Does the manufacturing or video/audio production sales tax exemption cover motor vehicles rented to transport movie production equipment?

Plain-English summary

A film production company asked whether renting motor vehicles -- specifically a used truck and a flatbed trailer -- to transport movie production equipment could qualify for a sales tax exemption.

The Comptroller's answer: no, and for a structural reason that applies broadly. Motor vehicles in Texas are taxed under an entirely separate statute, Tax Code Chapter 152 (Motor Vehicle Sales and Use Tax), rather than the general sales tax statute in Chapter 151. Because the manufacturing exemption (§ 151.318) and the video/audio production exemption (§ 151.3185) both live in Chapter 151, neither one reaches motor vehicles at all -- it isn't that the rental fails some fact-specific test, the exemptions simply don't apply to this category of property. The letter adds a broader caution: even for property that IS covered by Chapter 151, neither exemption covers equipment used in transportation activities, and not every item a qualifying manufacturer or producer buys or rents is automatically exempt.

What this means for you

Film, television, and video/audio production companies

Don't assume your production's manufacturing or video/audio exemption extends to vehicles you rent or use to move equipment -- motor vehicles are governed by a completely different tax (Chapter 152), and the Chapter 151 production exemptions don't reach them.

Manufacturers and producers generally

This letter is a useful reminder that qualifying for an exemption as a manufacturer/producer doesn't make everything you buy or rent exempt -- transportation equipment in particular is called out as falling outside both the manufacturing and production exemptions.

Common questions

Q: Can a film production company rent a truck tax-free under the video/audio production exemption?
A: No, per this letter -- motor vehicles are taxed under a separate Chapter 152, which the Chapter 151 production and manufacturing exemptions don't reach.

Q: Does the manufacturing exemption cover equipment a manufacturer uses just for transportation?
A: No, per this letter -- transportation-use equipment is called out as falling outside both § 151.318 and § 151.3185.

Citations and references

Statutes:

• Tex. Tax Code Chapter 152 (Motor Vehicle Sales and Use Tax)
• Tex. Tax Code § 151.318 (manufacturing exemption)
• Tex. Tax Code § 151.3185 (video/audio production exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9911880L

Original ruling text

November 12, 1999

To: **

Subject: Tax Exempt Status

Dear **:

Thank you for your e-mail concerning the rental of motor vehicles to transport
movie production equipment.

Motor vehicles are taxed under Chapter 152 of the Tax Code rather than Chapter

151. The sales tax exemptions for manufacturers in Sec. 151.318 and video/audio
     producers in Sec. Sec. 151. 3185 are not applicable to motor vehicles.
     Therefore, the rental of the used 94 Ford truck and the flatbed trailer is not
     exempt. By the way, Sec. 151.318 and Sec. 151.3185 does not exempt equipment
     used by the manufacturer in transportation activities. Not all equipment and
     supplies purchased or rented by a manufacturer are exempt. You may find the
     enrolled text of House Bill 3211 covering the sales tax exemptions for
     manufacturers at the Texas Legislature Online website at
     .

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

I hope this information helps. If you have further questions, please e-mail me
at , or you may reach me by phone at 1-800-531-5441,
ext. 5-0030.

Sincerely,

David Somerville
Tax Policy Division