Ezel / Tax Rulings / TX
TX 8701L0791G13 Sales and/or Use Tax (State,Local,MTA) 1987-01-21

How long did Texas's prior-contract rate exemption apply to pre-1987 rent-to-own agreements, and did later-added items qualify?

Short answer: Written rental-purchase contracts for specific items used the signing-date rate until the original contract ended or September 30, 1989, whichever came first. Later-added items did not qualify.

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This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 1987 Texas Comptroller letter concerns a temporary prior-contract exemption for rent-to-own agreements signed before the end of 1986 and states that protection ended no later than September 30, 1989. It is historical guidance. Verify current rental-purchase, contract, added-item, rate, state, local, and MTA tax rules. STAR documents may no longer represent current policy even when not marked superseded. Identities 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 Texas Comptroller said written rental-purchase contracts for specific items qualified for the prior-contract exemption and used the tax rate in effect when the contract was signed.

The exemption lasted until the original contract ended or September 30, 1989, whichever occurred first. Items added to the original agreement did not qualify for protection from the rate increase.

What this means for you

The historical protection followed the original written agreement and its identified items. It did not extend indefinitely or cover later additions.

Common questions

Did a written pre-1987 rent-to-own contract use the signing-date rate? Yes, for specific items.

How long did the exemption last? Until contract end or September 30, 1989, whichever came first.

Did added items qualify? No.

Citations and references

  • The letter cited no numbered statute or Comptroller rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 21, 1987

Dear ***:

Thank you for your letter of January 7, 1987 concerning the proper tax
rate for "rent to own" agreements signed prior to December 31, 1986.

Written rental/purchase contracts for specific items will qualify for
the prior contract exemption and be subject to the tax rate in effect
at the time the contract was signed. The exemption is valid until the
original contract ends or until September 30, 1989, whichever comes
first.

Items added on to the original agreement will not qualify for exemption
from the increase in the tax rate.

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Administration Division

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