Nebraska
Sales and Use
Tax Guide
for
Auto Body
Specialists
Revised December, 2009
7-239-1995 Rev. 12-2009 Supersedes 7-239-1995 Rev. 3-2004
The purpose of this information
guide is to explain how Nebraska
sales, use, income, and withholding
tax programs apply to auto body
specialists. Information guides
are updated periodically to reflect
statutory changes. Please contact
the department to insure you are
using the most current issue.
INFORMATION
For more information, check our
website: revenue.nebraska.gov
OVERVIEW
Every individual or entity engaged in business as an auto body
specialist is a retailer. All retailers must obtain a Nebraska Sales Tax
Permit and collect and remit the appropriate sales tax on all sales,
or obtain a properly completed Nebraska Resale or Exempt Sale
Certicate, Form 13.
PURCHASES
Taxable Purchases
Auto body specialists are the consumers of all items, including
consumable shop supplies and equipment, they use that do not
become a part of the motor vehicle they are repairing or customizing.
Examples: Air compressors, blasting equipment, abrasives,
sprayers, solvents, bufng pads, paint thinner, polishing
materials, masking tape, protective sheets, rags, sandpapers,
waxes, reducers, vinyl resins, ofce equipment and supplies,
and consumable shop supplies.
All purchases of these items are taxable. The Nebraska and applicable
local sales tax must be paid at the time of purchase.
When items are purchased from a vendor who did not collect the
Nebraska and applicable local sales tax, such as an out-of-state seller,
auto body specialists are required to remit consumer’s use tax on
their cost of the items.
Please note: the tax is also due on delivery or shipping charges paid
to the seller of such items..
Tax-Free Purchases
Auto body specialists may purchase tax-free items that will become
a part of the motor vehicle they are repairing or customizing.
Examples: Paint, body putty, vinyl resins, rivets, bolts, parts
(fenders, panels, etc.).
G U I D E
“Vinyl resins” has been moved to the tax-free purchases list.
Updates are in Red boxes and explanations in Red.
This guidance document is advisory in nature but is binding
on the Nebraska Department of Revenue (Department)
until amended. A guidance document does not include
internal procedural documents that only affect the internal
operations of the Department and does not impose additional
requirements or penalties on regulated parties or include
condential information or rules and regulations made in
accordance with the Administrative Procedure Act. If you
believe that this guidance document imposes additional
requirements or penalties on regulated parties, you may
request a review of the document.
This guidance document may change with updated
information or added examples. The Department
recommends you do not print this document. Instead, sign
up for the subscription service at revenue.nebraska.gov to get
updates on your topics of interest.
Documenting tax-free purchases. When auto body specialists
purchase tax-free items from Nebraska vendors, they must provide
a properly completed Nebraska Resale or Exempt Sale Certicate,
Form 13, Section A, to the vendor.
SALES
Taxable Sales
Auto body specialists must collect sales tax from their customers
on charges for parts, detailing, paint, motor vehicle painting labor,
fabrication labor and installation labor. These charges are taxable
to the customer regardless of how they are stated on the invoice.
Charges for disposal fees, environmental fees, or other fees
imposed by auto body specialists are taxable to the customer
regardless of how the charges are stated on the customer’s invoice.
Motor vehicle painting labor. Charges for motor vehicle
painting labor are taxable.
Examples: Detergent/solvent wash; masking adjacent
panels or other items to prevent overspray damage;
mixing materials, adjusting spray equipment; applying
sealer; cleaning painting equipment; color matching;
and two-tone renish.
Installation labor. Charges for installation labor are taxable
when the item being installed is taxable, and when the item being
installed was not previously a part of the vehicle being repaired
or customized.
Example: Installing running boards or applying rust
proong on a vehicle that did not previously have running
boards or rust proong is taxable.
Production labor. Charges for production labor are taxable.
Examples: Tinting windows, undercoating, customizing,
or applying rust-proofing on a vehicle are taxable
production labor.
Tax-Free Sales
Auto body specialists are not required to collect sales tax on
separately stated repair labor charges or when their customers are
exempt from payment of sales tax.
Repair labor. Charges for repair labor relating to the repair of
a motor vehicle are not taxable PROVIDED such charges are
separately stated on the customer’s invoice. This does not apply
to charges for motor vehicle painting labor which are taxable.
