When did Texas tax a leased vehicle under the historical long-term lease rules, and were lease payments taxable?

Plain-English summary

Under the historical long-term lease rules, Texas taxed the lessor's vehicle acquisition or use rather than the lease payments.

A Texas-purchased leased vehicle drew sales tax; an out-of-state purchase drew use tax. Payment went to the county at title or registration, or directly to the Comptroller for other registration including apportioned tags.

A lease meant exclusive use for consideration for more than 180 days. Lease payments were not taxed. The printed four-percent tax applied to total consideration paid or payable for the vehicle.

What this means for you

The document's lease definition and acquisition-based tax system are historical. Current short-term rental, long-term lease, conditional-sale, registration, and tax rules must be checked separately.

Common questions

Q: Were lease payments taxed?
A: No under this 1980 guidance.

Q: What duration qualified as a lease?
A: More than 180 days, with exclusive use for consideration.

Citations and references

• Texas Tax-General Annotated art. 6
• Arts. 6.01(1)-(2), 6.04(1)-(2), and 6.03(D), (F)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/8012L0197D04

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller December 8, 1980

Dear *:

Thank you for your inquiry of November 26, 1980. I am happy to provide
this
response in so far as motor vehicles are concerned.

Motor vehicles are taxed under the Texas Motor Vehicle Sales and Use Tax
Law
(TEX. TAX. GEN. ANN. art. 6). A leased motor vehicle is subject to sales
tax if purchased in Texas (article 6.01(1)). A leased motor vehicle
purchased
outside of Texas is subject to use tax (article 6.01(2)). The tax is
paid to
the County Tax Assessor-Collector at the time of titling and/or
registration
(article 6.04(1)) or if operated with other than Texas registration
(including
apportioned tags), the tax is paid directly to the Comptroller (article
6.04
(2)). Lease payments are not taxed.

You should be aware that a lease is defined as the agreement by the owner
to
give exclusive use of a motor vehicle to another for a consideration and
for
a period of time exceeding 180 days under such agreement (article
6.03(F)).

The sale and use tax care is 4% and is based on total consideration paid
or to be paid for the vehicle (article 6.03(D)).

Find enclosed several brochures and a copy of the statute. If I can be
of
further assistance, please write the Motor Vehicle Tax Division or call
512/475-6897.

Sincerely,
Curt Swenson
Motor Vehicle Tax Division