Does Texas's motor vehicle purchase exemption for orthopedically handicapped people also exempt short-term vehicle rental receipts?

Plain-English summary

The Texas Comptroller's General Counsel confirmed that the motor vehicle tax exemption for qualifying purchases by orthopedically handicapped people did not extend to rentals lasting 180 days or less.

The rental provider had to collect motor vehicle rental receipts tax and obtain the required tax permit. The letter acknowledged the different treatment might seem unfair, but said the agency had to apply § 152.086 as written.

It also expressly rejected an older 1991 STAR letter that had allowed a rental exemption, calling that advice contrary to law and superseded.

What this means for you

Vehicle rental companies

Do not apply a purchase exemption to short-term rental receipts without separate statutory authority. The provider remained responsible for permit and collection duties.

Customers using adapted vehicles

The tax result can differ between buying and renting the same type of modified vehicle. This letter applied rental tax despite the purchaser exemption.

Common questions

Q: What rental term did the letter address?

A: A period not exceeding 180 days.

Q: Did an older Comptroller letter say rentals were exempt?

A: Yes, but this 2002 response states that the older letter was contrary to the statute and had been superseded.

Citations and references

• Tex. Tax Code § 152.086
• STAR 9111L1146B01 is identified in the body as superseded older guidance; no unverified internal link is supplied.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/200211584L

Original ruling text

November 18, 2002

Dear **:

I appreciated receiving a copy of your letter to Representative Al Edwards.
After reviewing it, I fully understand your concerns.

I agree with you that it does not seem fair for the Texas Legislature to grant
a tax exemption for purchases of motor vehicles made by orthopedically
handicapped persons, but not grant a similar exemption for rentals of motor
vehicles by the same group. Unfortunately, that is how Texas Tax Code Section
152.086 is written. This agency is required by law to administer, collect and
enforce the tax statute as written by the Texas Legislature.

It is my understanding that our Tax Policy Division has already advised you
that when you rent motor vehicles for a period not to exceed 180 days, you
should collect rental receipts tax. The advice given is correct. Although the
1991 letter (STAR Accession No. 9111L1146B01) indicated that a rental could be
exempt from tax, it was contrary to the law; thus, the agency had no choice,
but to superseded it. Our agency can help you obtain a tax permit to collect
rental receipts tax and explain the tax responsibilities related to that
permit. You can contact Curt Swenson by e-mail [email protected] or
by telephone at 1-800-531-5441, extension 3-4684.

If you continue to feel that the current tax statute is unfair, I encourage you
to discuss with Representative Edwards or other state legislators about the
possibility of a legislative change in this area of the law.

If you have any further questions, please do not hesitate to contact me.

Sincerely,

Jesse Ancira
General Counsel

c: The Honorable Al Edwards
Curt Swenson