waist taken in. The cuffs of the suit jacket also require shortening. The label is still attached to the sleeve of the suit and the pants have yet to be hemmed.
• A customer purchases a new wedding dress and takes it to her cleaner for alteration before the wedding. The cleaner shortens the dress as requested by the customer.

Examples of used clothing alterations (charges are not taxable):

• A customer lost weight and takes several used outfits to her neighborhood cleaner to have the waistbands taken in.
• A customer brings in her grandmother’s wedding dress for alteration. The bride-to-be intends to wear the dress at her own wedding and requests that the dress be shortened.

How do I apply for a seller’s permit?

You can register online by selecting Register for a Permit. You can also register in person at any of our offices. Please contact our Customer Service Center for assistance at 1-800-400-7115 (TTY:711).

There is no charge for a seller’s permit; however, in certain circumstances, we may require a security deposit.

Revision September 2026