During the 2017 Session, the Virginia General Assembly enacted House Bill 1518 (2017 Acts of Assembly, Chapter 104), which changed the Retail Sales and Use Tax treatment of separately stated shop supplies for automobile repair shops effective July 1, 2017. Under the legislation, automobile repair shops will be authorized to purchase eligible supplies exempt from the tax and will be required to collect the tax on any separately stated charge billed to the customer for supplies used during automotive repairs.
Since the legislation represents a change in long-standing policy, the Department of Taxation will issue a guidance document to facilitate understanding of and compliance with the new legislation.
To increase government transparency and facilitate the development process, the Department solicited comments regarding the development of the bulletin. Interested parties were given a 30 day period to comment on the draft of the bulletin. During that time, the Department received two comments. The comments and the Department’s responses can be found below.
The law change becomes effective July 1, 2017.
Legislative Documents
House Bill 1518 (2017)
- HB 1518 Text as passed the House and Senate
- HB 1518 PDF of text as passed the House and Senate (PDF)
- HB 1518 Fiscal Impact Statement
Guideline Development Documents
- Auto Repair Shop Supplies Sales Tax Treatment Workplan (PDF)
- Auto Repair Shop Supplies Sales Tax Treatment Interested Parties Notice (PDF)
- Draft Auto Repair Shop Supplies Sales Tax Treatment Guidelines (PDF)
- Interested Parties Comments and Virginia Tax's Responses (PDF)
- Final Auto Repair Shop Supplies Sales Tax Treatment Guidelines (PDF)