Weekly Legislative Update
February 20, 2023

TIA Right to Repair Update

Right to repair remains a top priority for TIA members and a national law would provide for much needed clarity and direction in vehicle repair. TIA has supported efforts on both the state and federal levels in recent years.

Modern cars and trucks contain advanced technology that monitors or controls virtually every function of the vehicle including: brakes, steering, air bags, fuel delivery, ignition, lubrication, theft prevention, emission controls and soon, tire pressure. Car and truck owners, as well as the facilities that repair these vehicles need full access to the information, parts and tools necessary to accurately diagnose, repair or re-program these systems.

Recently, Right to Repair legislation was reintroduced in the House. U.S. Representatives in the 118^th Congress by Rep. Neal Dunn (R-FL-02), and co-sponsored by Rep. Brendan Boyle (D-PA-02), Representative Warren Davidson (R-OH-08), and Rep. Marie Gluesenkamp Perez (D-WA-03).

The Right to Equitable and Professional Auto Industry Repair (REPAIR) Act, H.R. 906, will ensure consumers have access to data relating to their motor vehicles, critical repair information, and tools, and to provide them choices for the maintenance, service, and repair of their motor vehicles.

Congressman Dunn is a member of the House Energy and Commerce Committee, which has responsibility for consumer protection matters, where the bill has been referred.

“When it comes to repairing their automobiles, consumers deserve options,” said Dunn. “The REPAIR Act would give owners, including the rural communities in my district, secure access to critical data so the service center of their choosing can replace parts and repair their vehicles. I am proud to support competition in the vehicle repair industry and this important legislation.”

New vehicles require access to critical parts, tools, and repair and maintenance data to properly service and complete repairs and routine maintenance. 

TIA members need the repair and maintenance data that is now being wirelessly transmitted from vehicles via telematics systems in a cloud-based format.

The REPAIR Act will accomplish this by:

• Preserving consumer access to high quality and affordable vehicle repair by ensuring vehicle owners and their repairers of choice have access to necessary repair and maintenance tools and data as vehicles continue to become more advanced.
• Ensuring access to critical repair tools and information---all tools and equipment, wireless transmission of repair and diagnostic data and access to on-board diagnostic and telematic systems needed to repair a vehicle must be made available to the independent repair industry.
• Ensuring cybersecurity by allowing vehicle manufacturers to secure vehicle-generated data and requiring the National Highway Traffic Safety Administration (NHTSA) to develop standards for how vehicle-generated data necessary for repair can be accessed securely.
• Providing transparency for consumers by requiring vehicle owners be informed they can choose where and how to get their vehicle repaired.
• Creating a stakeholder advisory committee and providing them with the statutory authority to provide recommendations to the FTC on how to address emerging barriers to vehicle repair and maintenance.
• Providing ongoing enforcement by establishing a process for consumers and independent repair facilities to file complaints with the FTC regarding alleged violations of the requirements in the bill and a requirement that the FTC act within five months of a claim.

As vehicle technology continues to advance, TIA has been on the forefront in addressing new vehicle technologies and electric vehicles.

Last year, TIA formed an Electric Vehicle Advisory Council (EVAC) to address issues tire dealers are facing and to recommend best practices to the industry. The mission of the EVAC is “to identify procedures to safely service Electric Vehicles and to promote them through education and training to tire, automotive, and commercial service centers.” The EVAC will develop a list of recommended “best practices” for TIA tire, automotive, and commercial service centers to safely service electric vehicles.

The REPAIR Act will reduce the repair access barriers when working on EVs.

Other Efforts

• In November 2020, Massachusetts voters overwhelmingly voiced their support for Ballot Question 1, also known as Right to Repair, with 75% of the vote, which preserves their right as vehicle owners to have access to and control of their vehicle’s mechanical data necessary for service and repair at the shop of their choice. The lawsuit against the right to repair law is still pending. The most recent development occurred on Jan. 11 when the parties agreed to a joint stipulation and proposed scheduling order for “(a) conducting the additional document discovery ordered by the Court and (b) briefing that motion for a protective order.” The law has been held up by a federal judge for three years citing numerous reasons for delay.

