Which impounded-vehicle charges were taxable: notification, towing, daily storage, or impound fees?

Plain-English summary

The notification fee, limited to $25 under the Vehicle Storage Facility Act and used to send required notice to the vehicle owner, was not taxable. The towing fee for bringing the vehicle to the storage yard was also not taxable.

Daily storage was a taxable motor-vehicle parking and storage service under Tax Code § 151.0101. The impound, preservation, or administrative fee—limited to $10 under the cited Act—was also taxable because it was part of the storage service.

The Comptroller said audit policy would expect all companies to collect tax on the impound fee beginning April 1, 1990.

STAR's subject metadata mentions scene-time and cleanup charges, but the body does not decide those items. This page reports only the four fees actually addressed.

Common questions

Was the towing charge taxable? No.

Was daily storage taxable? Yes.

Was the impound fee taxable? Yes.

Did the letter decide scene-time or cleanup charges? No.

Citations and references

• Tex. Tax Code § 151.0101

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9001L0974F14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
Austin, Texas 78774

January 31, 1990

Dear ***:

I've reviewed the information you sent in your January 22, 1990 letter
regarding charges for the storage of impounded motor vehicles. I'll summarize
my understanding of each of the fees involved, and set out the proper tax
treatment of them.

The notification fee is limited to $25 under the Vehicle Storage Facility
Act. This covers the cost of sending the required notice to the owner of the
vehicle. Sales tax does not apply to this fee.

As we've previously said, the towing fee, charged to cover the costs of
bringing the vehicle to the storage yard, is also not taxable.

On the other hand, the daily storage fee represents a charge for a type
of "motor vehicle parking and storage service." This service is specifically
taxed under Tax Code, Section 151.0101.

The impound fee, sometimes called a preservation or administrative fee,
which is limited to $10 under the Vehicle Storage Facility Act, is also
taxable. This is a part of the charge for services involved in storage a
vehicle.

Those companies that are collecting tax on what is commonly referred to
as the impound fee should continue to do so. As a matter of audit policy,
we'll expect everyone to be collecting tax on the impound fee as of April 1,
1990.

We appreciate your offer of mailing labels for all companies in this
business. This will help us get the word out to all affected taxpayers rather
than focusing just on your association. If you have any questions, need more
information, or if new charges or services are provided in the future, please
don't hesitate to call.

Sincerely,
Joe Greco
Director of Legal Services