What are these fees?
The tire fee is a fee collected by the seller on the retail sale of every new vehicle tire sold.
The studded tire fee is a fee collected by the seller on the retail sale of every new studded tire sold.
What is the amount of these fees?
Tire sellers must collect a $1 tire fee on the retail sale of every new tire sold for vehicles.
Tire sellers must collect a $5 studded tire fee and the $1 tire fee for each retail sale of studded tires.
Are there exemptions for these fees?
Yes. If any of the following conditions are true, the tire fee is not charged:
- Sales of tires to the federal government.
- Sales of tires to Indians delivered to the enrolled member's reservation.
- Sales of re-treaded vehicle tires.
- Tires provided free of charge under the terms of a recall or a warranty service.
If a tire is returned, are the fees refunded?
Yes. If a customer returns a tire and is refunded the entire selling price, the tire fees are refundable as well.
Can the seller keep a percentage of the tire fees?
Yes. The seller may retain 10% of the tire fees. The remaining 90% of the tire fees must be paid to the department.
Therefore, a seller may retain $.10 per new tire sold, and $.50 per studded tire sold.
Are the fees subject to retail sales tax?
No. Tire fees are not subject to retail sales tax.
How do sellers report the fees to the department?
Sellers must report the number of new vehicle tires sold, under the Tire Fee classification in the “Other Taxes” section. Studded tires sold will be reported under the Studded Tire Fee classification.
The amount paid to the department is calculated by multiplying the number of tires sold by the rate.
Example: 23 new tires sold x $.90 = $20.70; 23 studded tires sold x $4.50 = $103.50
Are the portion of the fees kept by the seller taxable?
Yes. A seller must pay Service and Other Activities business and occupation (B&O) tax on the 10% portion of the fee kept by the seller.
What happens if the Tire Fees is not collected from the seller?
Sellers, who fail to collect these fees or pay the fees to the department, even if the failure is the result of a circumstance beyond their control, are personally liable for the amount of the fee.
Sellers who fail or refuse to collect these fees with the intent to gain an advantage or benefit are guilty of a misdemeanor.