Ezel / Tax Rulings / TX
TX 9002L0977D14 Sales and/or Use Tax (State,Local,MTA) 1990-02-16

Which towing-company charges were taxable: motor-vehicle storage, impound, towing, or owner-notification fees?

Short answer: Storage and impound fees were taxable. Separately stated towing and notification fees were not taxable under the letter's historical guidance.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. 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

The Comptroller told towing and storage companies that motor-vehicle storage fees were subject to sales tax under the law then in effect.

An impound, preservation, or administrative fee was also taxable because it was part of the vehicle-storage service. A separately stated towing fee for bringing the vehicle to the yard was not taxable, and a separately stated notification fee for sending required notices to the owner was also not taxable.

The letter directed businesses that had not taxed impound fees to begin doing so no later than April 1, 1990. This is historical guidance, and STAR warns generally that older documents may not reflect current policy.

Common questions

Was vehicle storage taxable? Yes.

Was an impound or administrative fee taxable? Yes, as part of storage.

Were towing and notification fees taxable? Not when separately stated under the facts described.

Source

Original ruling text

February 16, 1990

Dear Taxpayer:

As a company in the business of towing and storing motor vehicles, you need to
be aware of how sales tax laws apply to motor vehicle storage and related
charges.

Under the Sales Tax Law, a fee charged to store a motor vehicle became subject
to sales tax effective October 2, 1984.

An impound fee, sometimes called a preservation or administrative fee, is also
taxable. This fee is part of the charge for services involved in storing a
vehicle. If you have been collecting tax on impound fees, you should continue
to do so. If you have not been collecting sales tax on the impound fee, we
expect you to begin collecting sales tax on this fee no later than April 1,
1990.

A separately stated towing fee, which is a charge for bringing the vehicle to a
storage yard, is not taxable.

A separately stated notification fee, which covers the cost of sending the
required notices to the owner of the vehicle, is not taxable.

For tax assistance call 1-800-252-5555 toll free nationwide, or call
512/463-4600. (From a Telecommunication Device for the Deaf (TDD) ONLY call
1-800-248-4099 toll free, or call 512/463-4621.)

Sincerely,

Bob Bullock
Comptroller of Public Accounts
of the State of Texas

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