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Tax on service labor gets attention in North Carolina

By Dave McMahon

The North Carolina Motorcycle Dealer Association is helping dealers get the word out to their state representatives that taxes on labor will have a negative impact on their business.

The state tax applying to labor on repair, maintenance and installation services went into effect March 1. The changes put franchised powersports dealers at a disadvantage, as local repair shops may not be required to charge the tax.

Thor’s Sentry Vest, available from Parts Unlimited, was selected as a Powersports Business Nifty 50 winner earlier this year. (From left) Michael Tam, product designer and developer; Aaron Morales, senior designer; and Warren Davis, product designer, were part of the product’s launch team.

Thor’s Sentry Vest, available from Parts Unlimited, was selected as a Powersports Business Nifty 50 winner earlier this year. (From left) Michael Tam, product designer and developer; Aaron Morales, senior designer; and Warren Davis, product designer, were part of the product’s launch team.

As of March 1, according to the North Carolina Department of Revenue, powersports dealers in North Carolina must charge a sales tax on their labor regarding repair and maintenance (including cleaning and refurbishing) services for motorcycles and off-road vehicles like ATVs. Prior to the law change, dealers were only required to charge sales tax on the vehicles, parts, etc.

Here’s how NCMDA lobbyist David Ferrell summed it up: “This has the potential to create a different standard when compared to businesses that only do repair work and are not considered ‘retailers’ under the sales tax law,” Ferrell wrote to NCMDA members. “For instance, a business that only performs repair work on may not have to collect sales tax on their labor on repair and maintenance, if they are not ‘retailers,’ whereas our members would have to collect sales tax on our labor for the same services. I do not know whether businesses that only provide repair services would have to collect the tax, but there is a concern expressed by some that this is the case. This is an issue that cuts across many industries, and the legislature is currently examining this issue and may attempt to ‘level the playing field’ in the 2016 legislative session.”

BikeMaster won another Nifty 50 award in 2016 for its Motorcycle Dolly. (From left) BikeMaster brand manager Phillip Mayfield and brand manager Katie Qatato show off their latest certificate.

BikeMaster won another Nifty 50 award in 2016 for its Motorcycle Dolly. (From left) BikeMaster brand manager Phillip Mayfield and brand manager Katie Qatato show off their latest certificate.

An effective state association with a lobbyist at your state’s capitol is the most ideal way to combat bad-for-business tactics like this one. I saw firsthand how effective the NCMDA is during a visit to their annual meeting earlier this year, so it doesn’t surprise me to see motorcycle dealers in the state being informed in a timely manner about state laws that could potentially harm their business.

Industry Leaders

We once again had a whale of a time narrowing our list of candidates for Executive of the Year and Industry Leaders. How do we select them? First off, it’s entirely selected by the PSB editorial staff. So no need to send cookies or gift cards. We base the selections on names that we keep hearing while talking to dealers and other industry members throughout the course of the year. Those conversations serve as a launch pad of sorts, then we take a deeper look at how their businesses have helped the dealer body.

The Giant Loop team was proud to show offits 2016 Powersports Business Nifty 50 Award for its Fandango Tank Bag Pro. (From left) Harold Olaf Cecil, Giant Loop owner/founder; George Craig, operations manager; Dan Price, warehouse;  Brian Frankle, design director; Dakota Buer, warehouse; and Paul Robson, production manager.

The Giant Loop team was proud to show offits 2016 Powersports Business Nifty 50 Award for its Fandango Tank Bag Pro. (From left) Harold Olaf Cecil, Giant Loop owner/founder; George Craig, operations manager; Dan Price, warehouse; Brian Frankle, design director; Dakota Buer, warehouse; and Paul Robson, production manager.

And the more we talked to dealers, the more we learned that Dennis McNeal is “the guy” when it comes to the success Yamaha dealers have had over the past year. Managing editor Liz Keener does another bang-up job of getting to the core of what makes McNeal a great leader. Similarly, our selection of Industry Leaders is meant to showcase those who elevate the dealer body with forward-thinking ideas. Of course, none of this is to say that only five folks in the industry have done great things over the past year. Who would you have picked for Executive of the Year? Why?

Tough month

You can see from our data partners at CDK Global that Lightspeed results did not bring much to shout about in April. Overall, same store sales at more than 1,500 dealerships were down nearly 3 percent overall in the U.S. The Northwest saw the biggest unit sales gain, with 12.5 percent growth compared to April 2015. If every line on every ticket is important to your growth, be sure to make plans now to attend our fourth annual Powersports Dealer Seminars during AIMExpo in Orlando. It’s a surefire way to keep your dealership on the right track to profitability.

Dave McMahon is editor in chief of Powersports Business. Contact him at 763/383-4411 or dmcmahon@powersportsbusiness.com.

 

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