Cell Phone Repair Shop Resale Certificate Guide: Parts, Accessories, and Sales Tax
Cell phone repair is a hybrid business. You provide a service (diagnosing and fixing a broken phone), but you also sell a product (the replacement screen, battery, or charging port). Most repair shops also carry retail accessories: cases, screen protectors, chargers, and cables.
That product component of your business is exactly where a resale certificate saves you money. Replacement parts that you install in customer devices and accessories you sell over the counter are resale inventory. Buying them tax-free with a resale certificate keeps your costs down on every repair and every retail sale.
Cell Phone Repair
How Resale Certificates Apply to Repair Shops
When a customer brings in a cracked iPhone screen, you order a replacement screen assembly, install it, and charge the customer for parts and labor. That replacement screen transfers from your inventory to the customer's device. It is a product sale bundled with a service.
The same applies to batteries, charging ports, speakers, cameras, and other components. You buy them wholesale, install them, and sell them to the customer. Your resale certificate covers these parts purchases.
Your retail accessories (cases, screen protectors, cables) are even more straightforward. You buy them wholesale and sell them at retail. Textbook resale.
Apply for Your Resale Certificate
What You Can Buy Tax-Free
Tax-Exempt Purchases (Resale Items)
Parts and products that transfer to customers:
- Replacement screens and digitizers (LCD assemblies, OLED panels)
- Batteries (phone batteries, laptop batteries, tablet batteries)
- Charging ports and flex cables
- Speakers, earpieces, and microphones
- Camera modules (front and rear)
- Home buttons, power buttons, and volume buttons
- Back glass and housing components
- Replacement logic boards or motherboards (when sold as part of a repair)
- Phone cases and covers sold at retail
- Screen protectors (tempered glass, film) sold at retail
- Chargers, cables, and adapters sold at retail
- Earbuds and headphones sold at retail
- Phone stands, mounts, and holders sold at retail
- Refurbished devices purchased for resale
- SIM cards and memory cards sold at retail
- Packaging (boxes, bags) that transfer to the customer
What You CANNOT Buy Tax-Free
Items used in your repair operations but not sold to customers:
| Item | Why It Is Taxable |
|---|---|
| Heat guns and rework stations | Shop tools |
| Screwdriver sets and pry tools | Shop tools |
| Soldering irons and solder | Tools/consumed during repair |
| Adhesive and tape used during repair | Consumed, not transferred |
| Isopropyl alcohol and cleaning supplies | Consumed |
| ESD mats and wrist straps | Shop equipment |
| Microscopes and magnifying lamps | Shop equipment |
| Diagnostic software and tools | Business use |
| Computer for diagnostics | Business equipment |
| Display fixtures and signage | Business property |
| Shop furniture and counters | Business property |
The Adhesive Question
Adhesive strips, B-7000 glue, and other bonding agents used during screen replacement present a gray area. They bond the new screen to the device and physically remain in the customer's phone. In most states, these qualify as resale items because they become part of the finished product transferred to the customer. However, the amounts are small, and some shops simply pay the tax on adhesives rather than track them separately.
Repair Service vs. Product Sale: The Tax Split
Many states distinguish between the service (labor) and the product (parts) portions of a repair transaction. This affects how you charge your customers.
States That Tax Parts but Not Labor
In states like Michigan, Pennsylvania, and Ohio, repair labor is typically not taxable when separately stated on the invoice. The parts you install are taxable. Your invoice should separate parts and labor into distinct line items.
Example invoice (parts-taxable, labor-exempt state at 7%):
- Screen replacement part: $45.00
- Labor: $50.00
- Sales tax (on parts only): $3.15
- Total: $98.15
States That Tax the Entire Repair
States like Texas and Florida generally tax the entire repair transaction (parts plus labor) because they classify the repair as a taxable service or a sale of refurbished property.
