V6 Bird

iTrader: (15)

for installing after market parts that are not part of maintenance or repair of OEM equipment with equivalent OEM spec'd parts.

Here's the law based on this. I wonder how many people believe the opposite and are not paying it.

Motor Vehicle Repairs
September 2003

There's no tax on labor to repair a motor vehicle. This means that charges for labor to replace a tire, battery, muffler, or shock absorber on a car, truck, trailer, or any other motor vehicle are not subject to sales tax.

A repair shop that charges a single price for parts and labor should not collect sales tax from the customer, but instead should pay sales tax to its supplier when buying parts. For example, a shop performs an oil change for the lump-sum price of $19.95. The shop should pay tax when buying oil, filters, and other items used in the repair, and should not collect tax on any portion of the $19.95 charge to the customer. If a shop erroneously charges tax, it must remit the tax collected in error and must still pay tax on items used in the repair.

On the other hand, a shop that charges separately for labor and parts must collect sales tax on the parts. In this situation, the shop can issue a resale certificate in lieu of paying tax when buying the parts. No sales tax is due on the charge for labor. For example, if a shop does an oil change for $10.00 labor and $9.95 materials, it can buy the oil and filter tax-free and must collect tax on the separately stated charge for materials. A repairman that separately states a charge for consumables used directly in repairing motor vehicles may collect tax on the charge for the consumables and buy these materials tax-free. Qualifying consumables do not include tools, electricity, or office supplies.

A shop that performs services under an extended warranty must collect sales tax on the separately stated parts. No sales tax is due on parts furnished by a manufacturer to repair a motor vehicle under a manufacturer's warranty.

Labor to Remodel Motor Vehicles is Taxable
All charges for both parts and labor to remodel a motor vehicle are taxable. For sales tax purposes, "remodel" means to modify the style, shape, or form of a motor vehicle. Remodeling includes such things as installing body lift kits, converting a van into a camper, and increasing vehicle performance. Remodeling also includes removing the back seat or modifying the trunk to install a car sound system.

Sale and Installation of Accessories
Sales tax is due on all parts and labor for the sale and installation of accessories such as car stereos, amplifiers, and alarm systems.

For more information, ask for Rule 3.290 - Motor Vehicle Repair and Maintenance; Accessories and Equipment Added to Motor Vehicles;

Splitz

iTrader: (1)

When my car was modded by XHP, he only charged me sales tax on the one thing that I bought from him. I asked if labor was taxed and he said no....doesn't mean that it's not taxable tho either.

Might have to pay business income tax on that money received tho, not sure how that would work.

You going somewhere with this? Your fishing!

Pavlock Performance

iTrader: (39)

when i got my dba they said mechanical work s non tax but selling parts is.

Manic Mechanic

iTrader: (3)

We never charge tax on labor and the comptroller just audited us a while back without any issues.

On a related note Texas State Comptroller's Office Bean Counters drive early eightys Delta 88's with simulated Daytons. Maybe they don't know what style and perfomance mods are?

Vernon

V6 Bird

iTrader: (15)

I was told by the comptroller that tax should be charged.

Because shops aren't charging it doesn't mean its right or lawful. People also lie on what the work performed is to cheap the system. Just cause the auditor missed it does that mean its lawful to not tax it. The bottom line is how you expense and tax within your system. If you stay with the same manner over the long run and dont change in the middle you shouldnt have a problem. But if you do change, its an automatic admission of guilt. Im on the fence here on what Id do, but going by my interpretation, im charging tax cause im not reading the fine print to not charge it.

If its to enhance power its taxed. If its repair and maintenance its non taxed.

Is very clear in what I bolded.

V6 Bird

iTrader: (15)

If you do repair and maintenance work, I agree.

Manic Mechanic

iTrader: (3)

I'm not saying we know to charge it and don't. This is actually the first I've heard of it and we've been in the business for about 17 years. We don't do much "modification" work anyways. Mostly maintenance and repairs. By saying the audit was good I was only pointing out that they're not necessarily looking for it, doesn't mean I endorse cheating the system and assuming that kind of risk.

Vernon

TchargedLS1TA

iTrader: (9)

We charge tax on everything. The way our county is run, it is based on the work you classify your shop under- therefore since we are an aftermarket retailer and installer, it doesnt matter if we change a light bulb, we still have to tax everything.

pdanrichey

iTrader: (4)

Denton county...no tax on labor. It's a service, not a good. I suppose any shop could make up their own rules to that though.

V6 Bird

iTrader: (15)

Maintenance and Repair doesnt have to brother. its clearly stated in the Tax laws.

V6 Bird

iTrader: (15)

Its state law. They have jursdiction over any county. County is usually supplemental laws.

Its okay SEB to admit Ive owned you.