The Tax Commissioner has clarified that repair services are not taxable but that tangible personal property transferred in connection with repair services is subject to sales or use tax. Service providers must separately state the repair charges on bills and if labor and parts are not itemized, the entire cost is taxable. However, items that become a part of real property or are considered a capital improvement are not taxable to the customer. In addition, items which are repaired in North Dakota and subsequently shipped outside the state are also exempt, provided the repair person itemizes the charges for labor and parts. If property is shipped outside North Dakota for repairs and transferred back, the repair parts will be subject to tax if transferred back to North Dakota, with credit provided for sales or use taxes paid to other states. Retailers providing parts to a person who will provide a repair service must obtain a completed certificate of resale. Warranties are also not subject to sales tax but charges for parts must be stated separately. (Office of State Tax Commissioner, Sales and Use Tax Guideline, March 2004)