Recent Sales and Use Tax Developments
Purchases on Which a Dealer Must Pay Sales Tax.
The dealership must pay tax on tools, parts, materials and supplies used in the dealership.
This is the list of items that are probably not eligible for the resale exemption
and are taxable when purchased or used by the dealership:
| Abrasives | Polishes | |||
| Battery water | Rags | |||
| Body filler or putty | Razor blades | |||
| Body lead | Rivets and cotter pins | |||
| Bolts, nuts and washer | Sand paper | |||
| Brake fluid | Sheet metal | |||
| Buffing pads | Soaps | |||
| Chamois | Solder | |||
| Cleaning compounds | Solvents | |||
| Degreasing compounds | Striping tape | |||
| Floor dry | Steel Wool | |||
| Grease | Thinner | |||
| Grinding discs | Upholstery tacks | |||
| Hydraulic jack oil | Waxes | |||
| Lubricants | White sidewall cleaner | |||
| Masking tape | Wiping cloths |
However, even an item
on this list can be eligible for the resale exemption. Look at the two
examples concerning paint to see how the test works:
Example 1:
A dealer can buy a can of paint that is used entirely on one car. If the
dealer charges the customer for the can of paint and separately charges the
customer sales tax for the paint, the dealer is eligible for the resale
exemption and does not have to pay sales tax when it purchases the paint but
must charge sales tax on the paint when it is sold.
Example 2:
The dealership has a large container of paint that it uses on a number of
different cars. In that case, if the dealership can quantify the amount of
paint used on each car and the paint is billed and charged separately, the
dealership would not have to pay sales tax on the paint when purchased but
must charge sales tax on the paint when it is sold.