Was a lessor-paid lease-facilitator fee taxable when the facilitator was neither the vehicle seller nor the seller's agent?

Plain-English summary

The Texas Tax Policy Division said a lease-facilitator fee paid by the lessor was not part of the taxable consideration paid to the vehicle seller.

The result applied whether the facilitator's worksheet included the fee within a displayed purchase price or showed it as a separate line item. The selling dealer was not a party to that worksheet.

The facilitator had to be neither the seller nor the seller's agent. The purchaser's books and records also had to make clear that the amount paid to the dealer did not include the fee. Separate statement made that distinction easier to prove.

What this means for you

Lease facilitators and vehicle lessors

The historical exclusion depended on who earned the fee and whether the facilitator acted for the seller.

Motor vehicle dealers and fleet accountants

Records needed to separate dealer consideration from facilitator compensation.

Common questions

Q: Was the fee taxable when folded into the worksheet's displayed price?

A: No, under the described facts.

Q: Was separate statement required?

A: The letter did not make it a condition, but said it made the taxable dealer price clearer.

Citations and references

• The letter discussed total consideration without identifying a statutory section.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9511L1381A11

Original ruling text

November 28, 1995

Dear **:

Thank you for your inquiry concerning the taxability of a fee received
by a lease facilitator from lessors for arranging a lease transaction.

You indicated two methods in which the lessor may pay the lease
facilitator the fee for arranging the lease. One method will be that
the lease facilitator will provide the lessor a worksheet indicating
a vehicle purchase price that includes the lease facilitator fee. Tax,
title and registration fees will be separately indicated. The selling
dealer is not involved in the worksheet. The sales contract, or
purchase order from the lessor, issued to the selling dealer will only
indicate the actual sales price charged by the dealer to the lessor.
Tax, title and registration fees may also be separately indicated.

The second method differs only in that the lease facilitator fee will
be separately shown as a line item on the worksheet instead of being
added to the selling price shown on this worksheet.

In this situation it is understood that the lease facilitator is not
the seller of the vehicle, or an agent for the seller (dealer), and
that only the lease facilitator and the purchaser (lessor) are
parties to the worksheet. It is also understood that the lease
facilitator may remit the funds for the purchase of the motor vehicle
to the seller on behalf of the purchaser.

Motor vehicle tax is imposed on the retail sale and is based on the
total consideration paid to the seller. Because the fee is paid by
the purchaser to the facilitator (who is neither the seller nor the
seller's agent), it is not part of the taxable total consideration in
either of the two situations described above.

The taxable sales price would be more evident if the lease
facilitator fee were separately stated on the worksheet and especially
in the records of the purchaser. In an examination of the purchaser's
books and records, it must be clear that the amount paid to the seller
did not include the fee.

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

If you have any questions please feel free to give me a call.

Sincerely,

Curt Swenson
Tax Policy Division

NOTE: Previous Accession Number 9511707L