Virginia Tax Commissioner Issues Ruling on Sales Tax Exemption for Automotive Repair Services

The Virginia Tax Commissioner Aug. 21 issued a ruling regarding the application of retail sales and use tax to diagnostic charges in automobile repair. The Taxpayer argued that diagnostic testing should be considered part of repair labor, which is exempt from the retail sales and use tax. However, the Commissioner upheld the assessment, stating that diagnostic fees or charges are a taxable service when billed in connection with the sale of tangible personal property, but noted that recent changes to Virginia Code § 58.1-609.5 8, effective July 1, 2023, added an exemption for amounts separately charged for labor rendered in ...