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Ezel / Tax Rulings / TX
TX 7806L2015C11 Motor Vehicle Tax 1978-06-21

Did Texas rental tax apply to a manufacturer's mobile office buildings delivered to renters inside or outside Texas?

Short answer: Delivery controlled. A mobile office building delivered to the renter in Texas was rented in Texas and its receipts were taxable, regardless of the rental agency's location. Delivery outside Texas—or to a common carrier for out-of-state delivery—was not a Texas rental. Documented other-state tax could offset Texas tax on a Texas rental used there.

Apply this to your situation

This page answers the general question as of 1978. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1978
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Motor Vehicle Sales Tax Division letter issued on one original manufacturer's mobile-office-building rentals in 1978. It predates modern Private Letter Ruling reliance terms and cannot bind the Comptroller for unrelated taxpayers. Mobile-office classification, original-manufacturer treatment, delivery sourcing, common-carrier rules, gross-receipts tax, other-state credits, and documentation may have changed; the promised later rule is not identified in the body. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Texas Motor Vehicle Sales Tax Division treated mobile office buildings as motor vehicles and every possession-for-consideration agreement by their original manufacturer as a rental, regardless of term.

A vehicle was rented in Texas when delivered to the renter in Texas, regardless of the rental agency's location. All receipts from that rental were taxable under the historical rule.

A vehicle was rented outside Texas when delivered to the renter outside Texas or to a common carrier for transportation to the renter outside Texas. Those receipts were not subject to Texas rental tax, but the company needed delivery records.

For a Texas rental used in another state, Texas allowed documented credit for tax paid to that state to avoid double taxation.

What this means for you

Mobile office manufacturers and rental companies

The historical sourcing rule followed delivery, not the lessor's office.

Out-of-state renters and fleet accountants

Keep delivery and other-state tax records; both controlled the letter's result.

Common questions

Q: Did the contract term matter for the original manufacturer?

A: No.

Q: What made the rental a Texas rental?

A: Delivery to the renter in Texas.

Q: Could other-state tax reduce Texas tax?

A: Yes, with records supporting the payment.

Citations and references

  • The letter said a supporting rule was being drafted but did not identify it.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

June 21, 1978

Dear ***:

This letter is in response to the motor vehicle rental tax questions
raised
by your out of state renters.

A mobile office building is defined as a motor vehicle for tax purposes
in
Texas.

As the original manufacturer of mobile office buildings, any agreement by
COMPANY A to give possession of a mobile office building for a
consideration
is a rental, regardless of the period of time of such agreement.

The motor vehicle gross rental receipts tax liability in question depends
upon
whether or not a motor vehicle is "rented in Texas." A vehicle is
"rented in
Texas" when it is delivered to the renter in Texas regardless of the
location
of the rental agency. A vehicle is "rented outside of Texas" if the
vehicle
is delivered to the renter outside of Texas or to a common carrier for
trans-
portation to the renter outside of Texas.

If a mobile office building is rented outside of Texas, gross rental
receipts
from the rental are not subject to the Texas motor vehicle gross rental
receipts
tax. In the case of an out of state rental, you should supplement your
records
with a document confirming delivery was made outside of Texas.

If a motor vehicle is "rented in Texas," all rental receipts are subject
to
the Texas gross rental receipts tax. However, in order that we do not
impose
double taxation on the renter, Texas will credit tax paid to another
state if
the motor vehicle is being used in that state. Records must be kept to
document
this payment of tax to another state.

A rule is being drafted to support this decision and will be forwarded to
you
as soon as it is adopted.

I have sent copies of this letter to your out of state customers.

If you have any questions, you may contact the Motor Vehicle Sales Tax
Division
or call me toll free 1-800-252-5555.

Yours very truly,
Richard Montgomery, Director
Motor Vehicle Sales Tax Division

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