When I talk about taxes, I usually focus on income and estate taxes. I’ll continue to explore strategies for reducing those in future articles — especially if and when a final version of the One Big Beautiful Bill becomes law. But today, I want to shift attention to other taxes affecting your dealerships and offer some suggestions for staying compliant while minimizing your exposure.

Sales and Use Tax

Effective July 1, 2025, another five municipalities in West Virginia are imposing a 1% municipal sales and use tax, bringing the total up to 94. Sales tax is determined by the location of delivery of goods and services. For most dealership transactions, this is your facility. However, if you deliver parts or offer mobile services, you’re responsible for charging, tracking and remitting the municipal tax for any of the 94 municipalities where those deliveries or services occur.

To ensure accurate tax collection:

• Review F&I product setup and parts/service modules in your DMS periodically to verify sales tax is applied correctly.
• Maintain valid Certificates of Exemption for any customer marked as exempt from sales tax.

Regarding use tax, keep in mind that it typically applies to:

• Shop supplies.
• Large purchases (equipment, furniture).
• Services from vendors whose services do not qualify for exemption from sales tax.

Be sure to self-assess and remit use tax in these areas if sales tax was not remitted to the vendors.

Also, refer to WV Publication TSD 310, which outlines capital improvement exemptions for sales tax. Note: The definition for sales tax purposes differs from that used for income tax. Some expenditures may qualify for income tax expensing as repairs and also meet the exemption criteria for sales tax. TSD 310 has a detailed, comprehensive list worth referencing when you have a large facility expenditure.

Business and Occupation (B&O) Tax

As of July 1, 2025, sales of new automobiles are fully exempt from B&O tax — a welcome savings for dealerships.

However, please note B&O tax is determined by the location of delivery like sales tax. If you deliver parts or provide mobile services in municipalities that impose a B&O tax, you may still be subject to B&O tax in those jurisdictions. Review your activities accordingly.

Commercial Business Property Tax

West Virginia introduced the Small Business Property Tax Adjustment Credit to ease personal property taxes for small businesses. Unfortunately, most new automobile dealerships exceed the $1 million property value threshold and don’t qualify.

That said, there are still steps you can take to reduce your tax liability:

• Have department managers review depreciation schedules annually to identify and remove assets no longer in service.
• Scrutinize the inventory value calculation submitted with your tax return. Ensure that all allowable excluded sales are claimed.
• Scrap obsolete parts inventory and remove them from the valuation submitted.

These practices help ensure the lowest possible personal property tax liability.

Unemployment Tax

Wage misreporting for unemployment tax purposes is a common issue when employees reside in states other than West Virginia.

Remember:

• Unemployment tax is based on where the employee works.
• State income tax withholding, on the other hand, follows where the employee resides, assuming a reciprocity agreement exists (as it does with all West Virginia-bordering states).

Ensure your payroll provider and/or personnel are assigning wages to the correct jurisdiction.

Final Thoughts

Noncompliance — or even just inattention — to these tax areas can be costly. Regularly review each category and consult your accountant when needed to protect your bottom line.