Ezel / Tax Rulings / TX
TX 9705441L Motor Vehicle Tax 1997-05-06

Were Texas rental receipts exempt when a vehicle was modified for a renter with an orthopedic disability?

Short answer: No. The purchase exemption for a specially modified vehicle bought by an eligible individual did not extend to gross rental receipts. The rental business had to collect and remit rental tax, although a fleet of five or more rental vehicles could historically title vehicles tax-free using its permit number.

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 1997 adaptive-vehicle rental question. It predates modern Private Letter Ruling reliance terms and cannot be treated by unrelated taxpayers as binding protection. The letter uses historical disability terminology, and purchase exemptions, fleet thresholds, permit procedures, title treatment, rental tax, and qualifying modifications 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 the motor vehicle purchase exemption for a specially modified vehicle bought by an eligible individual did not exempt a rental company's receipts from renting a modified vehicle.

The rental business therefore had to collect and remit gross rental receipts tax on vehicles modified to accommodate renters with orthopedic disabilities.

The letter also said a business owning five or more vehicles held for rental could historically title and register them tax-free by providing its rental permit number to the county tax assessor-collector.

What this means for you

Adaptive vehicle rental companies

The historical purchase exemption and rental-receipts tax were separate rules.

Renters with disabilities

The letter did not give the renter a receipt-level exemption merely because the vehicle was adapted.

Rental fleet accountants

Track tax-deferred fleet acquisition separately from tax collected on rental receipts.

Common questions

Q: Were rental receipts exempt?

A: No.

Q: Could the rental company title vehicles tax-free?

A: A business with at least five rental vehicles could do so under the historical permit procedure.

Citations and references

  • The letter described the statutory purchase exemption without identifying its section number.

Source

Original ruling text

May 6, 1997

Dear ***:

Thank you for your letter dated April 22, 1997, concerning motor vehicle gross
rental receipts tax.

A business that owns five or more vehicles that are held for rental purposes
titles and registers the vehicles tax free by issuing their rental permit
number to the county tax assessor/collector.

The statute provides for an exemption from motor vehicle sales and use tax on
the purchase of a specially modified vehicle by an orthopedically handicapped
individual. However, the statute does not extend to exempt gross rental
receipts on a specially modified vehicle.

You must collect and remit the gross rental receipts tax on vehicles that are
modified to accommodate orthopedically handicapped individuals.

This opinion is based on the facts presented and current law. Different facts
though similar, may result in different answers.

You may call or write me for additional information or if you have any
questions. The toll free number is 1-800-531-5441, and my extension is 50330.
The direct line is 512/475-0330. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division

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