Harmon Solutions Group to Collect Sales Tax for Network Subcontractors

Harmon Solutions Group (HSG) will begin collecting the sales tax for its network auto glass subcontractors and remitting it to the proper state beginning January 1, 2006.

Starting January 1, HSG will be taking the remission of sales tax out of the hands of the business owner and handling the submission of sales tax for all transactions "other than O&A administered programs" to the "appropriate local taxing authority on a 'sale for resale' basis," according to a letter sent to network shops on December 21 by Harmon Solutions Group.
How will it work? According to Paul Gross, president of Harmon Solutions Group, shops will be issued a tax exemption certificate and HSG will pay the local taxing authority directly, to ensure the appropriate taxing authority gets their appropriate tax revenue.

"As a third party administrator, we need to be concerned with these things that a shop is billing from an appropriate market service area [MSA] but also that the proper sales tax is being remitted to the proper authority. This is one way to ensure that. Banks can't stop people from robbing them, but they can do things to minimize those activities," said Gross.

To ensure that shops are billing from the proper MSA, shop owners will be required to authenticate the actual location where the work was performed. Gross said that HSG's audit enhancement program cross references the "work location" with policyholder's home address as a test of reasonableness, and shop owners will be held liable if it is found that the information they submit is misrepresented.

The decision to implement the new business strategy, Gross told glassBYTES, was one that lasted several months and included consultations with accounting professionals, attorneys and the company's internal audit department.

"The abuse of the pricing structure has gotten out of hand and this is an effort to thwart that to some degree," he said. "I think it will give our clients better piece of mind that the work will be billed in the proper area in which it was performed, rather than another variation. If the invoicing from the shops is being done appropriately, there will be no change. It's really just a handful of shops that prompt an organization such as ours to make this sort of decision. We're helping keep honest people honest."

Additionally, Gross confirmed that an appropriate paper trail exists that will help shops cope if the situation were to arise wherein a tax payment to a state or locality is missed.

HSG has started faxing a letter to glass shops informing owners of just what to expect (CLICK HERE to read the text of the letter).