Can I purchase motor vehicle towing services for resale?
A. Yes, but only if your business is engaged in motor vehicle towing and you “farm out” or subcontract a tow job to another towing company. You may give that company a resale certificate to avoid paying sales tax when that company bills you. You will then collect tax on the full amount you charge your customer for the towing service. Q. I own an auto engine repair shop. We do not tow vehicles ourselves, but have an outside tow service do this for us. We pay the tow company for the tow, plus tax. Then we charge our customer a mark-up for the tow. Do we collect sales tax on this marked-up charge? A. No. Since you are not providing towing services to your customer (you are simply repairing the vehicle), you should not be charging tax to the customer for “towing.” You can recoup the cost of the tow (including tax) paid to the tow company by passing this cost on to your customer. Your bill to your customer should include the charge for the tow along with any other labor charges. There will
