SALT Report 1432 – The New York Department of Taxation and Finance issued a sales tax bulletin that provides information for auto repairs and body shops on how to calculate sales tax for repairs covered by warranty, insurance claims, what items may be purchased for resale, and exemptions.
In general, most charges by a repair or body shop are taxable and sales tax must be collected on the total charge for all parts, labor fees, or repair services provided. Sales tax must also be collected on most parts and supplies, such as windshield wipers or motor oil, sold directly to customers.
Towing or transporting a disabled vehicle is taxable. However, the transportation of vehicles that are not broken down or otherwise disabled is not taxable. This includes the transportation of antique cars to a car show, transporting repossessed vehicles, or hauling a vehicle from one location to another.
Warranty Work and Service Contracts
When a customer brings a vehicle in for a repair that is covered under a service contract or warranty, the warranty company should be billed for the work done and is not taxable provided the warranty company gives provides a Form ST-120, Resale Certificate. Only warranty companies that are registered vendors with New York State can issue a resale certificate.
However, any additional charges billed to the customer, such as charges for repairs not covered by the warranty, are taxable.
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