Ezel / Tax Rulings / TX
TX 7901L2019D07 Motor Vehicle Tax 1979-01-25

How did Texas tax a U-Haul trailer rental and separately stated insurance when the rental company charged five percent?

Short answer: The historical tax was four percent of the trailer rental charge, collected and remitted by the rental agent. Separately stated insurance was not taxable. Because the company charged five percent on both amounts, the letter said the customer should receive all five percent charged on insurance plus the one-percentage-point overcharge on rent.

Apply this to your situation

This page answers the general question as of 1979. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1979
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 January 25, 1979 taxpayer-response letter. STAR expressly warns that the four-percent rate is not current. Trailer classification, rental-agent collection duties, gross rental receipts, insurance-charge treatment, overcollection refunds, reporting, remittance, and agency procedures may also have changed. The response addressed the stated five-percent charge and separately stated insurance. STAR documents may no longer represent current policy even when not marked superseded. Company 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 rental company overcharged the customer by taxing separately stated insurance and using five percent instead of the historical four-percent rental rate.

The letter classified a U-Haul trailer as a motor vehicle. The rental agent collected gross rental receipts tax from the customer and reported and remitted it to the Comptroller.

Separately stated insurance was not part of the taxable rental receipts. The customer was told to seek a refund of the entire five-percent charge on insurance and the one-percentage-point excess charged on the rental fee.

What this means for you

The letter treated rental charges and separately stated insurance differently. It also placed collection and remittance responsibility on the rental agent.

Common questions

Q: Was the trailer rental taxable?
A: Yes.

Q: Was separately stated insurance taxable?
A: No.

Q: What refund did the letter describe?
A: Five percent of the separately stated insurance charge and one percent of the rental charge.

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

January 25, 1979

Dear ***:

As I informed you on the telephone today, your letter requesting information on the appropriate tax due on the rental of U Haul trailers has come to me for reply.

A U Haul trailer is a motor vehicle, and its rental is subject to 4% gross rental receipts tax. This is collected from the customer by the rental agent, who is required to report and remit the tax to the Motor Vehicle Sales Tax Division of the Office of the Comptroller. Insurance charges which are separately stated are not subject to the 4% gross rental receipts tax. If, as you stated in your letter, COMPANY A Truck & Trailer Rentals charged a 5% tax on the rental fee and on separately stated insurance, this procedure was incorrect. I have spoken with a representative of COMPANY A Truck & Trailer Rentals, who has evidently been improperly instructed. He will discuss this matter with his Houston office. You should be able to obtain from the COMPANY. A dealership a refund of 5% of the insurance separately stated, and 1%

rental charges. If you have any difficulty, please get in touch with me.

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

Yours very truly,

Patricia Brockway

Division Attorney

Motor Vehicle Sales Tax Division

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