Ezel / Tax Rulings / TX
TX 8610L0765C04 Motor Vehicle Tax 1986-10-10

When could a dealer sell motor vehicle parts tax-free to a Texas farmer or rancher under this 1986 guidance?

Short answer: Only when the vehicle was used exclusively on the farm or ranch and was not licensed for highway use. Before granting the exemption, the parts dealer had to obtain an exemption certificate stating those facts. If the vehicle was highway-licensed, the parts were taxable even if the certificate claimed exclusive farm or ranch use.

Apply this to your situation

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 a 1986 Texas Comptroller response about documentation for a historical farm-and-ranch parts exemption. It does not reproduce Rules 3.296 or 3.287, which were enclosed separately. Current agricultural exemptions, registration rules, certificates, and seller duties may differ, and STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted; the source's phone number is obsolete operational information. 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

A dealer could sell motor vehicle parts tax-free to a farmer or rancher only when the vehicle was used exclusively on the farm or ranch and was not licensed for highway use.

The dealer had to obtain an exemption certificate containing both facts before allowing the exemption.

A highway license defeated the exemption described in the letter. Parts remained taxable even if a certificate said the highway-licensed vehicle would be used exclusively on the farm or ranch.

What this means for you

Parts dealers

The seller had a documentation duty before making the tax-free sale. A customer's occupation as a farmer or rancher was not enough by itself.

Farmers and ranchers

The historical test focused on both actual exclusive agricultural use and the absence of highway licensing.

Mixed-use or highway vehicles

The letter did not allow the exemption for a highway-licensed vehicle, even if its owner claimed exclusive farm use.

Common questions

Q: Was farm ownership alone enough?
A: No.

Q: What certificate did the seller need?
A: An exemption certificate stating exclusive farm or ranch use and no highway license.

Q: Were parts exempt for a highway-licensed farm vehicle?
A: No under this letter.

Citations and references

  • Texas Comptroller Rules 3.296 and 3.287 — enclosed with the original letter but not reproduced in STAR's text
  • Sales Tax Review — two issues were also enclosed for reference

Source

Original ruling text

October 10, 1986

Dear ***:

I have been asked to write to you regarding the documentation your
members must obtain in order to sell automotive parts tax free to farmers.

A farmer or rancher may purchase motor vehicle parts tax free only if the
vehicle is exclusively used on the farm and is not licensed for highway use.
The dealer must obtain an exemption certificate containing this information
before granting the exemption.

If the vehicle were licensed for highway use, the parts would be taxable
even if the certificate stated that the vehicle would be exclusively used on
the farm or ranch.

I am enclosing 2 issues of the Sales Tax Review along with copies of
rules 3.296 and 3.287 for your reference.

Please feel free to contact me if you have additional questions. You may
write me or telephone 463-4600.

Sincerely,

Tax Policy
Tax Administration Division

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