Sales Tax on Large Truck Repair Services and Parts

Topic:
SALES TAX; TRUCKS;
Location:
TAXES - SALES; TRUCKS;

OLR Research Report


January 23, 2007		2007-R-0107
SALES TAX ON LARGE TRUCK REPAIR SERVICES AND PARTS

By: Judith Lohman, Chief Analyst

You asked whether Connecticut, Massachusetts, New Jersey, New York, and Rhode Island impose sales taxes on labor and parts for repairing and maintaining trucks that have gross vehicle weight ratings over 26,000 pounds.

All five states impose sales tax on retail sales of tangible personal property. Thus, unless the state's law has an explicit exemption for truck repair parts, sales of those parts are subject to the state's sales tax. Of the five, only New Jersey and New York exempt sales of repair and replacement parts for certain trucks from the general tax on sales of tangible personal property. Thus, such sales are subject to sales tax in Connecticut, Massachusetts, and Rhode Island.

Unlike tangible personal property, which is taxable unless expressly exempted, services are taxable only when expressly included in state law. Connecticut is the only one of the five states that taxes all motor vehicle repair services. The others either do not tax most services, including repair services (Massachusetts and Rhode Island), or tax repair services in general but have limited exemptions for certain truck repair services (New Jersey and New York).

Table 1 shows complete information for each state.

Table 1: Sales Taxes on Repair Parts and Labor for Large Trucks in Connecticut and Surrounding States

*STATE*	*TAX RATE*	*PARTS*	*LABOR*	*COMMENTS*
CT	6%	Taxable	Taxable	Sales of tangible personal property and motor vehicle repair services are taxable. No exemption for truck parts or truck repairs (CGS § 12-407 (37)(M)).
MASS	5%	Taxable	Exempt	Repair parts and materials are taxable, unless the value of the parts or materials is inconsequential (i. e. , less than 10% of the total charge) and the charge for them is not separately stated. Charges for labor are taxed only if the value of the parts is 10% or more of the total charge and labor charges are not separately stated. The 10% threshold is a guideline and can vary depending on the facts and circumstances of a particular transaction (830 CMR 64H1. 1).
NJ	7%	Exempt	Exempt	Parts exemption limited to trucks (1) registered in New Jersey with gross vehicle weight ratings over 26,000 pounds and operated exclusively in interstate commerce or (2) registered as farm vehicles with gross vehicle weight ratings over 18,000 pounds (NJSA § 54: 32B-8. 43). Repair services exemption applies only if services are provided by a person who is not in the regular business of offering truck repair services to the public (NJSA § 54: 32B-8. 41).
NY	7. 125%- 9% (combined state and local rates)	Exempt	Exempt	Exemptions apply only to trucks with gross vehicle weight ratings over 26,000 pounds (McKinney's Consolidated Laws of New York, Tax Law § 1115 (a) (26) and § 1115(g))
RI	7%	Taxable	Exempt	Sales of tangible personal property are taxable. No exemption for truck parts. Services are generally not taxable (Gen. Laws of R. I. , § 44-18-7)

JL: dw