Can a Texas lessor buy a vehicle exempt from motor vehicle sales tax when it will be modified and leased for an orthopedically handicapped driver or passenger?

Plain-English summary

The Texas Comptroller said a vehicle purchased for leasing could qualify for the motor vehicle sales tax exemption described in the letter for vehicles used by orthopedically handicapped people.

The lessor did not have to sell the vehicle directly to the handicapped driver or passenger. Its purchase could be exempt if:

1. The vehicle required the qualifying modification.
2. The modification was actually performed.
3. The vehicle's primary use was transporting an orthopedically handicapped person or being driven by one.

The Comptroller also told the requester that it could seek a refund if it had paid tax in error on qualifying vehicles.

What this means for you

Vehicle lessors

Under this historical letter, leasing rather than selling the vehicle to the user did not by itself defeat the exemption. The vehicle's modification and primary use controlled.

Mobility vehicle dealers

Document both the required modification and its completion. The letter did not approve an exemption based only on an intended future modification.

Accountants and tax professionals

The letter mentioned a refund route for tax paid in error, but its form reference and procedures date from 2000. Confirm current requirements before filing.

Common questions

Q: Did the handicapped driver or passenger have to buy the vehicle directly?

A: No. The Comptroller said the lessor's purchase could also qualify.

Q: Was intended use alone enough?

A: No. The stated conditions required the proper modification to be needed and performed, plus qualifying primary use.

Q: What primary use qualified?

A: Primarily transporting an orthopedically handicapped person or being primarily driven by one.

Citations and references

• The letter did not identify a statute or administrative rule by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/200001969L

Original ruling text

January 11, 2000

Dear **:

Thank you for your request for motor vehicle tax information.

You understand that there is an exemption from motor vehicle sales tax when a
vehicle is sold to an individual or business and the vehicle is being equipped
with a wheelchair lift to be used primarily for transporting an orthopedically
handicapped person or to be primarily driven by an orthopedically handicapped
person. You ask what the taxability status is for leased vehicles.

If you purchase a motor vehicle to lease and the vehicle requires modification
to be primarily driven by an orthopedically handicapped driver or used
primarily for transporting an orthopedically handicapped person, this vehicle
may also qualify for exemption. The vehicle does not have to be sold directly
to the orthopedically handicapped driver or passenger. The lessor's purchase
may also be exempt as long as the proper modification is required (and
performed) and the vehicle's primary use is for transporting, or to be driven
by, an orthopedically handicapped person.

I hope this helps clarify this exemption for you. If you feel you have paid
tax in error on a qualifying motor vehicle(s), you may request a refund of the
tax paid. I am forwarding under separate cover a copy of Form 14-202, Texas
Claim for Refund of Motor Vehicle Tax. You may make as many copies of the form
as needed for any additional refund requests.

This opinion is based on the information 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 1-800-252-5555. The local number is 512/463-4600.
You may also write to Tax Policy Division.

Sincerely,

Joan Hale
Tax Policy Division