Examples: Pulling a dent; applying body putty; or
sanding body putty.
Exempt customers. Nebraska and local sales tax is not required
to be collected when the customer is exempt from sales tax AND the
customer has provided a properly completed Form 13, Section B.
Most nonprot organizations are not exempt from sales tax in
Nebraska. In addition, not all governmental units are exempt from
Nebraska sales tax.
For specic details regarding who is exempt from sales tax,
please refer to the following, all of which are available from the
department’s website:
■
Nebraska Sales and Use Tax Regulations:
1-012, Exemptions
1-090, Nonprot Organizations
1-091, Religious Organizations
1-092, Educational Institutions
1-093, Governmental Units
■ Information Guides:
Nonprot Organizations
Governmental Units
GENERAL INFORMATION
Obtaining a Permit
A Nebraska Sales Tax Permit is obtained by ling a Nebraska Tax
Application, Form 20, with the Nebraska Department of Revenue.
This form is available on our Web site.
Remitting the Tax
Sales tax. The sales tax collected from customers is reported and
remitted on the Nebraska and Local Sales and Use Tax Return,
Form 10.
Please note: electronic ling of the Form 10 is available on
our Web site to retailers who le their returns on a monthly or
quarterly basis.
Consumer’s use tax. Consumer’s use tax is due on items that do
not become part of the motor vehicle being customized or repaired
(e.g., tools, rags, sandpaper, and other supply items) when sales
tax has not been paid by the auto body specialist at the time of
purchase. Consumer’s use tax is reported and remitted on lines 4,
5, and 10 of the Form 10.
This example has been updated.
This has been updated.
If
no use tax is due during a particular reporting period, a mark,
line, number or other notation must be reported on the use tax
lines to indicate that there is no use tax liability. Failure to do so
may result in the statute of limitations for audit purposes being
extended from three years to six years.
OTHER INFORMATION
Consumable Shop Supplies
Auto body specialists are the consumer’s of ALL shop supplies.
Therefore, regardless of how charges for consumable shop supplies
are stated on the customer’s invoice, auto body specialists OWE
the tax on their cost of these supplies.
When the charge for consumable shop supplies is included in the
charge for paint, painting labor, or parts, the total charge is taxable
to the customer.
When the charge for consumable shop supplies is separately stated
on the customer’s invoice, the charge is not taxable to the customer.
Production labor was not addressed in the prior guide.
Painting shop supplies. The gross receipts from charges for
painting motor vehicles are taxable. The recovery of the cost of
painting shop supplies is considered a part of the gross receipts
from charges for painting motor vehicles. Therefore, regardless
of how the charges for painting shop supplies are stated on the
customer’s invoice, auto body specialists MUST collect the
Nebraska and applicable local sales tax on the gross receipts from
charges for painting motor vehicles.
Detailing
Charges for detailing motor vehicles are taxable. If the customer is
an entity that is exempt from sales tax as indicated in the “Exempt
customers” section of this guide, and if the customer has provided
a properly completed Form 13, Section B, then the charge for
detailing is not taxable.
Motor vehicle dealers may not purchase detailing service tax free
even if the detailing is being performed on inventory vehicles.
Towing
Charges for motor vehicle towing are taxable. Auto body specialists
must pay Nebraska and applicable local sales tax on charges for
towing a motor vehicle to their shop for repair, customizing, or
detailing. Towing service may not be purchased tax free by auto
body specialists.
Auto body specialists WILL NOT collect sales tax from their
customers on towing charges passed on to their customers
PROVIDED the towing charge is separately stated on the
customer’s invoice.
Exception: If an auto body specialist is also in the business of
providing towing service, then that auto body specialist may
purchase towing service tax free PROVIDED the auto body
specialist provides a properly completed Form 13, Section A,
to the towing company.
An auto body specialist is considered to be in the business of
providing towing service if the auto body specialist would tow a
vehicle to a competing auto body specialist for repair, customizing
or detailing.
Taxpayer assistance. For additional information, please contact
the Nebraska Department of Revenue, PO Box 94818, Lincoln, NE
68509-4818, or call 800-742-7474 (NE and IA) or 402-471-5729.
