Ezel / Tax Rulings / TX
TX 8602L0699C03 Sales and/or Use Tax (State,Local,MTA) 1986-02-24

Did Texas's commercial-vessel sales-tax exemption cover a fiberglass vessel displacing less than eight tons?

Short answer: No. The letter said the exemption required at least eight tons displacement, exclusive and direct commercial use, and sale by the builder.

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This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 1986 Texas Comptroller taxpayer-response letter applying the commercial-vessel exemption to vessels displacing less than eight tons. It describes the statute as then written and does not establish that the same requirements remain current. STAR documents may no longer represent current policy even when not marked superseded, and letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
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 Comptroller said a fiberglass commercial vessel displacing less than eight tons was taxable. Under the letter's description of Tex. Tax Code Ann. § 151.329, the exemption covered only a vessel that displaced at least eight tons, was used exclusively and directly in a commercial enterprise, and was sold by the builder.

The agency said it could not broaden the Legislature's exemption. A vessel below the eight-ton threshold therefore did not qualify regardless of its other size characteristics or commercial use.

Common questions

Was commercial use by itself enough? No. The vessel also had to meet the displacement and builder-sale conditions described in the letter.

Did a fiberglass vessel below eight tons qualify because of its dimensions? No.

Did the reproduced body decide whether a rented vessel qualified? No. Although STAR's caption mentions rental, the reproduced letter discusses vessels sold by the builder and does not decide a rental transaction.

Citations and references

  • Tex. Tax Code Ann. § 151.329 — commercial-vessel exemption cited and summarized in the letter.

Source

Original ruling text

February 24, 1986

Dear ***:

Thank you for your letter of February 6, 1986, concerning tax on
commercial vessels of less than eight tons displacement.

I am enclosing a copy of Tex. Tax Code Ann. 151.329. Please note that
the exemption for commercial vessels is defined by the tax statute to
include only vessels of eight or more tons displacement, used exclusively
and directly in a commercial enterprise, and sold by the builder.

We cannot change the statute, nor can we broaden the exemption as written
by the Legislature. Fiberglass vessels that displace less than eight
tons will be subject to tax regardless of the size or use of the vessel.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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