• In May 2021, the FTC released a report highlighting the barriers auto manufacturers have instituted to block consumers’ Right to Repair. In the report, the FTC supported expanding consumer repair options and found “scant evidence” for the repair restrictions imposed by original equipment manufacturers. In a subsequent policy statement on the report, the FTC noted that these repair restrictions create hardships for families and businesses and that the Commission was “concerned that this this burden is borne more heavily by underserved communities, including communities of color and lower-income Americans.”

• In July 2021, President Biden issued an executive order encouraging the FTC to address anti-competitive repair restrictions.

?In 2022, TIA joined efforts with the Maine Right to Repair Coalition who has collected more than 70,000 signatures on a petition that supports the right for independent repairers to access the vehicle diagnostic data they need to complete repairs. The goal is to get a right to repair referendum in front of voters on the November ballot. TIA is rallying dealers in Maine and providing materials to gather support for these efforts.

• In 2023, TIA worked with Maryland Delegate Kevin Hornberger (R) and his staff to introduce HB 1193 in Maryland. The bill titled: Consumer Protection-Motor Vehicles-Right to Repair addresses the right to repair issue on the state level by requiring a manufacturer that sells motor vehicles with telematics systems to install an open data platform in certain motor vehicles. The bill has a hearing in the House Economic Matters committee on March 8 at 1 pm.

?Passing the REPAIR Act will be a focus and top priority for TIA in the 118^th Congress.

TIA is actively recruiting members in the House of Representatives to join as a co-sponsor to the bipartisan legislation. 

IRS Issues Guidance on State Tax Payments to Help Taxpayers

The Internal Revenue Service provided details clarifying the federal tax status involving special payments made by 21 states in 2022. 

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns. 

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief.

This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

In addition, many people in Georgia, Massachusetts, South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit. 

The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation.

The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022. A variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex. While in general payments made by states are includable in income for federal tax purposes, there are exceptions that would apply to many of the payments made by states in 2022.

To assist taxpayers who have received these payments file their returns in a timely fashion, the IRS is providing the additional information below.

Refund of state taxes paid

If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied) the payment is not included in income for federal tax purposes.

Payments from the following states in 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted.

1.      Georgia

2.      Massachusetts

3.      South Carolina

4.      Virginia

General welfare and disaster relief payments

If a payment is made for the promotion of the general welfare or as a disaster relief payment, for example related to the outgoing pandemic, it may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment. Determining whether payments qualify for these exceptions is a complex fact intensive inquiry that depends on a number of considerations. 

The IRS has reviewed the types of payments made by various states in 2022 that may fall in these categories and given the complicated fact-specific nature of determining the treatment of these payments for federal tax purposes balanced against the need to provide certainty and clarity for individuals who are now attempting to file their federal income tax returns, the IRS has determined that in the best interest of sound tax administration and given the fact that the pandemic emergency declaration is ending in May, 2023 making this an issue only for the 2022 tax year, if a taxpayer does not include the amount of one of these payments in its 2022 income for federal income tax purposes, the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return.

Payments from the following states fall in this category and the IRS will not challenge the treatment of these payments as excludable for federal income tax purposes in 2022.

1.    Alaska

2.    California

3.    Colorado

4.    Connecticut

5.    Delaware

6.    Florida

7.    Hawaii

8.    Idaho

9.   Illinois

10.  Indiana

11.  Maine

12.  New Jersey

13.  New Mexico

14.  New York

15.  Oregon

16.  Pennsylvania

17.  Rhode Island

For a list of the specific payments to which this applies, please see this chart.

Other payments

Other payments that may have been made by states are generally includable in income for federal income tax purposes. This includes the annual payment of Alaska’s Permanent Fund Dividend and any payments from states provided as compensation to workers.

Only for the supplemental Energy Relief Payment received in addition to the annual Permanent Fund Dividend.

Illinois and New York issued multiple payments and in each case one of the payments was a refund of taxes, which should be treated as noted above, and one of the payments is in the category of disaster relief payment.