Which Texas tax applies to a park-model trailer: motor vehicle tax, manufactured-housing tax, or ordinary sales and use tax?

Plain-English summary

The official STAR record says Texas changed how it taxes park-model trailers on November 14, 2013. Amended Rule 3.72 brought park models into Chapter 152 motor vehicle tax and removed them from Chapter 151 limited sales and use tax.

That alert supersedes the practical tax classification in this long 2008 letter. At the time, the Comptroller concluded that the park models at issue were not motor vehicles because TxDOT did not treat them as qualifying towable recreational vehicles. The letter then used a two-branch analysis:

1. If a unit qualified as manufactured or industrialized housing under the cited housing statutes—including by receiving the relevant industrialized-housing decal and being incorporated into realty—Chapter 158 applied.
2. Otherwise, the park model was treated as a taxable portable building under Rule 3.306. The manufacturer or dealer needed a sales-tax permit, resale documentation where appropriate, and collection of state and local Chapter 151 tax on sales, leases, or rentals.

The 2013 Rule 3.72 alert means that second branch should not be applied to a later park-model sale without checking the amended motor vehicle rules. The letter's extensive licensing and title narrative also records agency uncertainty at the time; the Comptroller expressly declined to decide titling issues.

What this means for you

Park-model dealers and manufacturers

Start with the post-2013 Rule 3.72 motor vehicle classification, not the 2008 portable-building conclusion. Separately determine whether a specific product is legally manufactured or industrialized housing subject to Chapter 158.

County tax offices

The tax classification changed after this letter. The original dispute involved a dealer who could not obtain the type of dealer license the county expected, but the Comptroller's response addressed taxability only and did not resolve title or dealer-licensing authority.

Accountants and tax professionals

This document is useful as a classification history. It shows why a unit's design, towability, habitation systems, housing label or decal, and intended installation mattered, but the STAR alert must control over the older Chapter 151 conclusion.

Common questions

Q: What tax did the 2008 letter apply to an ordinary non-housing park model?

A: Chapter 151 sales and use tax as a portable building, including delivery charges under Rule 3.306.

Q: What changed on November 14, 2013?

A: STAR says amended Rule 3.72 made park models subject to Chapter 152 motor vehicle tax and no longer Chapter 151 sales and use tax.

Q: Could Chapter 158 manufactured-housing tax apply?

A: The letter said yes if the unit legally qualified as manufactured or industrialized housing under the cited provisions. That status depended on the product and regulatory treatment.

Q: Did the Comptroller decide whether TxDOT should issue titles or dealer licenses?

A: No. The response explicitly said, "I cannot speak to issues of titling."

Q: Why is the frontmatter date July 9 rather than the scraper's July 8 metadata?

A: The ruling body itself is dated July 9, 2008, so the published page follows the document text rather than conflicting metadata.

Citations and references

• Tex. Tax Code §§ 152.001(3)-(4), 152.021, 152.022
• Tex. Transp. Code § 501.002(6), (14), (22)
• Tex. Tax Code §§ 158.002, 158.051, 158.154(b)
• Tex. Occ. Code §§ 1201.003(18), (20), 1202.002
• 34 Tex. Admin. Code Rules 3.72, 3.306

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/200807658L

Original ruling text

Note: This document is also indexed as a Sales Tax document under 200807137L.

ALERT: Effective November 14, 2013, Rule 3.72 Trailers, Farm Machines, and Timber Machines,
was amended to include park models as being subject to the Motor Vehicle Tax (Ch. 152)
and no longer subject to the Sales and Use Tax (Ch. 151).

July 9, 2008

INVESTIGATOR
Texas Department of Transportation
Motor Vehicle Division
Enforcement Section

RE: 07240580

Dear INVESTIGATOR:

Thank you for your inquiry regarding the issues surrounding certain units built
by COMPANY.

BACKGROUND

You proffered the text of a memorandum you submitted to INDIVIDUAL A, Chief
Investigator, Texas Department of Transportation (TxDOT), Motor Vehicle
Division (MVD), Enforcement Section.

On Thursday August 2, 2007, while assigned to phone duty, you were asked by
TxDOT Information Team Lead Worker INDIVIDUAL B to assist in a matter involving
the titling of “Park Model” trailers and the licensing and regulation of
dealers selling them.

