How much Texas tax was due on impounded-vehicle storage fees when an unpaid vehicle was sold at public auction?

Plain-English summary

The Texas Comptroller said tax was due on storage fees for an impounded vehicle transported to a storage lot and later sold at public auction for unpaid charges.

The amount of storage tax depended on the auction recovery. If net proceeds were enough to cover the taxable storage amount, the full tax was reported. If net proceeds were less than the total unpaid bill, the letter applied the same recovered percentage to the storage tax. Its example used 67% recovery and 67% of the stated storage tax.

If no bid was received or the storage operator bought the vehicle at the auction, no tax was due.

What this means for you

Vehicle storage lots

The historical tax calculation followed actual auction recovery rather than automatically taxing the full unpaid storage bill.

Accountants and tax professionals

Retain the unpaid-bill breakdown, auction price, auctioneer fee, net proceeds, and proportional calculation. The dollar amounts and rates in the example are historical.

Common questions

Q: Were the storage fees taxable?
A: Yes.

Q: What if auction proceeds did not cover the full unpaid bill?
A: The storage tax was paid proportionately to the recovery described in the letter.

Q: What if there was no bid?
A: No tax was due.

Q: What if the storage operator bought the vehicle?
A: No tax was due.

Citations and references

• The letter cites no statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8409L0586B07

Original ruling text

September 13, 1984

Dear **:

Thank you for allowing me to speak to your association the other night.

Enclosed is various tax rate charts to help your members calculate the taxes.

The issue concerning vehicle sold at public auction for storage and wrecker
fees has been answered by our tax policy section.

Tax is due on storage fees on a vehicle that is transported to a storage lot
and later sold at public auction for unpaid fees.

The amount of tax that is due will depend upon how much is collected from the
public auction. Let me answer by the following examples:

• If a storage lot operator has an unpaid bill for $45 wrecker fee, $212.25
  storage fee, which includes tax ($200 + $12.25 tax) and $25 legal fees (fees to
  send letter of notices to vehicle owner) or a total unpaid bill of $282.25.

• If this vehicle is sold for $300 at public auction (less $10 fee to the
  auctioneer) -- tax is due on the entire amount $200 or $12.25 tax) and should
  be reported.

• If the vehicle only brings $200 at the public auction -- then will report and
  pay this tax proportionately to the total unpaid bill. For example: the total
  unpaid bill was $282.25, you received $190 ($200 less $10 auction fee) then
  only sixty-seven percent (67%) on the tax is due ($190 + $282.25) or $8.21 (67%
  x $12.25)

• If you do not receive a bid at this public auction or you buy this vehicle
  yourself, no tax would be due.

This opinion is based upon the facts you presented. If there are additional or
different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may write
me, or call toll free 1-800-252-5555 from anywhere in Texas or phone
512/475-1931.

Sincerely,

Tom Gay
Tax Policy Section
Tax Administration Division