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S.F. No. 326 - Definition of Motor Vehicle Paint and Repair Materials
 
Author: Senator Ann H. Rest
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: February 18, 2013



 

Section 1 provides that the sale of motor vehicle paint and materials by a motor vehicle repair shop or body shop is a taxable retail sale. 

Under current law, parts used to repair a motor vehicle are exempt from sales tax when purchased by a repair shop.  These parts are considered items exempt for resale.  When these parts are used in a motor vehicle repair, they are taxable to the customer when listed separately on the repair invoice.  Repair shop supplies are items used or consumed in repair of a motor vehicle that are not as easily quantifiable for purposes of pricing and invoicing.  Some items, such as rags or solvents, never become part of the vehicle.  Other supplies become part of the vehicle, such as paint or brake fluid.  A line item on an invoice for "shop supplies" is not taxable.

This bill allows a motor vehicle repair shop to calculate the sales price of paint and materials used in the repair by multiplying the number of labor hours by a rate of consideration for the paint and materials.  If this method does not fairly reflect the taxable amount of the retail sale, the repair shop may use another method of calculation, as long as that method fairly reflects the gross receipts from the sale of paint and materials that are consumed in repairing, or ultimately become part of, the repaired motor vehicle.  This method does not apply to wholesale transactions at an automobile auction facility.

Section 2 creates a new definition for motor vehicle repair paint and materials.  “Motor vehicle paint” includes primer, body paint, clear coat, and paint thinner used to paint motor vehicles.  “Motor vehicle repair materials” means items, at retail, that become part of a motor vehicle or are consumed in the repair of the vehicle.  “Motor vehicle repair materials” does not include items not used directly on the motor vehicle, such as items used to clean the shop, tools, or repair equipment, but not used to clean the vehicle.

Effective for sales and purchases made after June 30, 2013.

NBP:dv 

 

 

 
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