INDIVIDUAL B had handled an inquiry from INDIVIDUAL C of COMPANY B,
**, Texas, regarding INDIVIDUAL C’s attempt to transfer the title
of a new park model trailer to his retail customer in ** County. As
a result of this inquiry, INDIVIDUAL B FAXed a copy of an opinion regarding
park models (TxDOT - MVD – Licensing Informal Opinion, August 29, 1997) to
assist INDIVIDUAL C in his title transfer attempts.

INDIVIDUAL C took the correspondence with him to the ** County Tax
Office where he claimed to have titled these park model trailers on prior
occasions without incident. Upon going to the ** County Tax Office,
he met with Motor Vehicle Department Manager INDIVIDUAL D, who, after reviewing
the document, contacted TxDOT Information Team Member INDIVIDUAL E. Subsequent
to her review of the August 29, 1997, Informal Opinion and telephone discussion
with INDIVIDUAL E, INDIVIDUAL D advised INDIVIDUAL C that she would not permit
him to transfer the title until he obtained a Travel Trailer General
Distinguishing Number (GDN) from TxDOT MVD. INDIVIDUAL C then re-contacted
Information Team Lead Worker INDIVIDUAL B, advising him that he still needed
help because TxDOT was apparently giving conflicting information. INDIVIDUAL B
then asked you to attempt to resolve the situation.

You, then, spoke with INDIVIDUAL C who advised you that he is a mobile or
manufactured home dealer, but is not a travel trailer dealer and does not sell
travel trailers with the exception of COMPANY, which, while being unable to
travel on the highways without permits and special equipment, are required to
be titled in the state of Texas. INDIVIDUAL C further stated he had been
selling the COMPANY for, at that point, approximately two years to help
supplement his income from the extremely slow manufactured home sales. He
stated that he is not a high volume dealer and does not sell many of these
units, but he has transferred title to retail consumers in **
County. He added that the county was not permitting him to transfer until he
obtained a GDN from TxDOT - MVD. He stated that he would obtain a dealer’s
license from TxDOT - MVD, but had been informed that TxDOT does not issue
licenses to dealers for the sale of these units. Due to the conflicts in
regulations, INDIVIDUAL C was unable to transfer the title of a park model home
to his retail customer, and was unable to submit the approximate
$** in sales tax collected to the state of Texas. He stated that he
could send the Manufacturer’s Certificate or Origin (MCO) back to the
manufacturer, which would issue the MCO directly to the retail consumer, and he
could also refund the taxes collected to the retail consumer, who could then
take the MCO and refunded taxes to the tax office; however, he felt that would
be defeating the purpose of having dealers. You advised INDIVIDUAL C that you
would research this matter and get back to him after you had acquired the
information he needed to proceed.

You, then, spoke with TxDOT Assistant Chief Investigator INDIVIDUAL F and
several investigators, all of whom were of the belief that TxDOT does not issue
dealer’s licenses or regulate the sale of park model trailers. You, then, spoke
with Assistant Chief Investigator (ACI) INDIVIDUAL G, whom you had been told
was investigating a case involving park model trailers. INDIVIDUAL G advised
you that his investigation was regarding “Travel Trailers’ that TxDOT does
regulate. Investigator INDIVIDUAL H then provided you with a copy of the
aforementioned August 29, 1997, informal opinion, and Investigator INDIVIDUAL J
located copies of Motor Vehicle Title Manual, Chapter 14, ‘Park Model
Trailers;’ Property Code Chapter 94.001(8), ‘Park Model Unit;’ Transportation
Code Chapter 541 (19), ‘Towable Recreation Vehicle;’ and TxDOT VTR Form
VTR-141, ‘Travel Trailer’ or ‘Park Model Trailer’ Verification. You concluded
that these various documents seemed to indicate that Texas Department of
Licensing and Regulation and not TxDOT - MVD regulates the manufacture and sale
of park model trailers. Nevertheless, in that light, you believe that park
model trailers should be titled as “Park Model - type” trailers and labeled and
bundled separately. Furthermore, the face of the title should be noted ‘PERMIT
REQUIRED TO MOVE.’ And, finally, TxDOT Vehicle Titling and Registration (VTR)
Form VTR-141, “Travel Trailer” or “Park Model Trailer” Verification, must be
used when titling a park model trailer.

