This information is not current and is being provided for reference purposes only
TSSN-36
Special Notice Concerning Purchase of Repair Parts and Labor For Leased Vehicles or Vehicles Held for Sale By Motor Vehicle Dealers
This TSSN is superseded by PS 92(8.1)
The purpose of this Special Notice is to restate existing Department policy and to announce a new policy of the Department of Revenue Services concerning the appropriate use of Resale Certificates to purchase repair labor for leased vehicles or vehicles held for sale by motor vehicle dealers effective September 1, 1990. Repair or Maintenance services rendered to motor vehicles that are used in a trade or business became taxable on July 1, 1989. Car washing and waxing services also became taxable on July 1, 1989.
Definitions
A. Repair - to mend or bring back as near as possible to its original working order an item of tangible personal property that was broken, damaged, malfunctioning or defective. (Where used in this notice, the word "repair" shall include repair and/or maintenance services.) Such repairs include, but are not limited to, painting or replacement related to the body or any operating parts of the motor vehicle. Not included are towing and storage charges.
B. Maintenance - to keep in good working order by preventing the decline, failure, lapse or deterioration of tangible personal property. Such maintenance includes, but is not limited to, changing engine oil, replacing vehicle fluids, lubricating chassis, replacing spark plugs, filters, rotating tires, recharging air conditioning, rustproofing and applying fabric protection or paint sealant.
C. Integral Part - An integral part is a repair part or material that retains its separate identity after being incorporated into repaired property. Examples of integral parts include, but are not limited to, transmissions, alternators, clutches, belts, batteries, steering wheel fluids, windshield wipers, water pumps, mufflers, tires, hoses, oil filters, oil, and spark plugs. An integral part does not include such items as paint, cleaning solvents, polish, wax, paint thinners and reducers, primers, sealants, undercoats and corrosion-protection materials, fabric-protection materials, tape, sandpaper and abrasives, masking paper and rags, because these items are considered to be consumed by the service providers of motor vehicle repair or maintenance services.
D. Car Washing and Waxing - Car washing and waxing services are not considered to be repair or maintenance services. The charges for washing and waxing are taxable to all motor vehicles regardless of whether the vehicles are individually owned or are used in a trade or business. Car washing and waxing service providers are the final consumers of materials and supplies that they use in rendering these services.
Purchases of Motor Vehicle Repair Services by Motor Vehicle Dealers and Motor Vehicle Lessors.
As of July 1, 1989, the purchase of motor vehicle repair services, including any type of repair, painting or replacement related to the body or any of the operating parts of a motor vehicle used in a trade or business is subject to Sales and Use Tax. Such repair services purchased by a retailer of new or used motor vehicles for use in motor vehicles held for sale in the regular course of business may be purchased without payment of Sales Tax by issuance of a bona fide Resale Certificate, Regulation 1, to the service provider. As of September 1, 1990, a lessor who purchases such repair services for use in a motor vehicle used exclusively for leasing purposes may also purchase these services without payment of Sales and Use Tax by issuance of a bona fide Resale Certificate, Regulation 1, to the service provider.
Car Washing and Waxing Services Purchased by Motor Vehicle Lessors and Motor Vehicle Dealers.
Motor vehicle dealers and motor vehicle lessors are the final consumers of car washing and waxing services. Motor vehicle dealers and motor vehicle lessors are not permitted to purchase car washing and car waxing services on resale certificates and must pay the applicable Sales and Use Tax on these services.
Purchases of Repair Parts for Resale by Motor Vehicle Dealers and Lessors
The purchase of repair parts for motor vehicles are subject to the Sales and Use Tax. Motor vehicle dealers who sell either new or used motor vehicles may purchase repair parts which are considered "integral parts" without payment of Sales and Use Tax for motor vehicles which are held for sale in the regular course of business by issuing a bona fide Resale Certificate, Regulation 1, to the retailer or service provider. Motor vehicle lessors may also purchase repair parts which are considered integral parts for motor vehicles used exclusively for leasing purposes without payment of Sales Tax by issuing bona fide resale certificates to the retailer or service provider. Motor vehicle dealers and lessors are not permitted to purchase materials that are not integral parts, as defined in Definition C, with the use of a resale certificate because the retailer/service provider is the final consumer of these materials.
Purchases of Repair Parts or Repair Services by Lessee
A lessee may not use a Resale Certificate, Regulation 1, for the purchase of repair parts or repair service. If repair services are purchased directly by the lessee, the sale is subject to Sales and Use Tax only in the event that the lessee uses the motor vehicle in a trade or business. If the sale is taxable, the lessee must pay the tax to the service provider. If repair parts are purchased directly by the lessee, the sale is taxable whether or not the motor vehicle is used in a trade or business and the lessee must pay the tax to the retailer/service provider.
TSSN-36 (New 9/90)