Pain in the glass

Today, the owner of Weather's Auto Glass & Accessories in Muscle Shoals and Tapp's Auto Glass & Accessories in Florence is worried he won't have a business to hand down.

The problem that Tapp and other installers of automotive glass face, he said, is unfair competition.

That unfair competition comes from businesses that do not operate "brick and mortar" facilities in the Shoals, he said.

"I appreciate Wal-Mart," Tapp said. "You can compete with Wal-Mart."

Tapp has complained that mobile automobile glass installers do business in the Shoals but do not purchase privilege licenses or report sales taxes to the municipalities where they do business.

In 2003, Tapp said he paid more than $42,000 in sales tax to Shoals municipalities. He said he doesn’t mind paying taxes that help fund Alabama’s schools.

Muscle Shoals Mayor David Bradford heard Tapp’s complaints loud and clear and went so far as to write letters to local insurance agents seeking their help in making sure all their auto-glass vendors are licensed.

“I think they need to be on the same playing field as the brick-and-mortar businesses,” he said. “But if you’re going to do business in (Muscle Shoals), you should purchase a business license.”

Much of the auto glass replacement business is generated by insurance claims. Insurance companies are not legally bound to check their vendor’s licenses or to make sure they’re reporting sales tax, Bradford said.

Several insurance agents in Muscle Shoals were contacted about Bradford’s letters and their response to them. All refused to comment.

Al Ford, owner of Al Ford Insurance Agency in Florence, represents several automobile insurance companies.

“It’s standard practice that insurance companies have deals with companies like Safelite,” he said. “They’ve gone to this because of the disparity in replacing automobile glass.”

Safelite Glass Corp is the nation’s largest auto glass service company. It operates from fixed service centers and from mobile vans designed for customer convenience. Safelite services more than 85 percent of customers with its mobile service vans, which come to the customer, rather than have customers come to a facility, according to information from its Web site.

Diamond Triumph also operates a mobile service auto glass business.

Muscle Shoals Revenue Clerk Rebecca Barnett said both companies have had business licenses in the city for a couple of years. Both companies currently hold 2004 business licenses, she said.

Diamond Triumph has a current privilege license in Florence; Safelite does not, said License Inspector Bob Leyde.

Safelite once operated a glass installation business at 1412 Pine St. in Florence. They had a proper business license and paid sales taxes until September 2003, city officials said. The building is now occupied by a dry cleaner.

“Safelite has not bought a license this year, but we were also showing them as out of business,” Leyde said.

Sheffield’s Deputy City Clerk Linda Richardson said neither Safelite nor Diamond Triumph hold business licenses in the city of Sheffield.
Richardson has no evidence the companies are doing business in Sheffield, but if they are, “I need to send them a little application,” she said.

A matter of choice

According to Ford, a customer may go to a dealership to replace a windshield and pay $500 or $600. Another company, Safelite, for instance, may charge half that.

“The insured may be given a choice of vendors, but the insurance company is only going to pay X rate,” he said.

He added that he “could not imagine a company without a license. I’ve never even heard or suspected that a company wouldn’t have a license.”

State Farm Insurance spokeswoman Emily Gong released this statement from the company’s home office in Birmingham: “Under Glass Central, State Farm’s new glass program, all auto glass repair and replacement claims are handled by LYNX Services, an affiliate of PPG, one of the world’s largest glass manufacturers.”

Diamond Triumph and Safelite Auto Glass were contacted for comment. Phone calls were not returned.

In response to Tapp’s concerns, Jimmy Johnson, the deputy commissioner of the State of Alabama Department of Insurance, sent letters to several insurance companies asking them to validate their vendors’ licenses.

State Farm, Progressive Insurance Co., Alfa Insurance Co. and Allstate Insurance Co. were among the insurers who received letters.

“We had to tread lightly because there’s a question of jurisdiction,” Johnson said from his office in Montgomery.
“We have no control over the vendors the insurance companies use,” he added.

An insurance company cannot mandate a single company for an insurer to use, Johnson said.

“There is no statute, but the courts have said over the years that you can’t make the insured go to a particular body shop,” he said. “A lot of states have something like that on the books, but Alabama doesn’t.”

Investigating complaints

Tapp recently took his concerns to the Colbert County Commission.
As a result, the commission unanimously passed a resolution asking District Attorney Gary Alverson to launch an investigation.

The resolution requests the district attorney to demand that companies operating in the county without a license or those not paying taxes “cease and desist their operations immediately.”

Alverson said he has contacted the State Attorney General’s Office and State Revenue Commissioner’s Office to determine what steps the county might take to enforce its demand.

Richardson admitted that sometimes city licensing officials are not aware that a company is doing business without a license or not paying sales taxes.

“It’ extremely unfair to local businesses who have privilege licenses and who are paying their sales taxes,” Alverson said. “It makes the competition extremely unfair.”

Tracking sales revenue

Citing the Taxpayer’s Bill of Rights, Muscle Shoals City Clerk Ricky Williams said he could not say how much Safelite or Diamond Triumph have paid in sales taxes.

Florence’s Leyde also would not release that information, citing confidentiality issues.

The Shoals is not alone, however, in its endeavors to collect business license fees and sales tax revenue from traveling auto-glass installers.

Ed Fricks, a licensing inspector with the city of Decatur Revenue Department, says the industry itself is tricky because it’s too mobile.

“We have four or five (traveling auto-glass installers) here in Decatur, and most of them are licensed,” he said.

To obtain the license, Fricks said he and his staff will ask businesses to send in a vendor’s list when it’s time to renew their license or do a sales tax return.

“When they give it, we check those vendors for a license,” he said. “That’s one of the better ways we have.”
Fricks added that, once the companies are contacted about obtaining a license and submitting sales tax, they are often cooperative.

“Out-of-state people are generally more difficult to deal with than local people,” he said. “When you get into the other states, they may have different tax structures, and they may not understand our tax structure.”

In Decatur, Fricks estimates the city loses about $2,500 a year from traveling auto-glass installers who don’t apply for a business license or submit sales tax.

“Cities with multiple glass companies will see the lost revenue increase exponentially,” he said.

Alverson said he contacted the attorney general’s office because the issue could involve many jurisdictions across the state.

“We will coordinate whatever we do with the attorney general’s office and other district attorney’s offices,” Alverson said. “We need to know a little more about it before we decide what to do, and it needs to be a coordinated effort.”

One question that must be answered is how many transactions have occurred where taxes were not paid and in which municipality they occurred.

“Part of the allegation is that they’re collecting the tax and not paying it,” Alverson said.

He said the tax money that is not being paid would be placed in the state’s General Education Trust Fund.