Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
315.0000 INSTALLING, REPAIRING, RECONDITIONING IN GENERAL—Regulation 1546
(a) IN GENERAL
315.0030 Body Shop Repair Supplies. A body shop and repair operator has charged its customers a flat fee for supplies "rated" to the job. Usually such fees relate more to the operator's own formula than to the actual value of the supplies used. The operator uses this approach in an attempt to avoid paying the sales tax to the sellers of the supplies. The supplies are items such as sandpaper, paint thinner, etc.
If a purchaser who has a valid seller's permit insists on its purchasing for resale property of a kind not normally resold in its business and makes such a statement on the resale certificate, the retailer would have no alternative but to accept the resale certificate as taken in good faith and the seller would then be exempt from the imposition of sales tax. The purchaser who gave the certificate would be liable for the use tax if in fact it used the items rather than resold them.
Items purchased and used by the body shops such as masking tape, thinner and the like are not regarded by the Board as items sold by the repairer and, accordingly, the repair shop should not charge tax to its customers. As a consumer of such materials, the body shop is guilty of a misdemeanor under the Sales and Use Tax Law when "tax" or "tax reimbursement" is charged to the customers. Such charges will be regarded as excess tax reimbursement and will have to be refunded to the customers or they will be retained by the Board.
In addition, the purchaser (body shop) will still be liable for use tax measured by the purchase price of those items purchased from the supplier under a resale certificate and used on the job. In such cases, the shop operator would be responsible for the payment of the use tax directly to the Board without any offset for the amount of tax reimbursement that was collected from the customers.
Also, if a particular individual continues to collect excess tax reimbursement, the Board has the authority to revoke his seller's permit. 5/26/77.
(Note: Subsequent statutory change re excess tax reimbursement.)