Luxury Tax Repealed for
Auto Equipment for Disabled Persons

WASHINGTON - The new tax law has completely repealed the luxury tax on equipment installed to help disabled persons enter, exit or operate a vehicle. The law also indexes for inflation the $30,000 cost threshold at which the luxury tax on vehicles begins, but the indexing formulas does not result in any change for 1993.

The repeal of the tax covers equipment on passenger vehicles sold since the beginning of 1991, when the tax first went into effect. The person who filed the excise tax return reporting the tax should claim a refund from the IRS. This will usually be the retailer who installed the part or accessory. The customer--the owner, lessee or operator of the vehicle--should contact the retailer for reimbursement of the tax paid.

Retailers who paid luxury tax on equipment installed for disabled persons must file Form 843, Claim for Refund and Request for Abatement, to get a refund of this tax.

They must certify that they have refunded the tax to the consumer, that they have a signed consent from the consumer, or that they did not include the tax in the selling price nor collect it from the consumer.

Any luxury taxes collected that have not yet been deposited with the IRS must be refunded to customers who paid the tax.

Although taxpayers must usually file refund claims within three years after the due date of the original returns, or two years after the taxes are paid, whichever is later, refund claims for luxury taxes on equipment for disabled persons bought in the first half of 1991 may be filed until August 10, 1994.

IRS Notice 93-44 gives specific technical guidance on claiming refunds or credits repealed luxury taxes. It will be published in Internal Revenue Bulletin 1993-29, dated September 20, 1993.

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