Is Texas motor vehicle tax due when a taxicab owner adds the cab company to the title solely to satisfy an operating agreement?

Plain-English summary

The Texas Comptroller told the Travis County tax office not to assess motor vehicle tax when a taxicab owner added the cab company to the vehicle title under the submitted Dual Title Agreement.

The individual titled owner retained beneficial ownership. The company was added to the certificate of title to comply with the Texas Motor Vehicle Safety Responsibility Act and the contractor operating arrangement, and sole title would return to the owner when that agreement ended.

On those narrow facts, adding the company's name was not treated as a taxable transfer of the vehicle.

What this means for you

Taxicab owners and companies

The no-tax result depended on the agreement preserving the individual's beneficial ownership and making the company's title status temporary and compliance-driven. A different agreement that transfers economic ownership could produce a different answer.

County tax offices

Review the actual operating and title agreement rather than assuming every added name represents a sale or taxable use. The Comptroller's response was expressly based on the submitted agreement and warned that similar-looking facts could yield another result.

Accountants and tax professionals

This is an informal Tax Policy Division email response, not a modern private letter ruling with cited statutes and reliance terms. Treat it as fact-specific historical guidance.

Common questions

Q: Who kept beneficial ownership?

A: The individual vehicle owner.

Q: Why was the cab company added to the title?

A: To meet the operating agreement and Texas financial-responsibility requirements for taxicab operation.

Q: What happened when the operating agreement ended?

A: Title was to return solely to the individual owner.

Q: Does this mean adding any business to a title is tax-free?

A: No. The response was limited to the submitted Dual Title Agreement and its retained-beneficial-ownership facts.

Citations and references

• The letter cites the Texas Motor Vehicle Safety Responsibility Act by name but gives no statutory section.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/201103049L

Original ruling text

From: Lavonne Key
Sent: Friday, March 18, 2011 11:45 AM
To: '[email protected]'; '[email protected]'
Subject: RE: 11066051 Cab Owners and Cab Companies

March 18, 2011

Office of Nelda Wells Spears, TAC
C/O Michael Montecalvo

[email protected]
[email protected]

RE: 11066051 Cab Owners and Cab Companies

Dear Michael Montecalvo:

Thank you for your email regarding cab companies and cab owners claiming no tax
due when adding a name to the title. The following response is based on the
“Dual Title Agreement” you provided. I am pleased to be of assistance.

Response: As stated in the “Dual Title Agreement,” the titled owner will
maintain beneficial ownership of the vehicle and pledges to list the Company on
the Certificate of Title of the vehicle for purposes of complying with the
Texas Motor Vehicle Safety Responsibility Act. At the conclusion of the related
contractor operating agreement, title will be returned solely to the owner.
Motor vehicle tax is not assessed when a titled owner of a motor vehicle adds
the name of a cab company to the title of the vehicle to fulfill the
requirements of such an operating agreement as the “Dual Title Agreement,” for
the purpose of operating as a Taxicab.

I hope you find this information helpful. Complete Texas motor vehicle sales
tax information, including rules, statutes, publications, and frequently asked
questions, can be found on the Motor Vehicle Sales and Use Tax Web page at:
http://window.state.tx.us/taxinfo/mtr_veh/mv_su.html.

This opinion is based on the information presented in your e-mail received
March 7, 2011. Other facts, though similar, may yield different results.

If you have any questions or need additional information, you can reply to this
email, call me at 1-800-531-5441 ext. 36263, or write to Tax Policy Division,
P. O. Box 13528, Austin, Texas 78711-3528.

Sign up for e-mail updates on the Comptroller topics of your choice at
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Our goal is to provide you with prompt, professional service. Please take a
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Sincerely,

Lavonne Key
Tax Policy Division

From: MICHAEL MONTECALVO [mailto:[email protected]]
Sent: Monday, March 07, 2011 10:49 AM
To: Lavonne Key
Subject: Fwd: scan doc

Lavonne,

I have attached the letter that the cab company and cab owners are trying to
use for their tax exemption. In these transactions either the company name or
individual's name is being added to the title. We have advised them that tax is
due, however COMPANY agency states that they spoke with someone at the
comptroller's office that advised them that this type of transaction would be
exempt. I know that we did not find any listed exemptions when I spoke with
you, but I thought I would provide you with a copy of their agreement to be
certain. Should we be charging motor vehicle use tax on these transactions or
are they in any way exempt. Please advise.

Thank you,

Michael L Montecalvo
Tax Supervisor
Motor Vehicle