The Arvada Municipal Code imposes a sales tax upon the purchase price paid for tangible personal property and certain taxable services in the City by the ultimate user or consumer. This also includes a use tax upon using, storing, distributing or otherwise consuming in the City any article of tangible personal property purchased, leased or rented from sources outside the City on which a lawfully imposed sales tax has not been paid.
An upholsterer that is in business to repair, recover or upholster property that is provided by the customer is engaged in selling tangible personal property and a service. The labor portion of the service must be separately stated from the tangible personal property; otherwise that entire amount would be subject to sales tax. The tangible personal property or materials portion is subject to sales tax.
If the upholsterer purchases property which he repairs or upholsters and then sells the finished item, then the upholsterer is required to collect sales tax on the full selling price of the item. Upholstery materials can be purchased tax-free, however, sales or use tax must be paid when the items are used or consumed and do not become a part of the finished item.
Example
- Tony, the local upholsterer, upholsters chairs. When a customer brings in their chairs to be upholstered, Tony helps them pick out the new fabric that will be used. When Tony is done he bills the customer for the fabric, tacks and the new stuffing that is used. The materials are all subject to sales tax. Tony separately charges his service/labor for the time it took him to upholster the chair.
- Bob’s Upholstery buys old used dining room furniture at auctions for resale. Bob then repairs or upholsters the furniture before it is put up for sale. The materials such as, fabric, varnish and nails that become part of the furniture, can be purchased tax-free, however, the sand paper and the equipment used to repair the furniture is subject to sales or use tax. Once Bob is done, Bob can sell the furniture in his front show room and the total sale price of the furniture is subject to sales tax.
*This information is a summary in layman's terms of the relevant Arvada tax law for this subject, industry, or business segment. It is not intended for legal purposes to be substituted for the full text of the Arvada tax code. However, the tax guide shall be used in conjunction with the Arvada tax code (chapter 98) in determining tax liability.