Which vehicle sales, adaptive equipment, repairs, and remodeling for an orthopedically handicapped person were exempt?

Plain-English summary

A qualifying motor vehicle modified for operation by or transportation of an orthopedically handicapped person was exempt from motor-vehicle sales tax when it met Rule 3.84. A travel trailer did not qualify because it could not legally transport people and was not itself driven.

Wheelchairs, wheelchair lifts, tiedowns, related controls, and identifiable wheelchair ramps were exempt. Labor to install or repair those exempt items was also exempt, whether installed in a motor vehicle or home, with the required documentation and exemption certificate.

After adaptive items were installed in a vehicle, ordinary motor-vehicle repair labor was nontaxable under Rule 3.290, while repair parts and materials were taxable. Labor to remodel a motor vehicle specifically to accommodate the handicapped driver or passenger—including raising a roof when necessary for a wheelchair passenger—was exempt. Aesthetic or unrelated remodeling remained taxable.

The letter said residential remodeling labor was nontaxable and exempt entities could claim their own exemption under Rule 3.322. It expressly left nonresidential real-property remodeling for disability access under review, so this record does not decide that issue.

Common questions

Did a modified motorhome qualify? It could, if it met the specified driver-or-passenger accommodation rules.

Did a travel trailer qualify for the vehicle exemption? No.

Were wheelchair lifts and ramps exempt? Yes, with the required identification and documentation.

Was every vehicle remodel exempt? No. The work had to be necessary to accommodate the orthopedically handicapped driver or passenger.

Did the ruling decide nonresidential building modifications? No.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8904L0933B05

Original ruling text

April 7, 1989

Dear **:

I am finally responding to your second request for further clarification
regarding the adjustments made to motor vehicles for the orthopedically
handicapped person. I apologize for the delay; as we discussed, these issues
have been reviewed by the Taxability Section of Legal Services.

These modifications, repairs, and services fall under the sales tax statute
while the sale of a vehicle that has been or will be modified for the
orthopedically handicapped falls under the motor vehicle sales tax statute. I
will restate your questions with responses; however, I may not respond in the
same order as your letter.

Question(s): At the time of purchase would a motorhome or travel trailer be
tax exempt with adaptive work or equipment? Must the handicapped person be
the driver of the vehicle to qualify for tax exemption on work done?

Response: Motorhomes and travel trailers are motor vehicles and are subject to
motor vehicle sales tax. No tax is due on the sale of a motor vehicle
modified to be driven by or used to transport an orthopedically handicapped
person. The modifications to the motor vehicle must be those set out in Rule
3.84 enclosed. However, this exemption does not apply to travel trailers
because they may not be legally used to transport persons nor are they driven
by anyone.

Question: How should the invoice be documented for proper proof in case of an
audit?

Response: In order to qualify for the exemption from the motor vehicle sales
tax, the procedures outlined in Rule 3.84 section (c)(1), (2), or (3) must be
met. In order for the work actually being performed on the motor vehicle to
qualify for the sales tax exemption, a properly completed exemption
certificate must be given. You may also accept a resale certificate from a
dealer who is having the work performed on a vehicle that will be resold to
the dealer's customer. I have enclosed copies of the rules relating to resale
and exemption certificates for sales taxes. The invoice itself must clearly
define the work being performed and should be easily identifiable with the
appropriate certificate.

Question: Is there a minimum requirement to the degree of modification done in
order to qualify a new vehicle for taxexempt purchase?

Response: Yes. The vehicle that is modified for operation by an
orthopedically handicapped person must meet the requirements set out in rule
3.84 (a)(2). The requirements for the vehicle that is modified for the
transportation of an orthopedically handicapped person are set out in rule
3.84 (a)(3). These are the requirements for the vehicle to be exempted from
motor vehicle sales taxes. The "work" performed to meet the requirements for
this exemption is subject to sales and use taxes; this work is also exempt
from sales and use taxes.

Question: What is the taxability of repairs and services to existing
equipment such as:

A. Servicing a wheel chair lift, hydraulic fluid, micro switch, broken
terminals, wire, etc.?

B. Adjusting power door openers or relocating a transfer bar?

Response: Once these items have been installed into the motor vehicle, they
are considered accessories and a part of the motor vehicle. Motor vehicle
repairs are covered by Rule 3.290, enclosed, which explains that the labor
to repair, maintain, or restore motor vehicles is not taxable. The labor to
repair the items listed above is not taxable. The parts or materials are
taxable.

Question: Must the equipment plus labor only be on a motorized unit to allow
the parts plus labor to be tax exempt? Is the purchase of portable ramps to
be used in a van, travel trailer, or home taxable? Are modifications to a
travel trailer interior exempted, such as widening the door ways or hallways
for access?

Response: Wheelchairs, wheelchair lifts, wheelchair tiedowns, and the related
controls, as well as the wheelchair ramps are exempt from sales tax.
(Ramps and other accessories must be clearly identifiable as wheelchair
ramps and the purchase documented by an exemption certificate.) The
labor to install these items is the labor to install exempt items and is
also exempt. The labor to repair these items is for the repair of an
exempt item and is also exempt. This applies whether the item is
installed as a part of a motor vehicle or home. Aside from the sale and
installation of the equipment, alterations or modifications may be
required to accommodate this equipment. Such alterations or
modifications (raising or lowering the doors, roof, etc.) is remodeling.
The labor to remodel a motor vehicle is taxable. However, tax is not due
on the labor to modify a motor vehicle in order to accommodate an
orthopedically handicapped driver or passenger. (Your customer must give
a properly completed exemption certificate to cover this transaction.)
Modifications or remodeling for aesthetic purposes or other reasons are
taxable, even when performed on a vehicle qualifying for this motor
vehicle exemption. For example, a person may claim an exemption to raise
the roof on a van only if this change is made in order to accommodate the
orthopedically handicapped driver or passenger. The labor to add
decorative murals or pin-stripping for the first time is taxable on all
vehicles. The labor to remodel a residence is not taxable. Exempt
entities (churches, schools, etc.) may claim exemption for this work
according to the provisions of Rule 3.322.

The questions relating to the remodeling of non-residential real property
in order to accommodate an orthopedically handicapped person are
currently being reviewed. I will respond to this portion of your letter
as soon as a response is available.

I am enclosing several rules other than those referred to in my responses which
may also be helpful to you.

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

You may write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence

DATE: April 7, 1989

TO: Tax Correspondence

FROM: Adina Whittemore via Martin Cherry

SUBJECT: Remodeling a Motor Vehicle for an Orthopedically Handicapped Driver
or Passenger

Question: Is the labor to remodel motor vehicles taxable when the remodeling
is necessary to accommodate orthopedic equipment which qualifies for exemption?

Answer: Under 151.3111 a taxable service performed on a motor vehicle exempt
under 152.086, 152,087, or 152.088 is exempt from sales and use tax. And
152.086 exempts motor vehicles modified for operation or transportation of an
orthopedically handicapped persons.

Tax is not due on labor to remodel a motor vehicle to accommodate orthopedic
equipment. This includes the charge to raise a roof when it is necessary to
accommodate a wheelchair passenger.