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VERMONT SALES AND USE TAX GUIDE FOR THE AUTOMOTIVE REPAIRS INDUSTRY- GB-1161
Introducon
Both dealers and repair shops must register with the Vermont Department of Taxes to collect and remit
Vermont Sales and Use Tax on retail sales of auto parts and supplies. If you need further assistance with any
topics covered below, please get in touch with us at tax.business@vermont.gov.
Vermont’s 6% sales tax applies to retail sales of tangible personal property. Sales made for resale are not
subject to tax because they are not retail sales. A retail sale occurs when there is a “bargained-for” exchange,
and the price paid corresponds to the item being sold.
Denions Used in This Guide
• Auto Supply Dealer or Supplier: A business that sells auto parts and supplies.
• Auto Repair Shop: Includes any business that provides auto repair or auto body work or services.
• Auto Repair Work: This could include work on any vehicle or vessel, including cars, trucks, RVs,
motorcycles, mopeds, snowmobiles, all-terrain vehicles, and others.
Repair Parts and Supplies
Not Taxable: Repair Parts Sold to A Shop That Taxes Them When They Are Resold
To The Customer
An auto repair shop may purchase parts without paying sales tax if the parts will be resold to its customer as
part of a repair job. When it resells the parts, the auto repair shop must charge the customer directly for the
part and itemize the bill to idenfy the charges subject to tax. If a shop does not itemize the bill, the enre
charge is subject to tax. An auto repair shop must provide Form S-3, Resale Exempon Cercate (hps://tax.
vermont.gov/sites/tax/les/documents/S-3.pdf), to the supplier when using the resale exempon to purchase
items that would otherwise be taxable.
Not Always Taxable: Parts And Supplies Not Always Resold to The Customer
An auto repair shop has a choice when it comes to some supplies that are not always directly charged to the
customer as part of a retail sale. This comes up with items such as oil, anfreeze, transmission uid, brake
uid, and power steering uid. These items are somemes used in repair work but not always directly charged
to the customer, such as when an auto repair shop tops o these types of uids.
The law requires an auto repair shop to follow one of these three approaches:
1. The shop may pay sales tax on these items when purchasing them from a supplier. In this case, the
customer cannot be charged tax—the shop is using the items in its business.
2. If the item is conveyed to the customer the shop may itemize it on its bill to its customer, and collect and
remit sales tax from the customer. In this case, the shop may use a resale exempon cercate when
buying from the supplier.
3. If the shop neither pays sales tax when it purchases the item from a supplier nor charges tax to its
customer, it must pay 6% sales or use tax on the item.
Please contact the Department of Taxes if unique or extraordinary circumstances require you to deviate from
this guidance.