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Wednesday, 20 March 2013 22:01

Texas HB 71, If Passed, Would Lower Tax Bills for ‘Non Retail’ Collision Repair to Dealer Rates

The Automotive Service Association (ASA) is urging all independent automotive repairers in Texas to contact their state legislators and voice their support for a bill that would bring balance to the state tax laws. Current Texas tax code allows automotive service and collision repair shops owned by new or used car dealerships to be taxed at half the rate of independently owned businesses doing identical work.

The tax code in Texas classifies dealership sales (including repair work) as “retail,” allowing their service and repair departments to be included under that category.

The bill consists of a one sentence insertion to create a new clause C of the “retail trade” definition:  “the activities classified as Industry Group 753 of the 1987 Standard Industrial Classification Manual published by the federal Office of Management and Budget.” SIC Industry Group 753,  Automotive Repair Shops is part of: SIC Major Group 75 - Automotive Repair, Services, and Parking.

Texas House Bill 71, if passed, would allow independent repair shops to be taxed the same amount that dealers, parts stores, and tire stores are now taxed. The bill’s provisions would amend Chapter 171 of the Tax Code to permit repairers to use a tax rate of 0.5 percent rather than 1.0 percent.

The Texas Legislative Budget Board estimates that, should the measure be adopted, the state would lose approximately $7.5 million in annual revenue used for the Property Tax Relief Fund. The office notes that any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program. The Texas House Ways and Means committee held a hearing on the measure on March 18 but the bill is still listed as pending in committee. The act would take effect Jan. 1, 2014.

ASA is asking Texas repairers to help support House Bill 71 by contacting their state legislators urging support of this bill. The association has prepared a form letter that repairers may fill out and send to their representatives. See ASA’s legislative web site

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