A few weeks ago, Allstate instructed many GCIA members that they would no longer be reimbursing shops for the sales tax charged to the consumer on paint and materials.
After communications with the Georgia Department of Revenue and Allstate regarding this issue, GCIA has received word from Allstate that their stand on this issue has been reversed.
Early on Tuesday, September 25th, 2012, Dan Risley, Market Manager (south), Allstate Insurance, spoke to Howard Batchelor, Executive Director of the GCIA, and told him that Allstate will pay sales tax on Paint and Materials.
We are sending this notice to all member shops so that they are aware that there have been no changes made by the Georgia Department of Revenue regarding sales tax.
The GCIA is attempting to obtain an official written statement from Allstate Insurance. In addition, the GCIA is working on Guidelines for members as to how shops should pay, collect and remit the sales tax on P&M items. If you would like to assist in writing these Guidelines, contact Howard Batchelor at at (770) 367-9816 or email to howard@gcia.org.
From the GA Department of Revenue:
In general, regulation [560-12-2-.08] provides that the sale of auto painting can be structured as either
1. The sale of painting services. In this scenario, the auto painter must pay tax on all tangible personal property used to perform his service and will bill his customer for painting services only; or,
2. The retail sale of paint with painting labor. In this scenario the auto body shop will purchase the paint exempt for resale, and then bill his customer for the paint and repair/painting labor, and then collect tax on the sale to the customer. Of course, the labor charge will be exempt if itemized on the customer's invoice.
Regulation 560-12-2-.08 supports both types of transactions. The Department can only require that the tax be applied correctly to the type of transaction chosen by the seller and buyer.
Sincerely,
The Board
Georgia Collision Industry Association