Was a Texas highway sweeper taxed as a motor vehicle or as moveable specialized equipment?

Plain-English summary

The Texas Comptroller said highway sweepers had no single blanket exemption. Their construction determined which tax system applied.

A sweeper accessory mounted on a cab chassis was a motor vehicle. The letter imposed motor vehicle sales tax on the vehicle, required a motor vehicle rental permit for rentals, and quoted different motor vehicle rental rates for contracts of 30 days or less and 31–180 days. It also warned that some cities or counties might impose local venue tax on short-term rentals. Those 2000 rates require current verification.

A sweeper manufactured from beginning to end was moveable specialized equipment subject to limited sales and use tax. If the dealer did not use it to perform a service and held it only for rental, the dealer could issue a resale certificate when acquiring equipment for re-rental. The total customer rental charge was taxable, and repairs to the rental equipment could be bought tax-free with a resale certificate.

What this means for you

Heavy-equipment dealers and rental companies

Classify the machine before invoicing. A cab-chassis unit followed motor vehicle rules; fully manufactured specialized equipment followed sales-tax rental rules on the facts presented.

Street-sweeping service providers

The resale treatment depended on not using the equipment to perform a service. Service use could change the result.

Common questions

Q: Were highway sweepers exempt from tax?

A: No blanket exemption was given. The letter assigned either motor vehicle tax or limited sales and use tax based on construction.

Q: Could specialized rental equipment be bought for resale?

A: Yes, if it was held for re-rental rather than used to perform a service.

Q: Was repair tax treatment addressed?

A: Yes. Repairs to the specialized rental equipment could be purchased tax-free with a resale certificate.

Citations and references

• The letter cites no numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/200010828L

Original ruling text

October 19, 2000

From: Elias Amaya

To:

Subject: Texas Sales & Use Tax

Dear **:

I am responding to your letter regarding sales tax. You state that you sell
and rent heavy equipment. You want to know if sales tax is due on highway
sweepers.

A highway sweeper could be identified as a motor vehicle or moveable
specialized equipment. A motor vehicle is subject to 6.25% motor vehicle tax
and moveable specialized equipment is subject to limited sales and use tax.

If an accessory/equipment is mounted to a cab chassis then you have a motor
vehicle. You are required to obtain a motor vehicle rental permit if you will
be renting motor vehicles. Short-term motor vehicle rentals that are for 30
days or less are subject to 10 percent motor vehicle rental tax. Long-term
motor vehicle rentals that are for 31 days - 180 days are subject to 6.25
percent motor vehicle rental tax. Some cities and/or counties created local
venue projects that may also impose tax on short-term rental. Please check
with the cities or counties where the rentals occur.

If you manufacture (beginning to end) a sweeper then you have moveable
specialized equipment. Providing that you are not using the equipment to
perform a service and are just renting it, you can issue a resale certificate
for the rental of equipment that will be re-rented. Your total charge to your
customer for the rental of the equipment is subject to sales tax. You may
purchase repairs to the rental equipment tax-free by giving a resale
certificate.

A complete set of rules, along with the text of the Tax Code, and a wealth of
other information are available through our web site at
through the "Texas Taxes" window.

This opinion is based on the information presented. If there is additional or
different information, the opinion may change.

If I can be of further assistance, the e-mail address is
or you can call me at 1-800-531-5441, extension
5-9913. You may also write to Tax Policy Division, Comptroller of Public
Accounts, P.O. Box 13528, Austin, TX 78711-3528.

Sincerely,

Elias Amaya
Tax Policy Division

On Thu, 12 Oct 2000 17:02:18 EDT wrote:

We are a heavy equipment dealer that sells and rents large construction
equipment to companies. We have been informed by a couple of sources that the
purchase of "Highway Sweepers" is exempt from the Texas Sales & Use Tax. We
have nothing to base this on, and would like some help in this area.

Are "highway Sweepers" exempt? If so, could we get some reference material to
back this up? If not, please let us know, so that we may charge and collect
the proper tax.

Thank You,

**, Comptroller
COMPANY A