How did Texas tax parking fees, separately stated towing and returned-check charges, government parking, consulates, supplies, and operator reporting?

Plain-English summary

The Texas Comptroller answered a parking association's operational questions:

• Separately stated returned-check service charges were not taxable.
• Separately stated towing fees for moving a vehicle from an authorized space were not taxable.
• If an operator collected parking receipts and paid the owner net of expenses, the operator owed the tax and the owner needed a permit and resale certificate from the operator.
• If receipts went directly into the owner's bank account, the owner reported the tax.
• A company managing multiple lots needed one permit and one bond, not one per lot.
• Parking fees on city-, state-, and federal-owned property were taxable.
• Parking contracts entered before October 2, 1984 were exempt only through September 30, 1987.
• Government employees were not exempt; foreign consulates were exempt with a signed exemption certificate.
• Parking operators kept records for four years.
• Supplies could not be bought tax-free for resale except parking decals.
• If a customer refused to pay sales tax, the parking operator still owed it.

What this means for you

Parking operators and owners

Reporting responsibility followed the receipt arrangement, and customer nonpayment did not eliminate the operator's tax liability.

Towing and payment-fee operations

Separate statement was required for the nontaxable towing and insufficient-check service charges described.

Accountants and tax professionals

Maintain the four-year records stated in the historical letter and verify current permits, exemptions, sourcing, and retention periods.

Common questions

Q: Were separately stated towing charges taxable?
A: No.

Q: Were government employees exempt from parking tax?
A: No.

Q: Were foreign consulates exempt?
A: Yes, with a signed exemption certificate.

Q: What supply could be bought tax-free for resale?
A: Parking decals only.

Q: Who owed tax if the customer refused to pay it?
A: The parking operator.

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/8409L0590B05

Original ruling text

September 18, 1984

Dear **:

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

I have answered your questions on the attached pages. If your group
has more questions, please write or call 1-800-252-5555 toll free from
anywhere in Texas. Our regular number is 512/475-1931.

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

Sincerely,

Tom Gay
Tax Policy Section
Tax Administration Division

Q. Is tax due on service charges for returned insufficient checks?

A. No, provided the service charge is separately stated from the parking
fees.

Q. Is tax due on towing charges to move a vehicle from an authorized
parking space?

A. No, provided the Towing fee is separately stated from any parking
fees.

Q. Who is responsible for reporting the tax if an operator collects the
parking fees and gives the owner the money less expenses?

A. The operator owes the tax.

Q. In the above situation, does the owner need a sales tax permit?

A. Yes. The owner should have a resale certificate from the operator.

Q. If a parking contractor has multiple parking lots that they manage,
will the contractor need a different permit and bond for each lot?

A. No, only one permit and one bond is needed for each company.

Q. If a parking lot owner operator deposits all the parking receipts
into the owners bank account, who is responsible for reporting the tax?

A. The owner.

Q. Will city, state and federal owned properties collect the tax on
parking fees?

A. Yes

Q. Will contracts for parking be taxable if entered into before October
2, 1984?

A. No. However, the prior contract exemption expires September 30, 1987.

Q. Are government employees exempt from paying the tax?

A. No.

Q. Are foreign consulates exempt from paying the tax?

A. Yes. and must be supported by a signed exemption certificate.

Q. How long must a parking lot operator keep records?

A. Four (4) years.

Q. Can a parking lot operator purchase supplies tax free for resale?

A. No. The only item that can be purchased tax free for resale is parking
decals.

Q. If a customer refuses to pay the sales tax, does the parking lot
operator have to pay it?

A. Yes.