You, then, spoke with TxDOT Information Team Member INDIVIDUAL E, who advised
you that she used the same August 29, 1997, informal opinion as Information
Team Lead Worker INDIVIDUAL B had when speaking with INDIVIDUAL D, and that she
(INDIVIDUAL E) did not inform her not to title the unit. She stated that she
advised INDIVIDUAL D that, based on information available, it appeared to her
that the Texas Department of Licensing and Regulation regulates the manufacture
and sale of park model trailers, and TxDOT MVD does not currently issue GDNs to
park model trailer dealers.

You, then, spoke with VTR Chief INDIVIDUAL K, who advised you that the park
model trailers do appear to “fall between the cracks” where regulating the sale
and titling of the units is concerned. She further advised you that, sometime
within the six months prior to your inquiry, she met with TxDOT -MVD Division
Director INDIVIDUAL L, TxDOT - MVD Licensing Director INDIVIDUAL M, the Park
Model Trailer Manufacturer and his attorney, as well as some other people. She
stated it was recommended at that time that INDIVIDUAL L and INDIVIDUAL M
attempt to get legislation to have TxDOT — MVD begin “issuing GDNs to park
model trailer (dealers).” She was not sure at that time what had transpired
since that meeting, and recommended that you contact INDIVIDUAL L and/or
INDIVIDUAL M. She (INDIVIDUAL K) agreed that there was a deficiency in how to
handle these units at the current time, and was not sure how to resolve the
titling issue until such time that TxDOT MVD begins issuing GDNs to park model
trailer dealers. When you advised her that INDIVIDUAL C stated that he could
send the MCO back to the manufacturer, which would issue the MCO directly to
the retail consumer, and then refund the taxes collected to same, allowing the
consumer to take the MCO and refunded taxes to the tax office, she replied that
she believed that would constitute one temporary solution suggested at the
meeting. At the conclusion of your conversation with INDIVIDUAL K, you
contacted INDIVIDUAL A about the situation, and he advised you that he would
meet with INDIVIDUAL L within the next week, due to INDIVIDUAL L being away at
that time.

You, then, spoke with ** County Tax Office Motor Vehicle Department
Manager INDIVIDUAL D, who advised you that INDIVIDUAL C was extremely upset and
that she summoned a ** County deputy sheriff to stand by during
their meeting. She stated that she is the manager, had been there seven years
at that time, and their office has never transferred title of travel trailers
from a retail dealer to a retail consumer without the dealer having a GDN, nor
have they titled park model trailers in the past. She further stated that
INDIVIDUAL C had come to the office with his documents and a blank check to pay
title fees, but had told one of her staff members that he was tax exempt and
did not have to pay the sales tax. You advised her that he claimed to you that
he knew he had to pay approximately $** in sales tax, had collected
it from the consumer as he always had in the past, and was attempting to pay it
and transfer title. You advised her that, at that time, TxDOT MVD did not issue
GDNs for park model trailer dealers, mentioning your conversation with
INDIVIDUAL K and also that Chief INDIVIDUAL A would be discussing this issue
with Division Director INDIVIDUAL L the following week. You also mentioned
INDIVIDUAL C’s idea of sending the MCO back to the manufacturer and refunding
the retail consumer’s tax, as well as Chief INDIVIDUAL A’s recommendation for
INDIVIDUAL C to retain the tax and title fees in a tax account until this
matter can be explored and resolved. You, then, asked her what would happen to
any penalties for filing for title transfer and paying the taxes if it were
eventually determined that INDIVIDUAL C had been attempting to handle this
matter properly and government agencies were preventing him from doing so. She
stated that she would obtain affidavits from INDIVIDUAL C and you, and that any
penalties would be waived, the late filing not being his fault. She asked you
to keep her informed of any decisions made.

