Publication 62, Locksmiths
Other Locksmith Charges, Sales, and Purchases
This section includes information on other common sales and use tax issues for locksmiths, including trip or service charges, delivery charges, leases, and making sales and purchases for resale.
Trip and service call charges
A trip charge or a service call charge may be nontaxable, fully taxable, or partially taxable, depending on the transaction's conditions.
Trip or service charge not taxable
A trip charge or service call is not taxable when:
- You are the consumer of the materials furnished for the job.
- Your job involves labor or services only, and you do not transfer any merchandise to your customer.
For example, you may charge an amount for a service call when the only work you perform is opening a lock. Since opening a lock is a nontaxable repair service, tax would not apply to your service call charge.
Trip or service charge fully or partially taxable
If you are a retailer of materials furnished for a job, all or part of your related trip charge or service call charge is taxable. If all your other charges for a job are taxable, the full amount of your trip charge is also subject to tax.
When your job includes both taxable and nontaxable charges, tax applies to part of your trip charge. To determine how much of the trip charge is taxable, you should follow these steps:
- Total your charges for services and materials, not including the trip charge.
- Total the taxable portion of your charges.
- Divide the result of step 2 by the result of step 1.
- Multiply the trip charge by the result of step 3. The result is the taxable portion of the trip charge.
Example: You make a house call that involves nontaxable repair of a deadbolt lock and taxable fabrication charges for cutting a new key. Your trip charge is $30. To figure out how much of your trip charge is taxable, you:
- Determine that your subtotal without the trip charge is $75.
- Determine that the taxable portion of the charges—for cutting and providing the key—is $25.
- Divide subtotal of $25 by taxable subtotal $75: $25 ÷ $75 = 33%. (33.33% is rounded down to 33%.)
- Multiply the trip charge by the result: $30 x 33% = $10. ($9.90 is rounded up to $10.)
Tax would apply to $10 of your trip charge.
Taxable total: $35 ($25 key charge + $10 taxable part of trip charge)
Sale does not involve any service other than delivery
A trip charge or service call charge is taxable if the charge is made only for delivering merchandise you have sold and there is no explicit written agreement transferring ownership to your customer prior to delivery (see Delivery charges).
Delivery charges
If you charge a separate amount for a delivery, your charges are generally taxable if:
- You make the charge in connection with a taxable sale, and
- You make the delivery in your own vehicle.
However, if your contract specifies that ownership of the property transfers to the customer prior to delivery, tax does not apply to your separately stated delivery charges, provided the charges are reasonable for the service provided. In addition, under certain circumstances, deliveries you make using delivery or shipping services are not subject to tax.
For more information on how tax applies to delivery-related charges, see publication 100, Shipping and Delivery Charges, and Regulation 1628, Transportation Charges.
Leases
If you lease a safe or alarm to a customer rather than selling it outright, tax generally applies to the lease payments you receive. However, tax does not apply to the payments if you lease the item in substantially the same form as you acquired it, and:
- You paid an amount for sales tax when you bought the item, or
- You paid use tax on the purchase price of the item when the use tax was due (with the timely filed tax return for the reporting period in which you first lease the safe or alarm to your customer).
This is true whether the item is installed to real property or attached to personal property. In addition, separately stated installation charges for items you lease are not taxable.
Sales for resale
Items of personal property (not attached to real property)
When you sell an item of personal property from your shop to another businessperson who will resell it, and you accept a valid resale certificate in good faith and in a timely manner, your sale is considered a nontaxable sale for resale. Similarly, when you perform work on personal property, and you are considered the retailer of materials furnished for the job, you can accept a resale certificate from your customer if he or she will resell the final product. However, when you are considered the consumer of materials on a job, you cannot legitimately accept a resale certificate from your customer.
Example: You rekey the locks on a used automobile for a used car dealer who sells the car. Your total lump-sum charge for the work is $175. The portion of your charge included for materials, including keys, is $15. Since your materials charge is less than 10 percent of the lump-sum charge ($175 x 10% = $17.50), you are considered the consumer of the materials, and tax applies to your purchase of those materials (see table: Retail value of materials is 10% or less of total charge). As a result, although your customer will resell the car on which you performed the work, you cannot accept a resale certificate for the cost of the materials. Your labor charges are not taxable because they are considered repair labor.
For more information, see Regulation 1546, Installing, Repairing, Reconditioning in General, and publication 103, Sales for Resale.
Selling materials and supplies as a construction contractor
In general, you may not accept a resale certificate for work you perform under a construction contract as a contractor or subcontractor. Therefore, you may not accept a resale certificate from a prime contractor, interior decorator, designer, department store, or any other person who has contracted with you to perform the work (see exception below, regarding certain leased fixtures). Tax applies to your contract as explained in Work Performed on Real Property: Houses, Stores, Office Buildings, and Apartments.
Example: You are hired as a subcontractor to install an electronic lock system in a commercial building. Your customer is the prime contractor for the project. You cannot accept a resale certificate from the prime contractor for the lock system materials.
Exception: When you furnish and install fixtures as a construction contractor, you may accept a resale certificate for the product only if you:
- Furnish and install the fixture, such as a safe, for a person other than the owner of the building; and
- That person will lease the fixture to another party and pay tax on the rental receipts.
For more information, see Regulation 1521, Construction Contractors, and Regulation 1668, Sales for Resale. If you have any questions, contact our Customer Service Center at 1-800-400-7115 (TTY:711).
Purchases for resale
You may issue a resale certificate to your supplier when you purchase an item you will sell as a retailer. However, if you know at the time you make the purchase that you will use the item—either for personal purposes or as a consumer—you should not issue a resale certificate. Instead, you should pay an amount for tax to your supplier. If you do not pay an amount for tax at the time of purchase and you do not hold the item for sale in your business, you will owe use tax on your purchase (see Purchases subject to use tax). For more information on making purchases for resale, see Regulation 1668, Sales for Resale, and Publication 103, Sales for Resale, which also contains information that may help you decide when you can legitimately make a purchase for resale.
Revision July 2026