Ezel / Tax Rulings / TX
TX 9703408L Motor Vehicle Tax 1997-03-13

Was a separately stated scheduled-maintenance contract included in the Texas motor vehicle tax base?

Short answer: No. The separately stated scheduled-maintenance contract was not part of the vehicle's taxable sale price and was not subject to motor vehicle tax. Repair and replacement parts used under the contract were subject to Texas sales and use tax.

Apply this to your situation

This page answers the general question as of 1997. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1997
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 letter issued on one separately stated 1997 maintenance-program contract. It predates modern Private Letter Ruling reliance terms and cannot be treated by unrelated taxpayers as binding protection. Motor vehicle tax, service-contract, and sales-and-use-tax treatment may have changed. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
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 Texas Comptroller said a scheduled-maintenance program sold with a motor vehicle was not included in the motor vehicle tax base when its charge was separately stated.

That exclusion did not make everything supplied under the program tax-free. Repair and replacement parts used to maintain or repair the vehicle were subject to Texas sales and use tax.

What this means for you

Motor vehicle dealers

The 1997 letter treated the separately stated contract charge differently from the vehicle's taxable sale price.

Service-contract sellers and dealership accountants

The contract charge and the parts used to perform the contract had different tax treatment.

Common questions

Q: Was the separately stated maintenance-program charge subject to motor vehicle tax?

A: No.

Q: Were repair and replacement parts used under the contract tax-free?

A: No. The letter said they were subject to sales and use tax.

Citations and references

  • The letter did not identify a statute or administrative rule by number.

Source

Original ruling text

March 13, 1997

Dear ***:

Thank you for your letter requesting tax information.

You submitted information regarding a scheduled maintenance program contract
you offer at the time of sale of a motor vehicle. The contract is a separate
line item. You ask if the charge for this contract is subject to motor vehicle
tax.

Response: As long as the charge for the program is separately stated, the
contract is not part of the taxable sale price of the motor vehicle and not
subject to motor vehicle tax. Repair and replacement parts used in the repair
or maintenance of the vehicle under the contract are subject to limited sales
and use tax.

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 do not hesitate to call one of our tax
specialists toll free at 1-800-252-1382. The direct number is 512/463-4600.
You may also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Joan Hale
Tax Policy Division

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