You, then, contacted INDIVIDUAL C, advising him that the park model titling and
licensing of dealers seemed to be in a gray area, and that your supervisors
would be meeting with the appropriate people to resolve it. You advised him of
Chief INDIVIDUAL A’s recommendation of retaining the fees and taxes in a tax
account until this is resolved. He (INDIVIDUAL C) immediately raised the issue
of filing deadlines and penalties. You informed him of INDIVIDUAL D’s decision
to waive any penalties once the manner of how to handle these units is
resolved. He, then, advised you that he would FAX you the Vehicle
Identification Numbers (VINs) of units he previously sold and transferred title
to at the ** County Tax Office so that you would have them for
Friday morning.

On August 3, 2007, you received INDIVIDUAL C’s FAX, and ran Registration and
Titling System (RTS) checks on those six (6) VINs, confirming that INDIVIDUAL C
did, in fact, transfer titles to those units in the past. He also submitted a
TxDOT Texas Title Application Receipt from the ** County Tax Office
for one of the units.

After checking the VINs that INDIVIDUAL C sent you, you contacted INDIVIDUAL D
to advise her of what you had learned. She requested that you FAX her copies of
the information so that she could research what happened in the past and why
some of her employees apparently did title some of these units. She stated that
she had been informed by an employee that INDIVIDUAL C has been in the office
in the past to title trailers, but INDIVIDUAL D believes that any titles issued
would have been issued in error by a new, inexperienced employee. She advised
you that she would notify you of the findings of her research, but would be on
vacation the following week. You, then, FAXed her the information she
requested.

Because you believe there is some confusion about what type of units these are,
you went to the COMPANY Web site to obtain some information, which you
forwarded with this inquiry.

RESPONSE

I cannot speak to issues of titling.

Regarding taxability, Texas Tax Code (TTC) Chapter 152 imposes a tax on the
sale of a motor vehicle. Refer to TTC 152.021 and 152.022. Furthermore, TTC
Chapter 152 defines a “motor vehicle” for tax purposes, identifying the units
that are and are not included in the definition. The following language from
152.001(3) and (4) constitutes this definition:

“(3) "Motor Vehicle" includes:

(A) a self-propelled vehicle designed to transport persons or property on a
public highway;

(B) a trailer and semitrailer, including a van, flatbed, tank, dumpster,
dolly, jeep, stinger, auxiliary axle, or converter gear; and

(C) a house trailer as defined by Chapter 501, Transportation Code.

(4) "Motor Vehicle" does not include:

(A) a device moved only by human power;

(B) a device used exclusively on stationary rails or tracks;

(C) road-building machinery;

(D) a mobile office;

(E) a vehicle with respect to which the certificate of title has been
surrendered in exchange for:

(i) a salvage vehicle title issued pursuant to Chapter 501, Transportation
Code;

(ii) a certificate of authority issued pursuant to Chapter 683, Transportation
Code;

(iii) a nonrepairable vehicle title issued pursuant to Chapter 501,
Transportation Code;

(iv) an ownership document issued by another state if the document is
comparable to a document issued pursuant to Subparagraph (i), (ii), or (iii);
or

(F) a vehicle that has been declared a total loss by an insurance company
pursuant to the settlement or adjustment of a claim.”

Note that the definition includes a “house trailer as defined by Chapter 501,
Transportation Code.” Texas Transportation Code 501.002(6) defines a “house
trailer” in the following manner:

“501.002. DEFINITIONS. In this chapter: . . .

. . . (6) "House trailer" means a trailer designed for human habitation. The
term does not include manufactured housing. . . .”

Transportation Code 501.002(14)(C) then defines a motor vehicle to include a
“house trailer.” Note the following language from that chapter:

“(14) "Motor vehicle" means: . . .

(C) a house trailer; . . .”

And, finally, Texas Transportation Code 501.002(22) defines a “trailer”
thusly:

“(22) "Trailer" means a vehicle that:

(A) is designed or used to carry a load wholly on the trailer's own structure;
and

(B) is drawn or designed to be drawn by a motor vehicle.”

Nevertheless, the aforementioned TxDOT Informal Opinion dated August 29, 1997,
reviewed and re-adopted by TxDOT Licensing Director Molly Singletary in
September of 2000, provides an in-depth analysis of TxDOT’s position with
regard to whether a park model unit meets the definition of a motor vehicle as
defined in the Transportation Code. Note the following discussion from that
opinion.

