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North Carolina Expands Sales Tax to Auto Repair Service

North Carolina will require consumers to pay sales taxes on auto repair and oil changes beginning March 1, 2016.

The North Carolina Tire Dealers Association (NCTDA) describes the newly taxable services as a move towards a user tax versus an income tax.

“The NCTDA fought this battle early on until the legislative negotiations went behind closed doors and the language was inserted into the budget bypassing standard legislative proceedings through committees,” says Reece Hester, executive director.

Legislators expanded the state's sales tax in the 2016 budget. The budget offsets personal income tax cuts with new sales taxes on repair, installation and maintenance services.

Hester points out that only a few industries are subject to the new tax, which “screams” industry discrimination. “We are already ‘eatten up’ with regulations on business compliance standards.”

Hester says the tax especially hits working class people who are trying to make ends meet and depend on their vehicles for transportation to and from work.

“Having to quote and charge an additional $20 bucks on top of a $300 labor charge will come as a shock to many customers of our shops,” he says. Software changes, including sales and use tax clarifications to numerous line items of ‘should this be taxed or not’ will also create headaches for dealers. “Our phones have rung off the hook.”

Hester says the topic will be “on fire” at the NTCDA’s 2016 Expo and Trade Show March 4-5 in Raleigh.

“I just hope to see fairness in all of this as we continue forward to what will most likely become an expanded industry taxation on user fees and taxes,” Hester says.

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