What registration and interstate-use conditions did Texas require for the motor vehicle tax exemption for interstate trucks, trailers, and buses?

Plain-English summary

The Texas Comptroller's 1998 letter described the § 152.089 motor vehicle tax exemption for vehicles operated interstate for hire, but two parts now require caution.

First, STAR warns that the tax rates quoted in the old letter are no longer current. Second, the letter originally exempted interstate charter buses regardless of registration. STAR later states that, effective January 1, 2016, every charter bus purchased for interstate use must obtain apportioned registration to qualify.

The letter's truck-and-trailer framework required Texas-plated trucks and tractors to operate with International Registration Plan apportioned registration. Trailers pulled by qualifying apportioned tractors could qualify while using token registration. The exemption was lost if a unit was diverted from interstate use within one year after purchase.

What this means for you

Interstate trucking companies

Apportioned or apportionable status and actual interstate operation both mattered. Keep IRP registration and operational records, and watch the one-year diversion rule described in the letter.

Charter-bus operators

Ignore the 1998 statement that registration type did not matter. The official supersession notice imposes apportioned registration for interstate-use purchases from January 1, 2016.

Tax professionals

Do not quote the old rates. Verify current § 152.089, IRP, token-trailer, and diversion provisions before advising today.

Common questions

Q: Did Texas-plated trucks need IRP registration?

A: Yes, under the letter, to qualify for the interstate exemption.

Q: Could a token-registered trailer qualify?

A: The letter said yes when pulled by an apportioned tractor and operated interstate.

Q: What if the vehicle left interstate service within one year?

A: The letter said the exemption was lost.

Citations and references

• Tex. Tax Code § 152.089

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9803376L

Original ruling text

ALERT: The tax rates cited in this article are no longer the current motor vehicle sales tax
or motor vehicle rental tax rates.

STAR SUPERSEDED INFORMATION

Accession No. —

Supersede type - Partial

Document superseded on — 09/27/2016

Issue(s) that caused the document to be superseded — exemption for charter buses

and apportioned IRP registration requirements

Reason(s): Statutory change — Effective 01/01/2016, all charter buses purchased for

interstate use must obtain apportioned registration to be exempt from the motor vehicle tax.

March 12, 1998

Dear Mr. **:

Thank you for your letter requesting motor vehicle tax information.

You ask specifically for the taxability of a motor vehicle purchased or used in Texas and used in the interstate transportation of persons or property for hire.

Response: There is a 6-1/4% motor vehicle sales tax due on every sale of a motor vehicle in Texas. There is also a 6-1/4% motor vehicle use tax imposed on a motor vehicle purchased outside Texas and brought into Texas for use on the public highways of this state (with credit allowed for motor vehicle sales or use tax paid to another state).

There is an exemption from motor vehicle sales and use tax for apportioned (or apportionable) interstate-operated vehicles, or trailers pulled by an apportioned (or apportionable) interstate-operated vehicle. Texas-plated trucks and tractors must be operated with apportioned registration (International Registration Plan, IRP) in order to qualify for the exemption. Trailers pulled by apportioned tractors and operated on token registration will also qualify for the exemption. Interstate-operated charter buses are also exempt from the tax, regardless of type of registration.

Any units diverted from interstate use within one (1) year of purchase will lose the exemption. Trucks, tractors, or trailers that were purchased or first operated in Texas prior to September 1, 1997, will not qualify for the exemption and are subject to the Interstate Motor Carrier (IMC) tax.

Persons registering apportioned units or token registered trailers for interstate use should indicate "for interstate use" in item 21 of the title application/tax statement (copy of Form 130-U enclosed). The statutory reference for this exemption is 152.089.

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