1. (a)

   1. (1) The gross proceeds or gross receipts derived from wrecker and towing services are subject to state and local gross receipts taxes.
   2. (2) The gross proceeds or gross receipts derived from wrecker and towing services include mileage fees and towing charges.

2. (b) Definitions. As used in this section:

   1. (1) “Motor vehicle” means every vehicle subject to registration for use on the public roads and highways;
   2. (2) “Semitrailer” means every vehicle with or without motive power designed for carrying persons or property and for being drawn by a motor vehicle and so constructed that some part of its weight and that of its load rests upon or is carried by another vehicle;
   3. (3) “Trailer” means every vehicle with or without motive power designed for carrying persons or property and for being drawn by a motor vehicle and so constructed that no part of its weight rests upon the towing vehicle;
   4. (4) “Vehicle” means every device in, upon, or by which any person or property is, or may be, transported or drawn upon a highway, excepting devices moved by human power or used exclusively upon stationary rails or tracks; and

   5. (5)

      1. (A) “Wrecker and towing services” means pushing, pulling, carrying, or hoisting any motor vehicle, vehicle, trailer, or semitrailer from an initial point of service to some other destination and includes the rendering, furnishing, or performing of any service on a damaged, disabled, immovable, or nonoperable:

3. (i) Motor vehicle;

   1. (ii) Vehicle;

      1. (iii) Trailer; or

         1. (iv) Semitrailer.
      2. (B) Wrecker and towing services include hook-up fees charged for recovering a motor vehicle, vehicle, trailer, or semitrailer from locations such as a ditch, pond, hole, or median, prior to towing.

      3. (C) Wrecker and towing services do not include the transportation of motor vehicles to or from a new or used car dealership for the purpose of placing the vehicles into inventory for sale or returning the vehicles to an automobile auction for sale.

         1. (c) Local taxes. For the purpose of determining the correct local gross receipts taxes to collect, the following guidelines shall apply:
   2. (1) If the motor vehicle, vehicle, trailer, or semitrailer is towed from the location where the vehicle is picked up and delivered to a destination in Arkansas, the local taxes at the point of delivery or destination should be applied; and

   3. (2) If only wrecker services are provided and the motor vehicle, vehicle, trailer, or semitrailer is not towed from its location to another destination, the local taxes at the place where the motor vehicle, vehicle, trailer, or semitrailer is located should be applied. Example 1: J.T.’s car breaks down in Cabot, Arkansas. J.T. hires a towing service to tow the car into Little Rock, Pulaski County, Arkansas, for repairs. The City of Little Rock and Pulaski County have a sales tax. The place of destination determines what tax is due. The Arkansas state sales tax, the City of Little Rock sales tax, and the Pulaski County sales tax apply. Example 2: J.T.’s car breaks down in Fort Smith, Arkansas. J.T. hires a towing service to tow the car into Oklahoma for repairs. Arkansas state and local sales tax does not apply. Example 3: J.T.’s car breaks down in Oklahoma, and J.T. hires a towing service to tow the car into Fort Smith, Arkansas, for repairs. Since J.T.’s car was delivered to a destination in Arkansas, the Arkansas state sales tax, the City of Fort Smith sales tax, and the Sebastian County sales tax should apply. Example 4: J.T. is traveling to his home in Texarkana, Texas, and drives his car into a ditch in Little Rock, Arkansas, where it becomes stuck in the mud. J.T. hires a wrecker service to pull his car from the ditch. J.T.’s car is not damaged, so it is not necessary to tow the car to a destination for repairs. The City of Little Rock and Pulaski County have a sales tax. The point of service determines what tax is due. The Arkansas state sales tax, the City of Little Rock sales tax, and the Pulaski County sales tax apply.

      1. (d) Persons responsible for collecting and remitting the tax.
   4. (1) The tax shall be collected and remitted by the seller of the wrecker or towing services.
   5. (2) Wrecker and towing services may be purchased exempt as sales for resale by a person holding a retail permit and performing taxable repairs on a towed motor vehicle, vehicle, trailer, or semitrailer, if the charge for the wrecker and towing services and the applicable taxes are collected from the ultimate consumer by the person performing the repairs. Example: ABC Towing Company has a contract to tow motor vehicles to XYZ Repair Shop for repairs. XYZ Repair Shop holds a retail permit and charges its customer for repairs, the wrecker and towing services, and the applicable taxes. XYZ Repair Shop is entitled to claim the sale for resale exemption on the wrecker and towing services it purchased from ABC Towing Company since it is collecting the sales tax for the wrecker and towing services from its customer.

4. (e) Automobile clubs or insurance coverage.

   1. (1) If wrecker and towing services are provided through an automobile club or association, motor club or similar organization, or an insurance company, the taxable charge is the amount invoiced to the club, association, or insurance company for the services plus the amount of any applicable deductible.
   2. (2) The charge for an automobile club contract or insurance policy that provides for towing is not subject to tax. Example: XYZ Insurance Company pays J.T.’s Wrecker Service thirty dollars ($30.00) toward the tow of a motor vehicle on behalf of John Doe. John Doe pays J.T.’s Wrecker Service an additional amount of twenty dollars ($20.00) as a deductible. J.T.’s Wrecker Service should remit tax on the entire fifty dollars ($50.00). XYZ Insurance Company does not collect tax on the premium paid by John Doe for insurance that provides for towing.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules contained a footnote as follows: "Source: Ark. Code Ann. § 26-52-316"