Revenue Committee advances bill to exempt insurance damage settlements from sales tax

Summary

The House Revenue Committee voted to pass House Bill 113, which would prevent sales and use tax from applying to insurance damage settlement payments used toward replacement motor vehicles; supporters and state tax staff described documentation and timing rules the Department of Revenue and county treasurers would use to administer the exemption.

The House Revenue Committee voted 5-3 to pass House Bill 113, an act “relating to taxation and revenue, exempting insurance damage settlement payments from sales and use taxation and providing for an effective date,” Representative Smith told the committee as he presented the measure.

The bill would prevent motorists who receive an insurance damage settlement after a totaled vehicle from being taxed on that insurance payment when they purchase a replacement vehicle. Representative Smith said the change would stop what he described as “double tax” when an insured motorist replaces a totaled car.

The measure drew supporters and critics during public comment. Former Representative Alan Slagle said the bill grew out of a constituent case in which a senior on a fixed income paid about $1,500 in sales tax after a…

Revenue Committee advances bill to exempt insurance damage settlements from sales tax

Summary

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