TechCrunch exposes Big Rentals’ unscrupulous sales tax exemption

This week, technology news publication TechCrunch shone a light on an archaic sales tax exemption being milked by the traditional rental car industry. Amid all the buzz about a potential deal looming between Hertz and Tesla, there remain questions about how much Hertz will pay for a new fleet of electric vehicles and whether they will receive any special privileges related to the purchases. Spoiler alert: Yes.

On Monday, TechCrunch talked to Turo Vice President of Government Relations Lou Bertuca who provided important information that has gone virtually unknown for years– traditional rental car companies benefit from a tax loophole that allows them to sidestep sales tax on their vehicles.This has been the case for decades in the United States and causes states to lose out on approximately $4 billion in taxes every year.

“The sales tax exemption was designed for car resellers, but car rental companies have also been able to benefit from this ‘sale for resale exemption,’” wrote TechCrunch Senior Reporter and Editor Kirsten Korosec.

The sales tax exemption, which is not afforded to peer-to-peer car sharing hosts, is being used and abused by traditional rental car companies; yet consumers are still seeing astronomical and unaffordable rental car rates from these companies.

“They’re buying something tax-free and making lots of money by renting it out,” Bertuca said in the TechCrunch article. “Anytime a car rental company says they’re paying the same rate as everybody else, the only thing you need to keep in mind is they’re not paying the sales tax that everybody else is paying, whether they’re buying a Tesla or Ford.”

Notably, Hertz did not immediately respond to TechCrunch’s request for comment on its sales tax exemption.

Korosec also noted that several states, such as Massachusetts, have gotten wise to the sales tax exemption and are considering legislative actions to close those loopholes so that Big Rental contributes its fair share of sales taxes just like every other car owner.