Did a nonprofit licensed only for basic child care qualify for Texas's residential child-care facility vehicle exemption?

Plain-English summary

The Texas Comptroller denied the vehicle exemption to a 501(c)(3) agency licensed only to provide basic care for abused and neglected children.

The motor vehicle tax exemption applied to a vehicle purchased, used, or rented by a qualified residential child-care facility and used primarily to transport children residing there. The letter said a qualified facility needed a license for 24-hour residential care of both children needing basic care and emotionally disturbed children, with both groups permitted to live together in one residential group.

The agency's submitted license covered basic care but not care for emotionally disturbed children. The licensing department confirmed that the required dual license was absent.

What this means for you

Residential child-care providers

Nonprofit status and a basic-care license were not enough. The facility had to meet the precise dual-license definition, and the vehicle's primary use had to be transporting resident children.

Accountants and tax professionals

Check the actual license categories before claiming the exemption. The Comptroller independently confirmed the requester's licensing status with the responsible department.

Common questions

Q: Did 501(c)(3) status create the vehicle exemption?

A: No. The result turned on the motor vehicle statute's qualified-facility definition.

Q: What license was missing?

A: Authorization to provide residential care for emotionally disturbed children alongside the basic-care group.

Citations and references

• The letter describes the motor vehicle tax exemption but does not cite its section number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/200102043L

Original ruling text

February 12, 2001

Dear **:

Thank you for your request for information regarding motor vehicle tax.

Yours is a 501(c)(3) agency. You are licensed to provide basic child care for
abused and neglected children. You provided a copy of the license issued to
you by the Texas Department of Protective and Regulatory Services. You ask for
exemption from tax on motor vehicles purchased by your organization.

There is an exemption in the motor vehicle tax statute for a motor vehicle that
is purchased, used or rented by a qualified residential child-care facility and
used primarily to transport children residing at the facility. The statute
defines a "qualified residential child-care facility" as a facility that is
licensed by the Texas Department of Protective and Regulatory Services to
provide residential care 24 hours a day to both: (a) children who do not
require specialized services or treatment (basic child care), and (b) children
who are emotionally disturbed (e.g., a residential treatment center). In
addition, children in both of these classifications must be permitted by the
license to live together in a single residential group.

The license you submitted indicates that you are licensed to provide basic
child care, but does not indicate license to care for the emotionally
disturbed. I did, however, contact the Texas Department of Protective and
Regulatory Services regarding your license. That department advised me that
your organization is licensed to provide basic child care, but does not have
the dual licensing as required for this exemption.

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

If you have any questions, please do not hesitate to call one of our tax
specialists toll free at 1-800-252-1382. The local number is 512/463-4600.
You may also write to the Tax Policy Division.

Sincerely,

Joan Hale
Tax Policy Division