Ezel / Tax Rulings / TX
TX 8801L0868E04 Sales and/or Use Tax (State,Local,MTA) 1988-01-25

Were vault-storage services taxable, could security contracts qualify as prior contracts, and was motor-vehicle storage taxable?

Short answer: Vault storage was nontaxable unless the provider had to hold a security-service license. Security contracts shifting tax increases to the customer failed the prior-contract exemption, while motor-vehicle storage was taxable.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 taxpayer-specific January 1988 Texas Comptroller letter applying prior-contract, security-service, and motor-vehicle-storage rules then in effect. It says the opinion may change if the facts differ. Prior-contract transition provisions, tax-shifting clauses, security licensing, vault storage, and vehicle-storage rules may have changed; verify current law and current licensing requirements. STAR documents may no longer represent current policy even when not marked superseded. 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 letter gave three answers:

  • Security-service contracts did not qualify for the prior-contract sales-tax exemption when they shifted the burden of tax increases from the provider to the customer. Rule 3.319(c)(4) disqualified that arrangement.
  • Vault-storage services were not taxable unless the provider was required to hold the security-service license described in Rule 3.333(a).
  • Motor-vehicle storage was taxable under Rule 3.315.

What this means for you

The historical treatment of vault storage depended on whether security-service licensing applied. The prior-contract result turned on a contract clause transferring tax increases to the customer.

Common questions

Was vault storage always nontaxable? No; required security-service licensing could make it taxable.

Why did the security contracts fail the prior-contract exemption? They shifted tax increases to the customer.

Was motor-vehicle storage taxable? Yes.

Citations and references

  • 34 Tex. Admin. Code Rule 3.319(c)(4) — historical prior-contract qualification.
  • 34 Tex. Admin. Code Rule 3.333(a) — historical security-services licensing provision.
  • 34 Tex. Admin. Code Rule 3.315 — motor-vehicle storage.

Source

Original ruling text

January 25, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This
isn't the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would not adversely impact businesses. In many instances, an answer to a
question just wasn't available when the question arrived.

Your contracts for security services cannot qualify for exemption from
sales tax as prior contracts. Section (c)(4) of Rule 3.319 states that
contracts which transfer the burden of tax increases from the provider of
the service to the customer violate the statutory qualifications for
exemption.

Vault storage services are not taxable unless you are required to hold a
license for the service as outlined in section (a) of Rule 3.333 on
Security Services.

I have also enclosed a copy of Rule 3.315 on motor vehicle storage, which
is subject to sales tax.

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 our
toll-free number 1-800-531-5441. The regular number is 512/463-4600. You
may write me at the Tax Policy Division.

Sincerely,

Julie Pesl
Tax Policy Division

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