Are towing charges and sublet auto services like glass and dent work subject to Kansas sales tax?

Plain-English summary

An auto body repair shop in the Kansas City area asked whether towing charges — and certain "sublet" services it buys in, like glass removal and installation and dent removal — are subject to Kansas sales tax.

Towing charges. The Department advised that towing charges are not subject to Kansas sales tax if they are separately stated line items on the customer billing. There is no separate sales tax imposition for "towing." Two twists:

• If the towing charge is not separately identified as a line item, it is taxable when repairs are performed on the vehicle (it gets swept into the taxable repair charge).
• When a vehicle is a total loss — so no taxable repair services are performed — no sales tax is charged on the towing.

Sublet services (glass, dent removal). These are taxable. The sales tax act enumerates them as taxable automobile services. Taxable automobile services include, but are not limited to, "installing" or "applying" parts, paint, etc. to an automobile, and "repairing, servicing, altering or maintaining" an automobile (K.S.A. 79-3603(p), (q), and (r)). So glass removal/installation and dent removal are taxable services regardless of the "sublet" label.

The organizing principle: towing is not an enumerated taxable service, so it escapes tax when broken out separately; the actual repair-type services are enumerated, so they are taxable.

What this means for you

Auto body and repair shops

Break out towing as its own line item to keep it non-taxable. If you bundle towing into a taxable repair invoice without separately stating it, the towing becomes taxable along with the repair. On a total-loss job where you do no repair, towing is not taxed.

"Sublet" work is still taxable

Farming out glass or dent work to another shop doesn't change its character — glass removal/installation and dent removal are taxable enumerated auto services. Charge sales tax on those charges to your customer.

Separately stating matters

The dividing line is both what the service is (enumerated repair vs. non-enumerated towing) and how you bill it (separately stated vs. bundled). Get both right on the invoice.

Common questions

Q: Are towing charges taxable in Kansas?
A: Not if they are separately stated line items on the customer's bill. Towing is not an enumerated taxable service.

Q: What if towing isn't separately stated?
A: Then it is taxable when repairs are performed on the vehicle, because it is folded into the taxable repair charge.

Q: What about a total-loss vehicle?
A: When the vehicle is a total loss and no taxable repair is performed, no sales tax is charged on the towing.

Q: Are sublet glass and dent-removal services taxable?
A: Yes. The sales tax act enumerates installing/applying parts and repairing, servicing, altering, or maintaining an automobile as taxable (K.S.A. 79-3603(p), (q), (r)).

Citations and references

• K.S.A. 79-3603(p) — tax on services of installing or applying tangible personal property (including to automobiles).
• K.S.A. 79-3603(q) — tax on repairing, servicing, altering, or maintaining tangible personal property.
• K.S.A. 79-3603(r) — additional enumerated taxable services referenced for taxable automobile services.
• The ruling notes there is no separate sales tax imposition for "towing," so a separately stated towing charge is not taxed.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-073

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 21, 2002

XXXX
XXXX
XXXX

RE: Your letter dated August 19,2002

Dear XXXX:

Thank you for your recent letter. You operate a body repair shop in the Kansas City area. You ask if towing charges are subject to sales tax. Please be advised that towing charges are not subject to Kansas sales tax if they are separately stated line items on the customer billing. When these charges are not separately identified as a line-item charge, they are subject to sales tax when repairs are performed on the vehicle. As you indicate, when a vehicle is a total loss, sales tax should not be charged on towing services since no taxable repair services are performed.

In your letter, you discuss "sublet" services, such as "glass removal and installation" and "dent removal." These services are taxable since the sales tax enumerates them as being taxable. Taxable automobile services include, but are not limited to, "installing" or "applying" parts, paint, etc. to an automobile; and "repairing, servicing, altering or maintaining" an automobile. See K.S.A. 79-3603(p); K.S.A. 79-3603(q); and K.S.A. 79-3603(r). Unlike repairing, installing, applying, servicing, etc, there is no separate sales tax imposition for "towing." Therefore, towing charges are not subject to Kansas sales tax if they are a separately stated line-item on the customer's bill. The "sublet" services that you describe are subject to sales tax the sales tax act makes them taxable.

I hope that I have adequately explained why towing charges are not taxed when stated as a separate line item charge, while the other charges are taxed. This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 08/26/2002 Date Modified: 08/26/2002

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