Other major adjustments related primarily to the Article 15 refund provisions. Current Sales Tax Compliance on Repair Services - The single largest offsetting factor is the State and local sales tax the State currently collects on motor vehicle repair services covered by physical damage awards. We based this estimate on sales tax return information from vendors in the repair industry including auto dealers. We adjusted reported sales to account for the percentage of sales that would relate to physical damage claim awards by type of repair industry. The percentages were derived from information provided by advisory panel members.
Automobile dealerships have a good compliance record.
In addition, the Department of Motor Vehicles requires proof of payment of sales tax before it will register a new vehicle. Adjustment for Out of State Repairs - DMV records indicate that 49 percent of the motor vehicles registered in New York State are registered in counties bordering other states or in New York City. From this information, we conservatively assumed that 5 percent of damage awards paid to New Yorkers are for repairs they will purchase outside New York. We also assumed that the average sales tax rate paid on repairs in other States equals 6 percent. Where the Claimant Does Not Repair or Replace the Vehicle - Claimants receiving insurance damage awards may choose not to repair or replace the damaged vehicle.