Does a public ambulance authority owe motor vehicle tax on leased ambulances, and can a for-profit ambulance company claim the House Bill 895 emergency-vehicle exemption?

Subject

Motor Vehicle Tax on Leased Ambulances — Public Agency Exempt Tags vs. For-Profit House Bill 895 Exemption

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9312L1274E07

Plain-English Summary

This letter addresses two separate ambulance-related motor vehicle tax questions raised in a telephone conversation and a faxed equipment lease agreement.

First, it addresses Area Metropolitan Ambulance Authority, described as a public agency. Under the terms of the lease agreement, this public agency will not incur a tax liability on the leased vehicles — as long as the vehicles are titled in the public agency's name and are operated with exempt tags. If the agency does not obtain exempt tags, the standard 6 1/4% motor vehicle tax will be due.

Second, the letter addresses a for-profit Texas corporation (identified only by a redacted "doing business as" name). The Comptroller states that this for-profit corporation does not qualify for the exemption provided in House Bill 895. According to the letter, that bill exempts vehicles used in emergency services that are purchased or leased by an emergency medical service provider that is either (a) a nonprofit organization, or (b) created and operated by a municipality and/or a county. Because the corporation in question is for-profit rather than nonprofit or government-created, it falls outside that exemption.

What This Means For You

If you're a public agency (city-, county-, or authority-operated) leasing or purchasing emergency vehicles: Titling the vehicles in the public agency's name is not, by itself, enough to avoid the motor vehicle tax — you must also obtain exempt tags for those vehicles. If exempt tags are not obtained, the 6 1/4% motor vehicle tax applies.

If you operate a for-profit ambulance or emergency medical service company: According to this letter, the House Bill 895 exemption does not extend to for-profit corporations, even if the vehicles are genuinely used to provide emergency medical services. The exemption described here is limited to nonprofit emergency medical service providers and to those created and operated by a municipality and/or a county.

Note on scope: This letter does not quote or cite any Tax Code section or Comptroller rule number — it refers only to "House Bill 895" by name and describes its exemption in general terms. It also does not explain the process for obtaining "exempt tags."

Q&A

Q: Does a public ambulance authority automatically avoid motor vehicle tax on leased ambulances just by being a public agency?
A: Not automatically. Per this letter, the public agency (Area Metropolitan Ambulance Authority) avoids the tax only if the vehicles are titled in the agency's name and operated with exempt tags. Without exempt tags, the 6 1/4% motor vehicle tax is due even though the lessee is a public agency.

Q: Can a for-profit ambulance company claim the House Bill 895 emergency vehicle exemption?
A: No. The letter states that a for-profit Texas corporation does not qualify for the House Bill 895 exemption, because that exemption is limited to emergency medical service providers that are nonprofit organizations or that are created and operated by a municipality and/or a county.

Q: What tax rate applies if an ambulance doesn't qualify for an exemption?
A: The letter references the 6 1/4% motor vehicle tax as the tax that becomes due if the public agency's vehicles are not operated with exempt tags.

Original ruling text

December 15, 1993

Dear **:

This is in response to our telephone conversations and the equipment
lease agreement that was sent to me by fax. Under the terms set out
in the lease agreement, Area Metropolitan Ambulance Authority (a public
agency) will not incur a tax liability when the vehicles are titled in
the public agency's name if the vehicles are operated with exempt tags.
If the agency fails to obtain exempt tags, the 6 1/4% motor vehicle tax
will be due.

** (dba **** ) a for-profit Texas corporation, does
not qualify for the exemption provided in House Bill 895. That bill
provides andexemption for vehicles used in emergency services that are
purchased or leased by an emergency medical service provider that is a
nonprofit organization or created and operated by a municipality
and/or a county.

If you have any questions or need more information, please write or call
me toll free at 1-800-531-5441, extension 5-0330, or 512/463-4600.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9311130L.1 and/or 9311130L