Ezel / Tax Rulings / TX
TX 7708L2013C12 Motor Vehicle Tax 1977-08-16

Who paid Texas tax on a vehicle purchased for lease to a common carrier, and were the lease payments taxed?

Short answer: The purchaser-lessor owed historical motor vehicle sales tax on the vehicle's purchase price and paid it at titling. The later lease payments were not taxed. At the time, a lease required exclusive use for more than 31 days; the letter said that threshold would change to more than 180 days on September 1, 1977.

Apply this to your situation

This page answers the general question as of 1977. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1977
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an August 16, 1977 taxpayer-response letter about a vehicle purchased in Texas for lease to a common carrier. STAR expressly warns that the four-percent rate is not current. Lessor liability, common-carrier treatment, tax on lease payments, title procedures, exclusive use, and the 31-day and September 1, 1977 180-day thresholds are historical and may have changed. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The lessor paid historical motor vehicle sales tax when buying the vehicle; the later common-carrier lease payments were not taxed.

The purchaser-lessor paid tax to the county tax assessor-collector at title.

The letter defined a lease as the owner's agreement to give another exclusive use for consideration for more than 31 days. It also stated that effective September 1, 1977, the required period would extend to more than 180 days.

What this means for you

The historical tax attached to the lessor's purchase rather than the payment stream, while the duration required for lease classification was changing within weeks of the letter.

Common questions

Q: Who owed tax on purchase?
A: The purchaser-lessor.

Q: Were the lease payments taxed?
A: No.

Q: What duration qualified as a lease?
A: More than 31 days at the time, changing to more than 180 days on September 1, 1977.

Citations and references

  • No statute or rule was cited in the letter.

Source

Original ruling text

ALERT: The tax rates cited in this article are no longer the current motor vehicle sales tax
or motor vehicle rental tax rates.

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, TEXAS 78774

August 16, 1977

Dear *:

A motor vehicle that is purchased in Texas for lease to a common carrier is subject to a 4% sales tax. The tax is the obligation of the purchaser/lessor and is paid to the County Tax Assessor-Collector at the time of titling. The subsequent lease payments are not taxed.

A motor vehicle lease means the agreeing by the owner to give exclusive use of a motor vehicle to another for a consideration and for a period of time exceeding 31 days under such agreement. Effective September 1, 1977, the period of time will be extended to exceed 180 days under such agreement.

Any correspondence in this matter should be directed to the attention of the Motor Vehicle Sales Tax Division or telephone 512/475-6897.

Yours very truly,

Richard Montgomery

Director

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