“Park model trailers are essentially small manufactured trailer houses, usually
a maximum of 12’ wide, which are towed to recreational sites, where they are
hurricane strapped to a slab and hooked up to electricity and/or gas, and
water. Generally, the wheels and tow bar are removed, the trailer is skirted,
and a porch is added. The standard unit consists of the items normally found
in a manufactured house: sheetrock walls, built-in light fixtures, full size
refrigerators, sinks, cabinets, stove, oven, sliding-glass patio door, front
door. Most units are one bedroom, one living room, but some have two bedrooms.
They do not have generators or converters, do not carry an on-board fuel source
(such as propane tanks) and do not carry an on-board potable water supply. The
units manufactured for sale in the northern regions of the country include
basements, which essentially make them two-story. The majority of the units
marketed in Texas end up in the Rio Grande Valley for Snowbirds. They are
towed by a tongue trailer hitch, and weigh in the neighborhood of 16,000
pounds. Manufacturers of this product indicate that they cannot be towed by
anything smaller than a 1½ ton truck, that a 1 ton would not be able to safely
handle the tongue weight. . . .

“In two Motor Vehicle Information Circulars issued in 1989, No. 40-89 and
48-89, VTR informed the tax offices that pursuant to HB 869 passed in the 71st
Legislature, ‘recreational vehicles’ as defined in the federal statute were
excluded from the Texas Manufactured Housing Standards Act. It was VTR’s
determination at that point that park model trailers were previously considered
manufactured houses, but would now be considered travel trailers. They
indicated that the park model trailers should be registered and titled as
travel trailers, showing the body style as travel trailer on the title,
regardless of the body style stated on the MSO. It also stated that in the
event that the park model was in excess of the maximum width or length
limitation, an oversize permit must be obtained, and that it would be noted on
the title that a permit was required for the vehicle to be moved. VTR also
clarified that if the trailer is designed as a permanent dwelling, it is not to
be titled and registered as a travel trailer, and would continue to fall under
the regulation of the Dept. of Licensing and Regulation. . . .

“That the vehicles are in fact being registered and titled as travel trailers
in itself [sic] should not be determinative of the issue of whether they fall
under the definition of “towable recreational vehicle” under the TMVCC. Towable
recreational vehicles under the TMVCC are non-motorized vehicles that are
designed and originally manufactured for temporary human habitation as its
[sic] primary purpose for recreational, camping, or seasonal use, and meet all
of the following criteria:

(a) titled and registered as a travel trailer,
(b) permanently built on a single chassis,
(c) contains one or more life support systems, and
(d) designed to be towable by another motor vehicle.

“The park models are, as required by VTR, titled and registered as travel
trailers. They are also permanently built on a single chassis (although it is
simply an I-beam frame, with 2 x 6 floor joists, and tongue-in-groove floor
decking over fiberglass insulation, with removable wheels, more like the
underside of a manufactured house than a travel trailer). Regarding life
support systems, the park models do not have an on-board fuel source for
cooking,[sic] [or] air conditioning or heating, [and] the exterior evacuation
for the toilet and tub/shower are conventional plumbing to a sewer system with
no holding tank capability, there is no potable water supply system that
includes a tank, and there is no electric power supply unless the trailer is
connected to an exterior source such as a metered supply or a generator. There
is an electric refrigerator, but it is a standard full-sized
refrigerator/freezer that would be seen in a conventional home, rather than an
RV refrigerator.

“The definition in the TMVCC also requires that the towable recreational
vehicle be designed to be towable by another motor vehicle. Although it does
have a detachable hitch, it is questionable whether the vehicle is designed to
be towable. And while park models are designed to be transported by means of
the tow hitch to a more or less permanent destination, the concept of “towable”
would logically entail being relatively easy to tow from place to place. The
park model weighs approximately 16,000 pounds, has sheetrock walls, vaulted
ceilings, sliding glass doors, and a shingled and pitched roof. Many models
require a special permit to be on the highway due to being over-sized. These
factors lead to the conclusion that these trailers are not designed to be
towable, in the sense of a towable recreational vehicle or travel trailer.

