OLR Report 2016-R-0029 identifies the circumstances under which auto paint suppliers charge sales tax on paint sold to auto repairers. Suppliers must charge sales tax if the auto repairer purchases the paint for any purpose other than repairing a specific customer’s vehicle. The repairer must first present the supplier with a sales and use tax resale certificate, which indicates that the paint is for a particular vehicle and the repairer will subsequently charge the customer for the paint and the sales tax.
This rule reflects a distinction the regulations make between “integral” and “non-integral” parts. Integral parts, such as filters, belts, and hoses, retain their identity after an auto repairer installs them in a vehicle. Non-integral parts, such as masking tape and sealants, are consumed by the service provider in repairing the motor vehicle and therefore do not retain their individual identity after use.
Suppliers do not collect sales tax on integral parts as the repairer will install them in a vehicle and charge the customer for the parts and sales tax. Suppliers do collect sales tax on non-integral parts because the repairer purchases them for use on several vehicles.
For more information, read the full report here.