Q. If I tow a wrecked vehicle from the crash site to a holding facility in Nebraska, am I required to charge sales tax on the amount charged for towing?
A. Yes. The charge is taxable regardless of who you bill, even if the wrecked vehicle is later totaled by the insurance company.
If you are later hired to tow this wrecked vehicle from the holding facility to the salvage yard, and you charge a separate fee for this tow, such charge is not subject to sales tax provided the salvage yard is a licensed motor vehicle dealer. The salvage yard can issue a Nebraska Resale or Exempt Sale Certificate, Form 13, to you when this vehicle will become an inventory vehicle of the salvage yard.
Q. Is a wrecked or totaled vehicle considered an auto hulk or crushed vehicle?
A. No.
Q. 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 be no separate tax collected by you on the tow charge, including any mark-up.
Q. Are towing services provided for under a warranty or maintenance agreement subject to tax?
A. No. The towing company must receive a Nebraska Resale or Exempt Sale Certificate, Form 13, for those vehicles towed under a warranty or maintenance agreement.
Q. What if the towing charge is paid for by an insurance company or will be reimbursed by insurance?
A. The amount charged for vehicle towing is taxable.
Q. Is the sale of a warranty or service agreement that covers towing taxable?
A. Yes. Although any charge for actual towing services performed under such an agreement would not be taxable. However, if the owner of the motor vehicle pays for towing but is later reimbursed by an insurance company, the charge for towing is taxable.
Q. Is a motor club membership taxable as a service agreement for towing?
A. No, as long as the motor club membership provides other services and benefits besides towing.
Q. Is a motor club taxable when it pays for towing a member’s vehicle and on what amount do I collect sales tax when I bill the motor club?
A. The charge to the motor club for towing is taxable. The taxable amount is the amount the motor club pays for the tow.
Q. Does towing include winching or uprighting a motor vehicle?
A. Yes. Motor vehicle towing consists of towing, pulling, transporting, winching, or uprighting an overturned motor vehicle. Therefore, the charge to winch a motor vehicle out of a ditch or upright an overturned vehicle by using a winch, air bags, or a crane is taxable.
Q. Are mileage charges for towing a motor vehicle part of gross receipts and taxable?
A. Yes. The mileage charge for towing a motor vehicle is taxable, even if the mileage charge is separately itemized or separately invoiced.
Q. Is the charge for towing a repossessed motor vehicle taxable?
A. Yes.
Q. Are towing companies that charge for cleanup or for off-loading a disabled vehicle required to collect sales tax on such charges?
A. No. The charges for off-loading and cleanup of the wreckage site are not taxable provided such charges are separately itemized on the billing invoice or separately invoiced and such statement is not used as a means of avoiding the imposition of the sales tax upon the actual charge for the towing service.