“It does not appear that the legislature, in passing HB 2382, intended to
include park model trailers as towable recreational vehicles. There was no
mention of these vehicles in all of the discussions involving various types of
trailers, including horse trailers, race car trailers, and other specialty
utility trailers that may have living quarters. The motor vehicle industry
itself would most likely consider this product a member of the mobile
home/manufactured housing industry, rather than the motor vehicle industry.
Therefore, it is the staff’s position that the park model trailers be
determined to not fit the definition of towable recreational vehicle, in that
they do not contain a requisite recreational vehicle life support system, and
are not designed to be towable in the logical sense of a recreational vehicle.”

In this light, it is clear that TxDOT does not consider a park model unit to
meet the definition of a motor vehicle. Inasmuch as TTC Chapter 152 draws its
definition of a motor vehicle, where a house trailer is concerned, directly
from the definition provided in Transportation Code Chapter 501, and since
TxDOT has oversight where the definitions in the Transportation Code are
concerned, it is our conclusion that a park model trailer is not a motor
vehicle for motor vehicle sales and use tax purposes.

Moreover, a series of discussions with the Texas Department of Housing and
Community Affairs, culminating in a conversation on 6/17/08 with INDIVIDUAL N,
Chief Inspector in that agency’s ** Office, provided guidance with
regard to the nature of the specific park models at issue. According to
INDIVIDUAL N, the COMPANY park model units in question are not built in such a
way as to require a label or decal issued by the U.S. Department of Housing and
Urban Development (HUD). Such a unit, along with a “manufactured home,” as that
term is defined in Texas Occupations Code Chapter 1201, would be subject to tax
under TTC Chapter 158. Note the following pertinent language from TTC 158.002
and 158.051, respectively:

158.002. DEFINITIONS. In this chapter, "manufactured home," "manufacturer,"
"retailer," and "person" have the same meanings as they are given by Chapter
1201, Occupations Code. In addition, the term "manufactured home" also
includes and means "industrialized housing" as defined by Chapter 1202,
Occupations Code.

And . . .

158.051. TAX IMPOSED. A tax is imposed on the initial sale in this state of
every new manufactured home at the rate of five percent of the amount of the
sales price determined as provided by Section 158.052 of this code.

Texas Occupations Code 1201.003(18) provides the definition of a “manufactured
home” for the purposes of the tax imposed by TTC 158.051. That language
follows:

“(18) "Manufactured home" or "manufactured housing" means a HUD-code
manufactured home or a mobile home.”

The language of Texas Occupations Code 1201.003(20) defines a “mobile home”
thusly:

“(20) "Mobile home":

(A) means a structure:

(i) constructed before June 15, 1976;

(ii) built on a permanent chassis;

(iii) designed for use as a dwelling with or without a permanent foundation
when the structure is connected to the required utilities;

(iv) transportable in one or more sections; and

(v) in the traveling mode, at least eight body feet in width or at least 40
body feet in length or, when erected on site, at least 320 square feet; and

(B) includes the plumbing, heating, air conditioning, and electrical systems
of the home.”

In addition, the language of Texas Occupations Code 1202.002 defines
“industrialized housing,” for the purposes of the tax imposed by TTC 158.051.
That definition from the Occupations Code follows:

“1202.002. DEFINITION OF INDUSTRIALIZED HOUSING.

(a) Industrialized housing is a residential structure that is:

(1) designed for the occupancy of one or more families;

(2) constructed in one or more modules or constructed using one or more
modular components built at a location other than the permanent site; and

(3) designed to be used as a permanent residential structure when the module
or the modular component is transported to the permanent site and erected or
installed on a permanent foundation system.

(b) Industrialized housing includes the structure's plumbing, heating, air
conditioning, and electrical systems.

(c) Industrialized housing does not include:

(1) a residential structure that exceeds three stories or 49 feet in height as
measured from the finished grade elevation at the building entrance to the peak
of the roof;

(2) housing constructed of a sectional or panelized system that does not use a
modular component; or

(3) a ready-built home constructed in a manner in which the entire living area
is contained in a single unit or section at a temporary location for the
purpose of selling and moving the home to another location.”

In light of the foregoing language from TTC Chapter 158, as well as that of
Texas Occupations Code Chapters 1201 and 1202, it is clear that the units in
question do not constitute either of the following:

1) a HUD-code manufactured home or
2) a mobile home.

