The North Carolina Department of Revenue (DOR) recently ruled that car washes that involve any activity by an employee are considered taxable repair, maintenance, and installation services.
The car wash provider operated a mechanical car wash. As part of the car washing service, an employee directed customers into the mechanical wash, placed a cover over rear windshield wipers, and for a period of less than fifteen seconds applied soap to car bumpers, and pressure washed the tires.
North Carolina taxes repair, maintenance, and installation services. This includes the cleaning, washing, and polishing of motor vehicles. However, North Carolina does not tax self-service car washes. The DOR ruled that the car wash was a taxable maintenance service and not a self-service car wash because self-service car washes do not include any activity performed by an employee to refinish, restore, clean, or wash customer cars.