Processing for hire

Generally, businesses that process for hire are taxable under the Processing for Hire business and occupation (B&O) tax classification upon the total charge made for those services, including any charge for materials they furnish.

Businesses reporting under processing for hire do not have to report under the Wholesaling or Retailing B&O tax classifications.

Note: If you are providing services for a consumer, you are not processing for hire; you are merely altering tangible personal property. In such cases, you are taxable under the Retailing B&O tax classification, and you must collect sales tax.

Definitions

Processing for hire means performing labor or mechanical services on property belonging to others so that a new, different, or useful article of tangible personal property is produced for sale or commercial or industrial use.

Note: If the business performing labor or mechanical services provides materials worth more than 20% of the value of all materials, they are a manufacturer.