Nevertheless, in a telephone conversation of 7/7/2008, INDIVIDUAL O, Program
Manager of the Industrialized Housing and Buildings Program at the Texas
Department of Licensing and Regulation, stated that it is possible that park
model units could constitute industrialized housing as defined in 1202.002 of
the Occupations Code. If a manufacturer chooses to obtain an Industrialized
Housing and Buildings Program decal for a unit (requiring it to be incorporated
into realty), then the unit would be considered industrialized housing and
would, therefore, be subject to tax under TTC 158.051. This tax is collected
from the purchaser by the manufacturer of the unit at the rate of 5.0 percent
of 65 percent of the sales price.

Be aware, however, that TTC 158.154(b) provides that “[m]anufactured homes are
not to be taxed as motor vehicles under Chapter 152 . . . and are not taxable
items under [TTC] Chapter 151 . . ..” In view of this, if the park models are
not taxable under Chapter 158 as manufactured housing, as described in the
immediately foregoing paragraph in this response, then they are subject to
limited sales and use tax as portable buildings as defined in Texas
Administrative Code Rule 3.306. Note the following definition from that rule:

“(a) Definitions. The following words and terms when used in this section shall
have the following meanings, unless the context clearly indicates otherwise. .
. .

. . . (2) Portable building--A self-contained transportable structure that does
not require attachment to a foundation or to realty in order to be functional.
An example of a portable building is a tool shed. . . .”

The taxability of portable buildings is established by the following language
from Rule 3.306(b):

“(b) Application of the sales tax. . . .

. . . (2) A sale of a portable building is a taxable sale of tangible personal
property. Sales tax is due on the total sales price charged by the seller,
including delivery charges. . . .”

If a park model is treated as a portable building, as opposed to being taxable
under TTC Chapter 158 as manufactured housing, then the manufacturer must hold
a sales and use tax permit and collect and remit state and applicable local
limited sales and use tax. The manufacturer may sell a park model subject to
limited sales and use tax tax-free for resale, however, if the dealer
purchasing the unit issues a limited sales and use tax resale certificate [Form
01-339(Front)]. The dealer must, in turn, hold a limited sales and use tax
permit and collect state and applicable local taxes on sales, leases or rentals
of the units. Again, the units are not subject to the motor vehicle sales and
use tax imposed under TTC Chapter 152. The limited sales and use tax is
remitted directly to the Comptroller’s office via report; it is not collected
by a county tax assessor-collector’s office.

A person may obtain a permit in any of three ways: 1) by mailing an
application, 2) by applying in person in one of our field offices in the state
or 3) by applying online on our Web site. If one mails in an application or
applies via the Web site, it usually takes about 4-6 weeks for the permit to be
issued. If one applies in person, the permit will typically be issued that day.
The sales tax permit application form may be obtained on our Web site at
http://window.state.tx.us/taxinfo/taxforms/01-forms.html. The field office
locations are available at http://window.state.tx.us/taxinfo/fieldtoll.html.

A permit holder will file regular sales tax returns with our office. How
frequently a seller reports sales and use taxes is determined by the amount of
tax owed.

1. Taxpayers who have less than $1,500 in state tax per quarter to report may
   file returns quarterly.

2. Taxpayers who have less than $1,000 state tax to report during a calendar
   year may file yearly returns upon authorization from the comptroller.

3. Taxpayers who have $1,500 or more in state tax per quarter to report must
   file monthly returns.

Initially, our office sets up the filing frequency for an account, when the
taxpayer completes his application for a permit, based on the amount of tax he
estimates he will owe. We may adjust his account later based on actual sales
tax liabilities that he reports. He must always file a report when due,
regardless of whether or not he has sales to report for the filing period.

I hope this information is helpful. If you have any questions or need more
information, you may email us at [email protected], call me at
1-800-531-5441 (x50647), or write to: Tax Policy Division, P.O. Box 13528,
Austin, TX 78711-3528.

Our goal is to provide you with prompt, professional service. Please take a
moment to complete our on-line survey at:
http://aixtcp.cpa.state.tx.us/surveys/tpsurv2/index.html.

Sincerely,

Tim Pingree
Tax Policy Division

cc: Lonnie Cantu, CID