Example invoice (everything taxable at 7%):
- Screen replacement (parts + labor): $95.00
- Sales tax: $6.65
- Total: $101.65
Why This Matters for Your Pricing
If your state does not tax labor, showing parts and labor as separate line items saves your customers money and can make your prices more competitive. If your state taxes the whole job, bundling may simplify your invoicing.
Either way, your resale certificate covers the wholesale parts purchase. The question is only about what you charge the customer.
Dollar Savings for Repair Shops
| Business Type | Monthly Parts/Inventory Spend | Annual Tax Savings (7%) |
|---|---|---|
| Solo repair technician | $800 | $672 |
| Small repair shop with retail | $2,500 | $2,100 |
| Busy multi-tech shop | $6,000 | $5,040 |
| Multi-location repair chain | $20,000+ | $16,800+ |
A busy shop doing 15 to 20 repairs per day with a retail accessory wall can easily spend $6,000 per month on parts and inventory. The $5,040 annual savings covers a month of rent for many small shops.
Refurbished Device Sales
Some repair shops buy used or broken devices, refurbish them, and resell them. This is a straightforward resale transaction. You can buy the broken devices, replacement parts, and packaging tax-free with your resale certificate because the finished refurbished device is sold to a customer.
Keep records: Document the purchase of each device, the parts used to refurbish it, and the sale to the end customer. Auditors want to see a clear chain from purchase to resale.
State-Specific Notes
California
California treats repair transactions as a combination of service and product sale. Parts installed are taxable to the customer. Labor is generally not taxable when separately stated. You need a seller's permit to buy parts tax-free and to collect tax from customers. If repair charges exceed the value of the parts, the transaction may be classified differently. See the CDTFA guidelines for repair shops.
Texas
Texas treats repairs to tangible personal property (phones, computers, electronics) as taxable services. Both parts and labor are taxable. You can buy parts tax-free with your resale certificate, but you must collect tax on the entire repair charge from the customer.
New York
New York taxes repair services. The total charge (parts plus labor) is subject to sales tax. Parts purchased for installation are exempt with Form ST-120. Retail accessories are also exempt at the wholesale level with the certificate.
Florida
Florida taxes repair of tangible personal property. The total charge is taxable to the customer. Parts for installation qualify for the resale exemption at the wholesale level. Retail accessories follow standard resale rules.
Illinois
Illinois treats service work on tangible personal property as a service occupation. Service providers owe a Service Occupation Tax on the cost of materials transferred during the repair. This is a technical distinction that affects how you report and remit tax. Consult an Illinois tax advisor for proper compliance.
Common Mistakes Repair Shops Make
Not Separating Parts and Labor on Invoices
In states where labor is not taxable, failing to separate parts and labor on your invoices means the entire amount may be considered taxable. Use your POS system or invoicing software to create distinct line items.
Buying Personal Devices With the Resale Certificate
A new phone for yourself is not resale inventory. Pay the tax.
Ignoring Retail Accessory Inventory
Some repair shops focus on the repair side and forget to set up proper tax-free purchasing for their retail accessories. Cases, screen protectors, and chargers are resale inventory. Buy them tax-free.
Not Tracking Warranty Replacements
When you replace a part under warranty (a battery that failed within 90 days, for example), you are using inventory without receiving payment from the customer. Track warranty replacements for accounting purposes and audit defense.
How to Get Started
Step 1: Apply for Your Resale Certificate
Apply through your state's tax authority or use our application service. Processing typically takes a few days.
Step 2: Set Up Parts Supplier Accounts
Provide your resale certificate to parts distributors (Injured Gadgets, Mobile Defenders, Wholesale Gadget Parts, MobileSentrix, or whoever supplies your parts). They will remove sales tax from your orders.
Step 3: Learn Your State's Repair Tax Rules
Determine whether your state taxes labor, parts only, or the entire repair. Set up your invoicing accordingly.
Step 4: Collect and Remit Sales Tax
Charge the correct tax on customer transactions and file your returns on time.
Apply for Your Resale Certificate