Were Texas city-pound, wrecker-service, and body-shop charges for storing impounded vehicles taxable?

Plain-English summary

The Texas Comptroller said the city pound, independent wrecker service, and body shop were charging taxable fees for motor-vehicle storage.

The company had to pay tax to those storage providers and could not give them a resale certificate. The letter explained that the company itself was not storing the vehicles at those locations and, when each vehicle entered storage, no one yet knew whether it would later be sold or salvaged.

What this means for you

Businesses handling impounded vehicles

Under this letter, a possible later sale or salvage did not make the earlier third-party storage purchase eligible for a resale certificate.

Pounds, wreckers, and body shops

The Comptroller treated the described motor-vehicle storage charge as a taxable transaction.

Accountants and tax professionals

The no-resale-certificate result depended on who provided the storage and on the vehicle's future disposition being undetermined when storage began.

Common questions

Q: Were the storage charges taxable?
A: Yes. The letter treated the charges by the pound, wrecker service, and body shop as taxable.

Q: Could the company give those providers a resale certificate?
A: No. The company had to pay tax.

Q: Why did a possible later sale or salvage not change the answer?
A: When the vehicles entered storage, it was not yet known whether they would be sold or salvaged, and the company was not itself storing them at those locations.

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/8411L0618A01

Original ruling text

November 2, 1984

Dear ***:

Thank you for your letter of October 4, 1984, regarding the taxation of
motor vehicle storage charges incurred by your business. I understand
that *** and ***** have both spoken with you regarding
the final policy decision on the matter under question.

The city pound, independent wrecker service and the body shop are simply
charging a fee for motor vehicle storage and this is a taxable transaction.
You may not present a resale certificate to these places but must pay tax.
Your company is not storing the vehicles at these locations, and when the
vehicles are placed in storage it is undetermined whether they will be
eventually sold or salvaged.

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

Sincerely,

Tax Administration Division