Wyoming assesses a statewide 4 percent sales and use tax; known as an “excise tax”; on the sale of goods. Most services are not taxed. But there is an exception for “sales price paid for services performed for the repair, alteration or improvement of tangible personal property,” which are taxable. So for example, if a person paid a mechanic to repair their car, that would be subject to Wyoming’s excise tax.
But what about roadside services? Say you get a flat tire or your car won’t start and you call AAA. Do you have to pay sales tax to have someone come out and change that tire or jump start your car? The Wyoming Supreme Court recently looked at this very issue and determined such roadside services were not taxable.
The respondent in this case, Big Al’s Towing and Recovery v. Wyoming Department of Revenue, sells car batteries and provides towing services. It was undisputed in the litigation that towing services were not subject to the sales tax. But in 2009, and again in 2017, the Wyoming Department of Revenue (DOR) issued guidance that stated “jump starts and tire changes are taxable as repairs.”
The DOR subsequently conducted a tax audit of Big Al’s and found it owed $10,881.66 in sales taxes that should have been collected and remitted between October 2016 and September 2019. Most of this assessment related to “jump start, lockout, and tire change services” that Big Al’s provided to customers under a contract with motor clubs like AAA.
Big Al’s appealed the DOR’s audit to the Wyoming State Board of Equalization, a three-member body charged with hearing most taxpayer disputes in the state. Before the Board, a DOR official testified that while roadside services were not “repairs,” they were “alterations or improvements” to a vehicle and thus subject to the excise tax on such services. The Board disagreed. It ruled in favor of Big Al’s and held that the terms “alteration” and “improvement” could be stretched to include services like unlocking a car door or jump starting a dead battery.
The DOR then appealed the Board’s decision by filing a petition in Laramie County District Court. Judge Peter H. Froelicher sided with the DOR and found that roadside services did in fact “make the vehicles different without changing the vehicles into something else and make the vehicles better.” In other words, Froelicher believed the services did “alter” or “improve” the vehicle.
As you can probably guess, Big Al’s appealed Judge Froelicher’s decision to the Supreme Court. And in a November 15, 2022, opinion that five-judge court unanimously reversed the district court and reinstated the Board of Equalization’s original decision in favor of Big Al’s.
Justice Lynne Boomgaarden, writing for the Supreme Court, said that neither jump-starting a car, unlocking it, nor changing its tires constituted an alteration or improvement as defined by the excise tax law. Critically, Boomgaarden noted that none of these services made any permanent changes to the vehicles, i.e., it did not make the vehicle any more valuable than it was previously.
For instance, Justice Boomgaarden said that when you jump start a vehicle, “the battery receives enough electricity from an outside source to allow the engine to start.” Aside from this one-time event, there is nothing “different” about the vehicle after Big Al’s performs this service. In that sense, nothing is altered or improved. Similarly, when Big Al’s replaced a flat tire with that vehicle’s own spare tire, it was simply swapping the locations of the tires. Again, this did nothing to alter or increase the value of the vehicle in any way. Accordingly, none of these roadside services were taxable events under Wyoming law.
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