Car Repair Billing Problem, Advice Needed

minoclan · 06-27-2009, 11:16 AM

The other day I get a call from a well-known race car shop, in the next state, that I have used in the past to do major suspension work on two of my cars. They wanted my current address to update their mailing list. No problem.

This morning I went to the post office to get a certified letter from the same shop. The letter says that I spent $12,000 at the shop in 2006 and 2007. The letter goes on to say that they forgot to collect sales tax from me. They ask that I either send a letter back saying that the car was picked up by an independent contractor and delivered to me at my home, OR that I send them a check for $700+. The letter also attached every invoice , marked "PAID" and showing a $0 balance owing. They did not collect sales tax. However at the time, being from another state I did not pay attention, and also did not know If PA collected sales tax on car repairs. I just paid the bill as presented.

I am pretty peeved that the shop owner, who I like and respect, did not have the cojones to pick up the phone and give me a heads up. I called him this morning, but he is out in CO. The guy in the shop told me that all of the customers got this letter.

I am calling my lawyer on Monday and asking him what my legal obligation is. I feel that other than his warranty of his work, that our transaction was concluded when I got the "paid in full" invoice. HOWEVER, If this guy did not collect any sales tax on any work since 2006, he is toast and I hate to see that happen.

Would you people just cut the check and just chalk it up to helping a friend who made a huge mistake?

Neilk · 06-27-2009, 11:54 AM

Well think of it a lesson for everyone... can't escape the tax man. I think the shop owner made an honest mistake. He should have called you and told you the situation instead of sending of sending a certified letter without warning.

If you value your relationship with the shop, I would reluctantly suck it up and pay. If you don't like the guy, which it doesn't sound like you do, I might hesitate in paying. BTW, who would the check be made out to? State treasury?

Rick Lee · Rick Lee's Garage

Just another reason I never pick up certified letters. No good can ever come of them.

Dantilla · 06-27-2009, 12:21 PM

A property management company I used to use sent me a letter saying I owed them because of screwed up records after a computer crash.

I remember the problems created when their computer system went down,. and it was a relatively small amount of money, so I simply stopped by their office with a check for the amount due.

The owner was very apologetic, said this was a very difficult letter to send, and really appreciated that I simply took care of her instead of raising a big stink. Not everybody who received the letter was so gracious.

They did a good job for me for several years, and it was nice to simply chat with them for a few minutes. We're both glad I sold that property.

The one thing this shop owner does not need is a bunch of angry customers. Even if you dispute this, please approach it with a spirit of cooperation, as opposed to opposition. You will get much farther that way.

cgarr · cgarr's Garage

Do they charge tax on labor too and not just parts in that state?

wreckersteve · 06-27-2009, 01:46 PM

Pa is parts and labor.

porsche4life · porsche4life's Garage

Around here the shop owner would eat that as a "I screwed and didn't bill that" I wouldn't pay it. Tell him that you paid the bill and if he wants any more he can drag your azz to small claims.

minoclan · 06-27-2009, 02:46 PM

If you value your relationship with the shop, I would reluctantly suck it up and pay. If you don't like the guy, which it doesn't sound like you do, I might hesitate in paying. BTW, who would the check be made out to? State treasury?[/QUOTE]

No he wants the check made out to him!

stomachmonkey · 06-27-2009, 03:13 PM

If the proper tax were originally included when you paid and he was rude to you would you have argued the bill?

If he messed up on your bill and a handful of others I doubt you would have heard from him.

Sounds like a mistake he's made on every transaction for at least two years.

He could be looking at a tax bill that might bankrupt him.

If you are happy with his work it might be in your best interest to help him stay in business.

stomachmonkey · 06-27-2009, 03:16 PM

Quote:

Originally Posted by Neilk

BTW, who would the check be made out to? State treasury?

It would be made out to the shop. It's the business owners responsibility to collect and pay the sales tax, not the customers.

Every customer writing a check to the Fed instead of the shop would be a nightmare.

Neilk · 06-27-2009, 03:19 PM

Quote:

No he wants the check made out to him!

Ask him if he has an attorney handling this and that you would be happy to send the attorney a check. At this point he may decide to take whatever money he can and the close shop anyway.

Zeke · 06-27-2009, 03:37 PM

Quote:

Originally Posted by minoclan

The other day I get a call from a well-known race car shop, in the next state, that I have used in the past to do major suspension work on two of my cars. They wanted my current address to update their mailing list. No problem.

That right there sounds deceitful. I think I'd "discuss" with them your true feelings. Ask if you pay, can they throw some work on your in the deal. It's their fault they didn't pay the tax on your invoices.

Jeez, in my business over the years as a contractor, if I made a mistake, I paid for it. And, I did many times. I could never in my mind go back to a customer and tell them something didn't add up, can they give me more money?

Yeah, right.

minoclan · 06-27-2009, 04:03 PM

That right there sounds deceitful. I think I'd "discuss" with them your true feelings. Ask if you pay, can they throw some work on your in the deal. It's their fault they didn't pay the tax on your invoices.

I agree that the way it was handled was as upsetting as getting all of the sales tax from all of my invoices handed to me in one lump.

Because I like the guy I may pay him the money over seven months, just on principal

porsche4life · porsche4life's Garage

Tell him its his mistake and the most you will do is split it with him. That would be being very generous of you.

pwd72s · 06-27-2009, 04:21 PM

Hmmm, as a resident of another state, are you required to pay this sales tax? Definitely check with your lawyer. Here, the Vancouver Washington car dealers proudly advertise that there is no sales tax to Oregon buyers. Don't know about shops, though.

Shaun @ Tru6 · 06-27-2009, 04:28 PM

Call him and ask him why he didn't have the balls to pick up the phone and call you. Make your decision based on that call.

Rot 911 · 06-27-2009, 06:18 PM

Call and ask him to send you a copy of the the letter he received from his state's Department of Revenue in which he was informed that he had failed to pay sales tax. If he can produce the letter and you feel it is the right thing to do, then send him a check.

rnln · 06-27-2009, 09:34 PM

My humble opinion...
1- I thought tax is only on part. Labor has no tax on customer. Whatever the guy makes (his income), he will have to pay that tax either quarterly ot anually. Customer don't pay his incoe tax.
2- If he made the mistake not charging tax, meaning he agreed to pay that tax portion.

Porsche_monkey · 06-28-2009, 06:17 AM

Is it possible that he failed to collect tax from out of state customers only? If so I suspect he made an honest mistake and I would be inclined to help him, provided, as Shaun says, he has the balls to come clean about it.

If he never billed any of his customers tax then I would say he is a fool (at best), and he should pay the tax himself.

t951 · t951's Garage

Business is all about risk. You take risks to make profits.

You can mitigate the risks by being knowledgeable in the different aspects of your business. (Knowing your product, your customers, etc).

Keeping your books is a HUGE part of being a successful business. If you do not know that you will be penalized until, you do get it, or you are gone.

I think it is LUDICROUS to ask for more money. If he is good at what he does he may return as a different business, or as a great employee for someone.

Your business is concluded. He needs to deal with how he did his books. You don't know markups he has on his inventory, or how he structures his labor payout rates. My point is, for all you know the taxes were included.

I would tell him, that I cannot pay as I already paid what was billed. He will need to pay out of his pocket. That is HIS lesson. You don't pay for that. He won't make that mistake again.