Connecticut Considers Legislation to Eliminate Double Taxation on Paint and Materials

On March 9, the Connecticut Joint Committee on Finance, Revenue and Bonding held a hearing on Senate Bill 335 (SB 335). The bill proposes to eliminate the sales and use tax on goods used exclusively in a business process such as paint in materials.

The bill would help clarify the sales tax treatment of paint and materials. A Department of Revenue Service ruling led to collision repair facilities being charged sales tax on paint and materials that had previously been classified as a sale for resale.

Speaking on behalf of the bill, Lisa Siembab, executive director of the Automotive Service Association of Connecticut (ASA-CT) said, “Collision repairers in the state of Connecticut have been unfairly penalized by an interpretation of the law that allows paint and materials to be subject to double taxation. ASA-CT believes that the current law does not take into consideration the evolution of industry practices, and we think that SB 335 is a good first step toward lifting this unnecessary burden on small businesses and their customers.”

In a letter of support submitted to the Committee, ASA also described how taxation of paint and materials is unfairly applied when shops purchase it, and again when they sell it. It also explained that today’s auto body repair business practices, related to the purchase of paint and materials, works to the advantage of vehicle owners or consumers and the environment, i.e. purchasing and mixing what is needed.

The Auto Body Association of Connecticut (ABAC) also supports the legislation. In testimony submitted to the committee by Tony Ferraiolo, president of ABAC, he explained that the association’s members would like the state to return to prior practice regarding the taxation of paint and materials. “On behalf of our member shops and the collision repair industry at large in Connecticut, the ABAC would like to continue to ensure that when paint is purchased from a wholesaler, that purchase would be considered a “sale for resale”, as it has been in the past.”

In September, ABAC called on legislators to address the double taxation of paint materials used in collision repair before the Connecticut General Assembly State Tax Panel.

Written by ASA CT

ASA advances professionalism and excellence in the automotive repair industry through education, representation and member services. To take advantage of the many benefits of membership in ASA, please visit www.ASAshop.org or call (817) 514-2931.

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