A. The gross proceeds or gross receipts
derived from wrecker and towing services are subject to state and local gross
receipts taxes. The gross proceeds or gross receipts derived from wrecker and
towing services include mileage fees and towing charges.
B. DEFINITIONS.
1. "Wrecker and towing services" means
pushing, pulling, carrying, or hoisting any motor vehicle, vehicle, trailer, or
semitrailer from an initial point of service to some other destination and
includes the rendering, furnishing, or performing of any service on a damaged,
disabled, immovable, or non-operable motor vehicle, vehicle, trailer, or
semitrailer. Wrecker and towing services include hook-up fees charged for
recovering a motor vehicle, vehicle, trailer, or semitrailer from locations
such as a ditch, pond, hole, or median, prior to towing. Wrecker and towing
services does not include the transportation of motor vehicles to or from a new
or used car dealership for the purpose of placing the vehicles into inventory
for sale or returning the vehicles to an automobile auction for sale.
2. "Motor vehicle" means every vehicle
subject to registration for use on the public roads and highways.
3. "Vehicle" means every device in, upon, or
by which any person or property is, or may be, transported or drawn upon a
highway, excepting devices moved by human power or used exclusively upon
stationary rails or tracks.
4.
"Trailer" means every vehicle with or without motive power designed for
carrying persons or property and for being drawn by a motor vehicle and so
constructed that no part of its weight rests upon the towing vehicle.
5. "Semitrailer" means every vehicle with or
without motive power designed for carrying persons or property and for being
drawn by a motor vehicle and so constructed that some part of its weight and
that of its load rests upon or is carried by another vehicle.
C. LOCAL TAXES. For the purpose of
determining the correct local gross receipts taxes to collect, the following
guidelines shall apply:
1. If the motor
vehicle, vehicle, trailer, or semitrailer is towed from the location where the
vehicle is picked up and delivered to a destination in Arkansas, the local
taxes at the point of delivery or destination should be applied.
2. If only wrecker services are provided and
the motor vehicle, vehicle, trailer, or semitrailer is not towed from its
location to another destination, the local taxes at the place where the motor
vehicle, vehicle, trailer, or semitrailer is located should be
applied.
3. Examples.
Example 1: J.T.'s car breaks down in Cabot, Arkansas. J.T.
hires a towing service to tow the car into Little Rock, Pulaski County,
Arkansas for repairs. The City of Little Rock and Pulaski County have a sales
tax. The place of destination determines what tax is due. The Arkansas state
sales tax, the City of Little Rock sales tax and the Pulaski County sales tax
apply.
Example 2: J.T.'s car breaks down in Ft. Smith, Arkansas.
J.T. hires a towing service to tow the car into Oklahoma for repairs. Arkansas
state and local sales tax does not apply.
Example 3: J.T.'s car breaks down in Oklahoma, and J.T. hires
a towing service to tow the car into Ft. Smith, Arkansas for repairs. Since
J.T.'s car was delivered to a destination in Arkansas, the Arkansas state sales
tax, the City of Fort Smith sales tax, and the Sebastian County sales tax
should apply.
Example 4: J.T. is traveling to his home in Texarkana, Texas
and drives his car into a ditch in Little Rock, Arkansas where it becomes stuck
in the mud. J.T. hires a wrecker service to pull his car from the ditch. J.T.'s
car is not damaged, so it is not necessary to tow the car to a destination for
repairs. The City of Little Rock and Pulaski County have a sales tax. The point
of service determines what tax is due. The Arkansas state sales tax, the City
of Little Rock sales tax, and the Pulaski County sales tax apply.
D. PERSONS RESPONSIBLE
FOR COLLECTING AND REMITTING THE TAX. The tax shall be collected and remitted
by the seller of the wrecker or towing services. Wrecker and towing services
may be purchased exempt as sales for resale by a person holding a retail permit
and performing taxable repairs on a towed motor vehicle, vehicle, trailer, or
semitrailer, if the charge for the wrecker and towing services and the
applicable taxes are collected from the ultimate consumer by the person
performing the repairs.
Example: ABC Towing Company has a contract to tow motor
vehicles to XYZ Repair Shop for repairs. XYZ Repair Shop holds a retail permit
and charges its customer for repairs, the wrecker and towing services, and the
applicable taxes. XYZ Repair Shop is entitled to claim the sale for resale
exemption on the wrecker and towing services it purchased from ABC Towing
Company since it is collecting the sales tax for the wrecker and towing
services from its customer.
E. AUTOMOBILE CLUBS OR INSURANCE COVERAGE. If
wrecker and towing services are provided through an automobile club or
association, motor club or similar organization, or an insurance company, the
taxable charge is the amount invoiced to the club, association, or insurance
company for the services plus the amount of any applicable deductible. The
charge for an automobile club contract or insurance policy that provides for
towing is not subject to tax.
Example: XYZ Insurance Company pays J.T.'s Wrecker Service
$30.00 toward the tow of a motor vehicle on behalf of John Doe. John Doe pays
J.T.'s Wrecker Service an additional amount of $20.00 as a deductible. J.T.'s
Wrecker Service should remit tax on the entire $50.00. XYZ Insurance Company
does not collect tax on the premium paid by John Doe for insurance that
provides for towing.
