Tire dealers in Virginia will soon not have to pay taxes on diagnostic and road service labor, thanks to efforts by the Virginia Automotive Association (VAA).
HB1677, which does away with what VAA officials call the "unfair taxation" of these common services, was recently signed by Gov. Glenn Youngkin and will take effect on July 1.
It was sponsored by Kim Taylor, VAA member-delegate.
"We learned the Virginia Department of Taxation was interpreting tax code to consider diagnostic labor and roadside service labor taxable when a part was sold as the result of the procedure," says Steve Akridge, longtime VAA executive director.
"Automotive labor has had a long-standing exemption in Virginia, so no shops were charging tax on these labor items. Taxation began auditing shops and charging them back taxes, penalties and interest based on this interpretation of code.
"We disagreed with this and challenged taxation with an appeal, which was denied. We then met with the attorney general’s staff to present the full details of the issue. We sent a direct letter to AG Jason Miyares, requesting a ruling. None of this got our desired results.
"Our last effort, which we knew would be a difficult road, was to put a bill in the General Assembly, which Delegate Taylor was willing to do. VAA led this direct lobby effort through our lobbyist Bo Keeney and the VAA Legislative Committee. VAA members made calls and sent emails to key legislators. This VAA team effort led to the passage of the bill.
"Due to this effort by VAA and our members, every shop in Virginia will no longer be financially impacted by this on their sales tax audits."
