PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3. TAX ADMINISTRATION
SUBCHAPTER F. MOTOR VEHICLE SALES TAX
34 TAC §3.83
The Comptroller of Public Accounts adopts new §3.83, concerning sales and use of motor vehicles purchased or leased by public agencies; and sales and use of motor vehicles purchased by commercial transportation companies, without changes to the proposed text as published in the December 23, 2016, issue of the Texas Register (41 TexReg 10087). This section implements Senate Bill 724 (SB 724), 84th Legislature, 2015. Effective June 17, 2015, this legislation amended Tax Code, §152.082 (Sale of Motor Vehicle to or Use of Motor Vehicle by Public Agency) to allow commercial transportation companies who provide transportation services under a contract with the board of county school trustees, school district board of trustees, or the governing body of an open-enrollment charter school, to purchase a motor vehicle tax-free when the motor vehicle is operated with exempt license plates. This section also memorializes long-standing comptroller policies not previously addressed by this section.
Subsection (a) contains definitions of key terms. Paragraph (1) defines "Application for Texas Title and/or Registration."
Paragraph (2) defines "lease." The definition is based on Tax Code, §152.001(6) (Definitions).
Paragraph (3) defines the term "motor vehicle" and provides specific examples. This definition is based, in part, on Tax Code, §152.001(3) and (4) (Definitions), and the definition of the term given in §3.80 of this title (relating to Motor Vehicles Transferred as a Gift or for No Consideration).
Paragraph (4) defines "public agency" in accordance with Tax Code, §152.001(7), and provides specific examples of entities considered public agencies that have previously not been addressed for purposes of this section. These examples are taken, in part, from §3.322(c) of this title (relating to Exempt Organizations) and attorney general (AG) opinions. See, for example, STAR Accession Nos. 7112A2002A10 (AG Opinion No. M-1033 1971) (community centers for mental health and mental retardation services are political subdivisions when created by a city, a hospital district, or a school district); 8303498A (AG Opinion JM-12 1983) (community centers for mental health and mental retardation centers may be operated by counties, cities, hospital districts, school districts, or any combination); 4912A2003C06 (AG Opinion V-955 1949) (navigation districts and flood districts are public agencies); and 8504L0653C09 (April 4, 1985) (Federal Intermediate Credit Bank, Federal Credit Union, Federal Reserve Banks, and Federal Home Loan Mortgage, Inc. are public agencies for the purposes of motor vehicle tax).
Subsection (b) addresses the sale or use of a motor vehicle purchased by a public agency or an entity exempted by another statute. Paragraph (1) identifies the requirements that must be met in order for a public agency to qualify for the exemption from motor vehicle tax under Tax Code, §152.082. Subparagraph (A) addresses motor vehicles operated with an exempt license plate issued pursuant to Transportation Code, §502.451 (Exempt Vehicles). Subparagraph (B) addresses motor vehicles that are exempted from inscription requirements by Transportation Code, §721.003 (Exemption from Inscription Requirement for Certain State-Owned Motor Vehicles) or §721.005 (Exemption from Inscription Requirement for Certain Municipal and County-Owned Motor Vehicles), and may be operated without an exempt license plate. Subparagraph (C) addresses motor vehicles operated with regularly designed license plates issued pursuant to Transportation Code, §502.451(f) (Exempt Vehicles), because the vehicles are dedicated to law enforcement activities. Subparagraph (D) addresses motor vehicles purchased by the federal government, which are exempt from Texas tax regardless of the type of license plate displayed. Subparagraph (E) addresses motor vehicles purchased by an entity exempt from taxation by other Texas statutes or federal statutes. Examples of entities exempted by other Texas statutes include, but are not limited to, the Cotton Growers' Boll Weevil Eradication Foundation created under Agriculture Code, Chapter 74 and an electric cooperative created under Utilities Code, Chapter 161.
Paragraph (2) provides that when a motor vehicle is purchased to be leased to a public agency, and operated with an exempt license plate issued under Transportation Code, §502.451, it is exempt from the motor vehicle tax pursuant to Tax Code, §152.083 (Lease of Motor Vehicle to Public Agency). Tax is due if the vehicle is not operated with exempt license plates. See STAR Accession No. 9602L1397G14 (February 22, 1996), ("Sections 152.082 and 152.083 of the Texas Tax Code exempts the lease or purchase of a motor vehicle by a public agency from tax if they carry an exempt license plate…").
Paragraph (3) provides the requirements for a seller and purchaser claiming an exemption pursuant to Tax Code, §152.083. It also provides the requirements for a seller and purchaser to file a joint statement with the tax assessor-collector of the county pursuant to Tax Code, §152.062.
Paragraph (4) provides that motor vehicle tax is due if a motor vehicle ceases to be leased to a public agency and is not held for sale. Paragraph (4) further describes how the tax is calculated and how to pay the tax, as provided by Tax Code §152.083.
Subsection (c) implements SB 724, allowing a commercial transportation company to purchase motor vehicles tax-free when it provides transportation services under contract with certain public agencies.
Paragraph (1) addresses motor vehicles purchased for use by a commercial transportation company under contract with the board of county school trustees, the school district board of trustees, or governing body of an open-enrollment charter school, and operated with an exempt license plate issued under Transportation Code, §502.451.
Paragraph (2) provides the requirements for a commercial transportation company to claim a tax exemption under this section.
Paragraph (3) provides that the tax exemption does not apply to motor vehicles purchased for lease to a commercial transportation company, regardless of whether the commercial transportation company provides transportation services under a contract with certain public agencies. This is based on the plain language of the statute. SB 724 only amended the provisions of sales or use of a motor vehicle by a public agency in Tax Code, §152.082, and not Tax Code, §152.083, which addresses the lease of motor vehicles to a public agency.
No comments were received regarding adoption of the new section.
This new section is adopted under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture), which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.
This section implements Tax Code, Chapter 152 (Taxes on Sale, Rental, and Use of Motor Vehicles), including, but not limited to, §152.082 (Sale of Motor Vehicle to or Use of Motor Vehicle by Public Agency) and §152.083 (Lease of Motor Vehicle to Public Agency).
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 25, 2017.
Comptroller of Public Accounts
Effective date: February 14, 2017
Proposal publication date: December 23, 2016
For further information, please call: (512) 475-0387