Fix Your Car

Thursday, CSG, on behalf of the Iowa Collision Repair Association, asked Representative Paul Shomshor, Chairman of the Ways & Means Committee, to introduce a bill that would change the way certain materials used in auto-body repair shops are taxed.

Currently, both parts and labor that go into vehicle repair are taxed to the consumer. That tax is paid on the retail price of the parts and labor. “Parts” includes the “big” parts, like bumpers and corner panels.

“Materials” used in auto repair include things like paint, putty, sandpaper, and cleaning compounds. The costs of these materials are taxed to the auto body shop itself and not the consumer. This results in the shop paying sales tax on the wholesale price of the materials.

If the consumer were to pay the tax on these materials instead of the shop, the consumer would pay a tax on the retail price – this slight increase in taxes paid would add an estimated $1.8 million to the state’s revenue.

Iowa is one of only a few states in the nation that require the sales tax on materials to be paid by the auto-body shop. Passage of this bill will lighten the overall tax burden on these small business owners.

Senate Study Bill 1210, in the Senate Ways & Means Committee is awaiting a fiscal impact statement before it will move. The introduction of the House bill and the momentarily static Senate version elude last week’s funnel deadline because they are Ways & Means bills.