Ezel / Tax Rulings / TX
TX 8410L0592C11 Sales and/or Use Tax (State,Local,MTA) 1984-10-09

Were costs of storing, preserving, and towing an impounded vehicle taxable under Texas's Abandoned Motor Vehicle Act process?

Short answer: Storage and preservation costs were taxable and the tax was deducted from sale proceeds before payment to the owner or lienholders. Separately stated charges such as towing were not taxable.

Apply this to your situation

This page answers the general question as of 1984. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1984
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 Texas Comptroller said tax applied to the cost of storing and preserving an impounded vehicle under the Abandoned Motor Vehicle Act process.

The tax became part of the storage cost and was to be deducted from the vehicle-sale proceeds before any distribution to the owner or lienholders.

Other separately stated charges, such as towing, were not taxable. The body does not separately discuss scene time or cleanup time despite STAR's metadata.

What this means for you

Impound lots and vehicle custodians

The historical taxable base included storage and preservation costs.

Towing businesses

The letter treated a separately stated towing charge as nontaxable.

Accountants and tax professionals

Keep storage and towing separately stated and verify current abandoned-vehicle, auction-proceeds, and sales-tax rules.

Common questions

Q: Were storage and preservation costs taxable?
A: Yes.

Q: How was the tax paid from an impounded vehicle sale?
A: It was deducted from proceeds before distributions to the owner or lienholders.

Q: Was a separately stated towing charge taxable?
A: No.

Citations and references

  • The letter refers to the Abandoned Motor Vehicle Act but gives no section number.

Source

Original ruling text

October 9, 1984

Dear **:

Thank you for your letter asking about the tax on parking and storage
fees and its application to impounded vehicles under the Abandoned Motor
Vehicle Act.

The tax does apply to the cost of storing and preserving the vehicle and
should be deducted from the proceeds of the sale before any disbursement
is made to the owner or lienholders. In effect the tax becomes a part of
the cost of storing the vehicle. Other separately stated charges, such as
for towing, are not taxed.

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

Sincerely,

Tom Soto
Tax Policy Section
Tax Administration Division

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