Maine – Updated Guidance for Service Stations and Auto Repair Shops

SALT Report 3019 – Maine Revenue Services revised its sales and use tax bulletin for service stations and auto repair shops to reflect recent changes to the laws affecting extended warranties and contracts.

Specifically, the publication reflects that the sale of an extended service contract for an automobile that entitles the purchaser to certain benefits for a specific time period is a taxable service.  The same provision will apply to sales of extended service contracts for trucks effective October 9, 2013.

In addition, parts sold in association with a repair made pursuant to a warranty are not usually taxable to either the repairer or to the customer, since the parts are considered to be included in the price of the extended warranty.

However, if the warranty requires that the customer pay a “deductible” at the time of the repair or maintenance, the amount paid by the customer should be applied to non-taxable labor first. If the deductible exceeds the amount charged for labor, the remaining amount should be applied to parts, for which the customer is required to pay sales tax.

The section regarding taxable consumables used in conjunction with repair work has been updated to reflect that electrical tape and duct tape are no longer included in that category, but masking tape has been added. Also, the section that discusses taxable items transferred to the customer no longer includes any kind of tape.

The publication provides additional guidance regarding taxable and non-taxable sales, core charges, services, tire retreading, recapping and repairs, rustproofing, purchases for own use, purchases for resale, and recycling fees.

For Further Information

Maine Revenue Services – Sales and Use Tax Instructional Bulletin No. 1