2019 | MSADA
RENTAL CAR SURCHARGE GOES INTO EFFECT – IMPACTS DEALERSHIPS WITH RENTAL COMPANIES
Surcharge Does Not Apply to Loaner Vehicles
As of January 1, 2019, any vehicle rental transaction in Massachusetts with a duration of more than 12 hours and not more than 30 days, must include a $2 surcharge to be collected by the vendor. The surcharge was created in combination with and to benefit the Massachusetts Municipal Police Training Fund, while any funds collected through the surcharge in excess of ten million dollars will revert to the Massachusetts general fund.
The Massachusetts Department of Revenue will administer the surcharge law. The DOR has issued information regarding the surcharge at this link: https://www.mass.gov/info-details/surcharge-on-vehicle-rental-transactions-for-police-training-in-massachusetts and has published draft regulations that are available here: https://www.mass.gov/technical-information-release/working-draft-tir-18-xx-police-training-surcharge-on-vehicular-rental.
Any Massachusetts dealership that maintains a separate, for-profit, rental car business should now be assessing the $2 surcharge on every rental vehicle contract. However, unless the DOR states otherwise in further regulations, dealerships do not have to collect this fee when issuing a repair customer a “loaner” vehicle and using a rental agreement document with no charges on it. At the time that the legislation creating the surcharge was passed, public officials assured your MSADA that the surcharge was intended only for rental companies and customers that were entering into a traditional rental agreement, not repair customers that were issued a loaner vehicle on a rental contract. However, it is sometimes the case that legislators and regulators may not fully understand the real-world impact of the laws that they pass and implement, and it remains to be seen if the DOR will address loaner vehicles in its final regulations on the subject.
To summarize, if you maintain a traditional rental business where members of the general public can rent vehicles, you now must collect the $2 surcharge on every rental contract in a manner approved by the DOR. However, unless the DOR states otherwise, the $2 surcharge does not need to be collected on loaner arrangements.
If you have any questions regarding this bulletin from MSADA, please contact Bill Carroll, General Manager- Lease & Rental at firstname.lastname@example.org, or by phone at (508) 668.3112 ext. 351