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By- Jeanette Rash, Legislative Chair
Several years ago, TTSA fought to get an opinion on sales tax concerning the vehicles that are auctioned or disposed of. This letter has been printed many times and is dated January 17, 1997. Since that time as with any rule or law, the statue was changed. Clearly storage of a motor vehicle is taxable and any service connected with storage is taxable hence the impound fee. Towing is not taxable except if the towing is done in connection with a repossession tow.
Unknown to us, an administrative hearing took place that changed what we had been told. The problem is that depending on the auditor that showed up at the vehicle storage facility, decisions changed from audit to audit. Not knowing about the change left us “sitting ducks”. Basically, without getting into the details, the administrative judge said that no matter what, sales tax is due when a vehicle is sold at an auction as the vehicle storage facility is getting paid “storage”.
There are many situations to consider. All of us across the state get rid of vehicles in many ways. Some have auctions by law enforcement in which law enforcement handles notice and does physically come to the vehicle storage facility. Some vsf’s are agents of law enforcement and hold the auctions for law enforcement. Some apply for certificate of authorities or abandoned nuisance vehicle disposal. Some dispose of by storage liens paying the tax, title and license fees. Some vehicles are sold directly at the auction. Some vehicles get no bid at all. And some vehicle storage facility operators just send vehicles to the crusher without any paperwork which is totally illegal but through desperation and failure to understand or want to pay the costs, this happens.
I own a big vehicle storage facility and a small one. Both are being audited at the same time. Both auditors wanted to handle the audits in a different way. At this time, the supervisor has stepped in and now we are suppose to be handling both audits the same way so that the outcome is consistent. By having this experience, it has convinced me of the difficulty of this task both for the vehicle storage facility owner and the auditor.
Again, TTSA is stepping up to the plate here. We were so fortunate that the same person who wrote the 1997 letter is the person we are working with. They, the comptroller’s office, are working with us to come to a complete resolution in these matters. Had they said no—we, the comptroller’s office, are going with the administrative judge’s decision, I suspect that many a vsf would be put out of business with huge penalties and interest to be paid. We have asked our lobbyist, CJ Tredway, to assist us in this endeavor. We have looked for any assistance that we could find. CJ has gotten guidance from a tax attorney. Right now, the door is open with the comptroller’s office and we want to work with them if at all possible to get a resolution.
We have submitted the list of questions to their office and await their response. We will then sit down with them and discuss what we do agree with and what we can make a case for. One big issue is the tow fee not being included in the calculation of percentage of tax owed. This has been one of the most difficult issues that we have faced because of the different circumstances across the state. We will get a firm decision and from that point on, all vsf’s will have to abide by the new opinion letter. The comptroller’s office will be at the tow show in Arlington to discuss this matter in great detail and answer all questions.
The Lone Star Roundup is going to be one of the most important meetings that we will have. Put the date on your calendar now! As soon as we get the decision we will get it to each and every one of you. It will be posted on our website, too. Hopefully, we will have the letter in hand within the next few weeks. Remember, TTSA is always fighting the battles to help your business every day and you may not even know it!!
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