Introduction
For auto repair and body shops operating in New York State, understanding sales tax regulations is crucial for compliance and accurate customer billing. This guide clarifies how sales tax applies to various aspects of your business, from customer repairs to warranty work and purchasing supplies. This information is essential for both shop owners and customers seeking clarity on auto repair expenses in NY.
Sales Tax on Auto Repair Services: What You Need to Know
In New York, most services provided by auto repair and body shops are subject to sales tax. As a shop operator, you are required to register with the New York State Tax Department to collect and remit these taxes. This applies to a wide range of vehicles, including cars, trucks, RVs, motorcycles, and snowmobiles.
Taxable Services and Charges
Generally, you must collect sales tax on the total charge for both parts and labor associated with repair services. Additionally, sales tax applies to any parts or supplies sold directly to customers, such as windshield wipers or motor oil. To determine the specific sales tax rate, you can consult resources like Sales Tax Rates, Additional Sales Taxes, and Fees (TB-ST-825) or the Tax Department’s website.
Specific scenarios that are taxable include:
- Towing and Transportation: Towing a disabled vehicle, whether to your shop, another repair shop, or a location directed by the owner, is a taxable service.
- Vehicle Storage: Charges for storing a vehicle, such as post-repair storage fees if a customer delays pickup, are also taxable.
Non-Taxable Services
- New York State Inspections: The fee for a New York State motor vehicle inspection itself is not taxable. However, it’s important to note that any repair work needed for a vehicle to pass inspection is taxable.
Sales Tax and Warranty Work
When you perform repairs covered by a service contract or warranty and bill the warranty company, these services are generally not taxable. To ensure tax exemption, the warranty company must provide you with Form ST-120, Resale Certificate, confirming their registered vendor status in New York State. Any charges billed directly to the customer for repairs not covered by the warranty remain taxable.
Sales Tax and Insurance Claims
Repair work covered by insurance claims is treated differently from warranty work. When billing insurance companies for accident repairs or other covered damages, both materials and labor are taxable. The entire bill submitted to the insurance company is subject to sales tax.
Example: If you replace a fender, quarter panel, and door, and perform painting as part of an insurance claim repair, the total cost billed to the insurer, including parts and labor, is taxable.
Purchasing Parts and Supplies: Tax Exemptions for Shops
Auto repair shops can leverage certain sales tax exemptions when purchasing items necessary for their operations.
Tax-Exempt Parts Purchases
You can purchase parts that will be transferred to customers during repair jobs without paying sales tax upfront. To do so, provide your supplier with Form ST-120, Resale Certificate. This exemption applies to a wide range of auto parts, including:
- Brake components (pads, rotors)
- Suspension parts (shocks, struts)
- Tires
- Filters
- Belts (fan belts)
- Electronic sensors
- Lights (headlights, brake lights)
- Starting and charging system components (starters, alternators)
- Windshields
- Mirrors (rear-view mirrors)
- Body panels (doors, fenders)
Taxable Tools and Equipment
Tools and equipment used within your shop for performing repairs, but not directly sold to customers, are taxable. This includes purchases, leases, or rentals of items such as:
- Hand tools (wrenches, screwdrivers, pliers, hammers)
- Power tools (impact tools, torches)
- Shop equipment (lifts, wheel balancers, engine analyzers, alignment equipment, air compressors, welding equipment, paint booths)
- Other tools (clamps, jumper cables, pipe benders)
Exception for Enhanced Emissions Inspection Equipment:
There is a specific exemption for enhanced emissions inspection equipment, provided it meets certain conditions. If the equipment is certified by the New York Department of Environmental Conservation and you are a licensed inspection station authorized to conduct enhanced emissions inspections, you can purchase this equipment tax-free. Use Form ST-121, Exempt Use Certificate, when making such purchases.
Tax-Exempt Supplies for Resale
Supplies that are physically transferred to the customer as part of a repair or maintenance service can be purchased exempt from sales tax using Form ST-120, Resale Certificate. These include:
- Fluids (brake fluid, transmission fluid, antifreeze, motor oil)
- Lubricants (bearing grease)
- Paint and body repair materials (paint, automotive body fillers, flux, sheet metal, thinners, solvents)
Taxable Shop Supplies
General shop supplies that are used in your operations but not transferred to customers are taxable. These include items like:
- Cleaning and maintenance supplies (shop towels, cleaners, sandpaper, polishing and buffing pads)
- Protective gear (face masks, drop cloths, masking tape)
- Office and general supplies (paper floor mats, office supplies)
For more detailed information on the taxable status of supplies, refer to TSB-M-81(8)S, Taxable Status of Supplies used by Auto Body Repair Shops.
Conclusion
Navigating sales tax for auto repair in New York requires careful attention to detail. By understanding which services and purchases are taxable or exempt, auto repair and body shops can ensure compliance, accurate billing, and efficient tax management. Always refer to the latest publications from the New York State Tax Department for the most up-to-date information and regulations.
References & Resources:
- Tax Law: Section 1105(c)(3)
- Regulations: Section 527.5
- Memorandum: TSB-M-81(8)S, Taxable Status of Supplies used by Auto Body Repair Shops
- Bulletins:
- Form ST-120, Resale Certificate: /pdf/current_forms/st/st120_fill_in.pdf
- Form ST-121, Exempt Use Certificate: /pdf/current_forms/st/st121_fill_in.pdf
