Towing

In general, towing charges are subject to tax under the Retailing classification of B&O tax and retail sales tax must be collected.

Towing damaged or inoperable vehicles

In special circumstances, the department will allow towing companies to accept resale certificates. Damaged or inoperable vehicles may be towed to service stations or auto repair shops for repair or servicing and the towing charges will be paid by the service station or auto repair shop. This generally happens as a matter of convenience. The auto repair shop or service station will bill the customer (or insurance company) for the repairs and the towing charges. The charge to the customer is a retail sale subject to the Retailing B&O tax and the retail sales tax.

Under these special cases, a reseller permit may be given to the towing company by the service station or repair shop. The towing company would report this income under the Wholesaling B&O tax classification. For sales after Jan. 1, 2010 the resale certificate was replaced by the reseller permit. For further information refer to Reseller Permits.

Resale certificates may not be given to the towing company by the service station or repair shop in cases where the charge to their customer is not subjected to the retail sales tax, for example, when repairs are done under a manufacturer's warranty. In such cases, a Retail Sales Tax Exemption Certificate (Original Manufacturer's Warranty) (pdf) must be presented to the towing company.

References

Washington Administrative Code (WAC) 458-20-129
Excise Tax Advisory (ETA) 3016 (pdf)
ETA 3084 (pdf)