Motor Vehicle Repair Industry Guide

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Motor Vehicle Repair Industry Guide

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This information describes the sales and use tax topics related to the motor vehicle repair industry. Use the links in the Guide Menu to see information about that topic.

Definitions

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Definitions

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Some of the items and services used to repair motor vehicles are taxable, and some are exempt from sales tax. The taxability of a given item may depend on its exact use, the kind of business providing it, and how parts, materials, and service are broken down on the invoice.

The following definitions apply to this industry.

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Taxable Sales

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Taxable Sales

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Local Sales Tax

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Local Sales Tax

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Some cities and counties have local sales and use taxes. If you are located in or make sales into an area with a local tax, you may owe local sales and use tax. For more information, see Local Sales and Use Taxes

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The map and rate calculator do not include special local taxes.

For more information, see:

Repair Paint and Repair Materials

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Repair Paint and Repair Materials

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You may purchase repair paint and repair materials exempt for resale if they:

  • Become part of the vehicle
  • Are consumed in providing the vehicle repair service
     

To purchase repair paint or repair materials exempt, give your supplier a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.  

Note: If you choose not to purchase repair materials exempt for resale, you can continue to pay tax on the purchase of materials and not charge tax to your customers. See Method 3 in the Handling Sales Tax on Repair Materials section.

Examples of Repair Paint and Repair Materials

Abrasives Clear coat Motor oil Sealer
Acetylene Degreasing agents Oxygen Solder
Battery water Diagnostic dyes Paint thinner Solvents
Body paint Glaze  Polishes  Striping tape
Body filler/putty Grease  Primer  Tack cloth
Bolts and nuts Grinding discs Razor blades Waxes
Brake fluid Hydraulic jack oil Sanding discs Welding rods
Buffing pads Lubricants  Sandpaper   
Chamois Masking tape Scuff pads  

Note: Service providers must pay sales or use tax on items used to provide repairs on multiple vehicles, such as machinery, tools, and equipment.

Handling Sales Tax on Repair Paint and Repair Materials

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Handling Sales Tax on Repair Paint and Repair Materials

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You must handle sales tax on repair paint and repair materials by using one of the following three methods listed. You must remain consistent in the method you choose.

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Nontaxable Sales

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Nontaxable Sales

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Some motor vehicle-related sales are not taxable.

Motor Vehicle Repair Labor

Auto body and mechanical repair labor is not taxable when it is separately stated from repair parts on the invoice.

Custom Painting

Labor charges to custom paint a vehicle are not taxable. But the paint and materials used are taxable. You must either charge sales tax to your customer, or pay sales or use tax when buying these materials.

Tire Recapping and Retreading

Charges to recap or retread a tire are not taxable. These are considered vehicle repair, even if the new cap is of a different tread design (such as snow tread applied over summer tread).

Waste Disposal Fees

Charges for disposing of hazardous waste are not taxable when separately stated on the invoice.

Examples include:

  • Antifreeze
  • Battery fees
  • Special charges for disposing of oil
  • Tires

Miscellaneous Sales

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Miscellaneous Sales

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Sales tax may or may not apply depending on who you're selling products to.

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Warranties and Service Contracts

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Warranties and Service Contracts

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Purchases and Use Tax

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Purchases and Use Tax

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Filing Returns and Record-Keeping

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Filing Returns and Record-Keeping

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When filing your return, you must report all sales tax collected and use tax you owe.

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Legal References and Resources

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