How did Texas tax mobile cranes supplied with or without operators, and when did the owner need a motor vehicle rental permit?

Plain-English summary

The Texas Comptroller classified a mobile crane mounted on a conventional truck chassis before purchase as a motor vehicle with an attached accessory. Its purchase was subject to Chapter 152 motor vehicle sales or use tax.

How the owner provided the crane determined the next tax result:

• With an operator, the arrangement was not a motor vehicle rental because the customer did not receive exclusive use. The owner paid tax on the vehicle purchase, and the customer owed no motor vehicle tax.
• Without an operator for 180 days or less, the arrangement was a rental taxed on gross rental receipts and required a motor vehicle rental permit.
• Under one contract exceeding 180 days, with or without a driver, the letter taxed only the vehicle purchase and did not tax the lease contract.

The letter distinguished qualified rental companies, which could title and register rental vehicles tax-deferred, from non-qualified permit holders, which paid tax at titling and registration but could reimburse themselves from customer tax collections. Qualified status required either a motor vehicle dealer license or title ownership of at least five different rental vehicles.

STAR warns that the 10% and 6 1/4% rental rates quoted in the original text are no longer current. The letter also said a purpose-built crane not using a conventional truck cab chassis would instead be taxed under Chapter 151.

What this means for you

Crane rental companies

The historical distinction turned on exclusive use. Providing an operator kept the transaction outside the letter's definition of a motor vehicle rental.

Equipment leasing companies

Contract length changed the tax mechanism. The letter treated 180 days or less as rental-receipts taxation and a longer single contract as tax on the owner's purchase.

Fleet accountants

Do not use the quoted rates as current figures. The official STAR text expressly labels them obsolete.

Common questions

Q: Was a truck-mounted mobile crane taxed as a motor vehicle?

A: Yes, where the crane was mounted on a conventional truck chassis before purchase.

Q: Why was a crane supplied with an operator not a rental?

A: The customer did not receive exclusive use.

Q: When did the owner need a rental permit?

A: When renting motor vehicles, including the described crane without an operator for 180 days or less.

Q: Are the rates in the original letter current?

A: No. STAR expressly warns that they are not current.

Citations and references

• Texas Tax Code Chapter 152
• Texas Tax Code Chapter 151

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9909727L

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.

September 23, 1999

Dear **:

Thank you for your letter concerning the taxability of mobile cranes.

It is my understanding that these units are cranes mounted on conventional truck cab chassis, such as on Macks or Fords. The crane is mounted to the chassis prior to your client's purchase of the combined unit.

These units are subject to motor vehicle sales or use tax imposed by Chapter 152 of the Tax Code. They are taxed as a motor vehicle with an accessory attached.

A motor vehicle provided with an operator is subject to motor vehicle sales tax on the owner's purchase. Providing the unit with an operator is not a rental as exclusive use is not given (which is one of the required elements in defining a motor vehicle rental). No motor vehicle tax is due from your client's customer.

In the situation where a motor vehicle is rented (without an operator) for a contract period of 180 days or less, the transaction is subject to motor vehicle tax on gross rental receipts. If the contract period is for 30 days or less, the tax rate is 10%. If the contract period is between 31 through 180 days, the tax rate is 6 1/4%. Other than local tax imposed by sports and community venues, there is no local tax on motor vehicle rentals.

A motor vehicle rental permit must be acquired through this office if you client is "renting" motor vehicles. A "qualified" motor vehicle rental company simply refers to a rental company that may register and title the units tax-deferred. A non-qualified permit holder must pay tax at the time or registration and titling, but may reimburse himself for the tax paid with tax collected from his customer. In order to hold the qualified status, a rental company would either need to be a licensed motor vehicle dealer or be title owner of at least five different motor vehicles held for rental.

If the motor vehicle is leased for a period of more than 180 days under a single contract, with or without a driver, motor vehicle tax is due only the purchase of the unit. Motor vehicle tax is not due on a lease contract.

Limited sales tax imposed under Chapter 151 would only be due if your client were performing a taxable service, such as real property repair or remodeling.

This opinion is based on the information presented. If there are additional or different facts, the opinion could change. A unit built from the ground up, not using a conventional truck cab chassis, is taxed under Chapter 151.

If you have any questions, please don't hesitate to contact this office. I may be reached by calling 1-800-531-5441, extension 3-4984.

Sincerely,

Curt Swenson

Tax Policy Division