Ezel / Tax Rulings / TX
TX 7803L2013D02 Motor Vehicle Tax 1978-03-10

Did a Section 501(c)(3) horse-show association's ordinary sales-tax exemption also exempt its car rentals from Texas vehicle rental tax?

Short answer: No. The 1978 letter said the association's limited-sales-tax exemption did not carry into the separate motor vehicle rental tax, which then had no general Section 501(c)(3) exemption. STAR now flags a September 1, 2025 law creating targeted vehicle exemptions for qualifying nonprofit food banks and certain housing-service entities, so the historical answer is not universal today.

Apply this to your situation

This page answers the general question as of 1978. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1978
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 a March 10, 1978 taxpayer-response letter about a horse-show association. STAR adds a current-law alert that 89th Legislature House Bill 4426 created vehicle exemptions effective September 1, 2025 for qualifying nonprofit food banks and entities primarily using vehicles as housing for people experiencing homelessness. The precise current scope, nonprofit status, rental tax, refunds, and other exemptions require current-law review. The 1978 letter addressed only the association and similar organizations under the law then in effect. STAR documents may no longer represent current policy even when not marked superseded. Names 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 horse-show association's Section 501(c)(3) and limited-sales-tax exemption did not exempt its car rentals from the separate historical motor vehicle rental tax.

The letter told the rental company to continue charging gross rental receipts tax and not refund tax already collected from the association or similar organizations.

STAR now carries an important later-law alert: effective September 1, 2025, Texas House Bill 4426 provides targeted vehicle exemptions for a nonprofit food bank using a vehicle primarily for its purposes and for an entity primarily using the vehicle as housing for individuals experiencing homelessness.

What this means for you

A general nonprofit exemption under one tax did not automatically transfer to a separate motor vehicle tax. The 2025 targeted exceptions also mean the 1978 answer cannot be applied categorically to every nonprofit today.

Common questions

Q: Did Section 501(c)(3) status alone exempt the association's rentals in 1978?
A: No.

Q: Did the limited-sales-tax exemption control the vehicle rental tax?
A: No.

Q: Does STAR identify later exceptions?
A: Yes, for the qualifying food-bank and housing uses described in its 2025 alert.

Citations and references

  • Internal Revenue Code § 501(c)(3)
  • Texas House Bill 4426, 89th Legislature (effective September 1, 2025, as described by STAR)

Source

Original ruling text

ALERT: 89th Legislature House Bill 4426 provides an exemption for a vehicle purchased, used, or rented by a nonprofit food bank that is used primarily by the food bank for its purposes and exempts an entity providing housing services that primarily uses the vehicle as housing for individuals who are experiencing homelessness. Effective September 1, 2025. See STAR 202508015N.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

March 10, 1978

ATTN: ***

Dear ***:

Thank you for your courteous letter concerning the exemption of *
Horse Show Association from the tax on automobile rentals.

The horse show association is not exempt from the tax on car rentals by
reason of their exemption from Texas Limited Sales Excise and Use Tax.

The rental tax imposed on automobiles is a part of the Motor Vehicle Sales
and Use Tax, which is a separate tax statute with different exemptions from
the Limited Sales Tax. There is no provision under the Motor Vehicle Tax to
exempt an organization organized under Section 501 (c) (3) of the Internal
Revenue code.

You should continue to charge Motor Vehicle Gross Rental Receipts Tax to
the Horse Show association and other similar organizations and should not
refund any rental tax you have collected from them.

If you have any questions you may write the Motor Vehicle Sales Tax Division
or call toll free 1-800-252-5555.

Sincerely,
Robert Mott
Motor Vehicle Sales Tax Division

Get today's answer for your situation

You just read a 1978 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.