Recent actions by the Tennessee Department of Revenue (TDOR) are presenting a significant financial threat to Tennessee car wash operators, according to DRB Systems LLC, a provider of technology-enabled devices and software solutions to the car wash industry. The TDOR auditors have held that by providing assistance to vehicles entering a building (guiding vehicles onto conveyors, folding over side mirrors, etc.) the service is subject to sales tax. This is not how most Tennessee car wash operators have interpreted the law, which was written almost 50 years ago and does not address the modern express car wash.
DRB has contributed $39,500 to efforts aimed at rectifying the situation. “We believe it is important to get out in front of this issue quickly to protect not only Tennessee operators but the industry at large,” said Dan Pittman, CEO of DRB Systems.
A recent audit of one Tennessee car wash resulted in a tax assessment that could exceed $3.5 million by year-end 2018. The operator has filed an administrative appeal. If the TDOR decision stands, it could open all Tennessee car wash operators up to similar assessments and potentially have a domino effect in other states.