Understanding Laundry Tax Exemptions
As a laundromat owner, it’s important to understand the trends that are taking place in the laundry industry and how they affect you from a business perspective. One important component to operating a coin laundry business is staying current with the state and federal legislation that is having an impact on your business operations. Tax exemptions have been a pressing issue for the laundry industry and Martin-Ray wants to help you understand this subject as a vended laundry owner.
A Background on Tax Exemptions and the Laundry Industry
For decades, self-service laundry businesses have been exempt from sales taxes in most states, with the exception of Hawaii, New Mexico, Iowa and West Virginia. The coin laundry industry has historically seen few regulatory or legislative changes over the course of its history. However, even with this hands-off approach, sales tax exemption has been a focus of concern for industry professionals because a change in the exemption status would have a detrimental effect on all facets of the business and those that is serves. Although the removal of sales tax exemptions are few and far between, it’s important to understand why washaterias should remain exempt from sales tax and what to do if there is a proposed legislative change in your state.
Why Self-Service Laundromats Should Remain Tax Exempt
Being exempt from sales tax offers many advantages to both laundromat owners and their customers. Some reasons that self-service laundries should remain tax exempt include:
- Being Able to Serve Low-Income Renters: With the median household income of laundromat clients being $23,000 per year, commercial coin laundry facilities serve low income demographics. Adding an additional fee to this basic and necessary service would have a negative impact on laundromats’ customer bases.
- Sticking with the Popular Choice: There are currently 45 states that charge sales tax in the U.S. and only four of those states do not allow vended laundry facilities a tax exemption. If state-based governments repealed this exemption, they would be joining a minority view.
- Avoid Tax Pyramiding: Owners of laundromats pay sales taxes on other components of their business and roll those added costs into the vending fee for its laundry customers. When commercial laundry equipment is purchased and utilities are paid, those have all been subject to a sales tax fee. Removing the tax exemption would result in owners paying tax on top of already paid sales taxes.
- And more!
What To Do If Sales Tax Exemption is Challenged in Your State
The Coin Laundry Association (CLA) has been leading the Stop Laundry Tax initiative for over three decades. Acting as an advocate and resource to coin laundry business owners, the CLA offers support to those that find their current exemption status is coming under threat. If you find your state’s legislation challenging the current sales tax laws, follow these steps.
Martin-Ray Laundry Systems is dedicated to helping our customer base go beyond purchasing and servicing commercial laundry equipment. We offer a comprehensive suite of business services for laundromat owners, helping you become as successful as possible. If you are located in Martin-Ray’s sales & service area, contact us today!