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To Tax or not to Tax, That is the Question

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  • To Tax or not to Tax, That is the Question

    Over the course of the last few months, many individuals have been sending information regarding the charging of sales tax on insurance claims or better yet, being told not to charge sales tax. Overall, two companies continue to come up time and time again and they are Alliance Claims Solutions and Harmon Solutions.

    This morning GlassBuzz was sent a claim dispatch from Alliance Claims Solutions that now has the tax disclaimer in bold letters (see attached PDF). What is interesting about this is two-fold; 1) the shop is not a network shop and therefore is required to charge tax since the relationship and sale is between the glass shop and the customer regardless of who pays for it, and 2) Alliance Claims Solutions is not licensed to do business in the state of South Carolina (happens to be where the shop that sent the materials is located) either as a real entity or a DBA.

    To make this all a bit more interesting, we then received what Alliance Claims Solutions is sending out as proof for the "sale for resale" requirement (see attached exempt PDF below). From all appearances someone simply took the original Safelite Solutions exemption documents and added "DBA: Alliance Claims Solutions" to each and every form in the package. There is no doubt looking at this group of documents that the DBA was added after the filing of the said documents. Upon examination in many of the listed States corporation commission reocrds, Safelite Solutions LLC or even a DBA for Alliance Claims Solutions could not be found. According to the laws in many if not all of these States, the entity must be registered to conduct business in order to have an exemption status. If this is the case, how are any of this exemption documents valid and in force?

    Alliance Claims Solutions Dispatch

    Alliance Claims Solutions Tax Exemption Certificate Package

  • #2
    Continuing on this topic, consultation with several CPA's have shed light on how Alliance Claims Solutions and others may be able to have their contractors not charge sales tax and it all hinges on whether or not the shop is a contractual sub-contractor for provided services and what the language in the agreement is.

    From reviewing the "Safelite Network Participation Agreement", section 15. Taxes, 15.1 clearly states the following:

    So this makes it perfectly clear that the "participant" (AKA the glass shop) is responsible for the collection and payment of all sales tax; therefore, the participant must pass along the total including tax to Safelite for full repayment.

    GlassBuzz is reviewing other network agreements; however, it is the early determination that Alliance Claims Solutions and others are clearly overstepping their authority in the demands to not charge sales tax.

    Have you had a similar issue and want to discuss it? Feel free to post your comments here!


    • #3
      A GlassBuzz member was kind enough to provide a copy of an HSG dispatch. Notice the language in the "Invoicing Requirement" section where it says "Please note, this transaction is a sale for resale. Please do not include sales tax on your invoice." Here it clearly says "sale for resale" so this begs the question, what is HSG doing with the invoice that the shops submits? Do they turn around and sell the services again to the insurance company whom they represent as a third-party administrator but at a different (sic higher) rate?

      What exactly is going on here?


      • #4
        It would seem that it would make sense to report these companies to each State's Department of Revenue. Every State that I've read about is hurting for money and I doubt that they would appreciate the gesture of avoiding a tax liability; especially one that is owned by a foreign corporation.


        • #5
          And not to leave HSG out, here is their Uniform Sales & Use Tax Certificate:


          • #6
            For a moment, let's pick on South Carolina and HSG. According to the SC Department of Revenue "Nonresident Retailers - Nonresident retailers with a physical presence in South Carolina must obtain a retail license to do business in this state. A nonresident retailer is one who does not have a business location in this state, but solicits business from South Carolina residents by means of sales representatives, manufacturers' agents, catalogs, advertising or other means. "

            After looking around, it appears that HSG "status" with the state is listed as "dissolved" back in 2009, which is almost two years from the date on the form above. Does this mean they are not registered to conduct business in the state through "other means" let alone given the ability to collect and pay taxes accordingly? What is going on here?


            • #7
              From the looks of the Quest Preferred Provider program, there is no mention of who should pay the taxes; therefore, Quest must expect the shop to pay the tax. We can remove Quest from this discussion unless someone has been asked by Quest to not charge sales tax.


              • #8
                This indeed will be interesting to see where this goes. I know that in other industries such as home warranty, the sub-contractor who accepts the job and performs the service does not charge tax on the job and invoices the home warranty company as a "sale for resale" entity so as long as the warranty company is registered to do business in the jurisdiction and has the proper tax exempt status. The documents here suggest that one or more third-party administrators may not even be licenses to conduct business in these reported jurisdictions.
                Best Regards,


                • #9
                  *BREAKING* HSG no longer has tax exempt status in South Carolina. According to Denise Henry in the Billing Quality Assurance department for HSG | CodeBlue, "...we
                  were tax exempt in SC until 10/01/13.

                  Stay tuned for updates as we await inquires as to the exempt status in other states by HSG, Safelite Services, and others.