Were heavy frac tanks rented for water storage motor vehicles subject to Texas sales, use, or rental tax?

Plain-English summary

The described frac tanks were not motor vehicles, so historical motor vehicle sales, use, and rental taxes did not apply.

The tanks weighed about 17,000 pounds empty, held about 500 barrels, used a single axle, and stored water at oil-well sites. They were not designed to transport property and were not constructed from existing trailers.

The company therefore did not qualify for a motor vehicle rental-tax permit. The tanks were tangible personal property subject instead to the Limited Sales and Use Tax Act, with the details referred to the Sales Tax Division.

If motor vehicle tax had already been paid, the company could request a refund from the Motor Vehicle Sales Tax Division and include a copy of the Form 31 receipt.

What this means for you

The tax definition differed from highway title and registration rules. Equipment could require a tag under another law without becoming a motor vehicle for this tax.

Common questions

Q: Did motor vehicle rental tax apply?
A: No.

Q: Was the equipment free from all tax?
A: No. The letter applied limited sales and use tax instead.

Q: Could previously paid motor vehicle tax be refunded?
A: The letter allowed a written request with the Form 31 receipt.

Citations and references

• Chapter 6, Vernon's Civil Statutes, Title 122A
• Limited Sales and Use Tax Act

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7810L2019A04

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

October 24, 1978

Dear ***:

Thank you for your recent application for a Motor Vehicle Rental Tax
Permit.
As I understand your company's activities are to rent "Frac Tanks" for
oil
well drilling and well sites. These tanks are used by your customers for
water storage.

These tanks weigh approximately 17,000 pounds empty and cannot be used to
transport fluids because of the weight and the single axle. The capacity
is
approximately 500 barrels; which when full, would far exceed any weight
and
limitation allowed on the highways of Texas.

The Motor Vehicle Tax Law defines a motor vehicle as a self-propelled
vehicle,
trailer, or semi-trailer in which any person or property may be
transported upon
a public highway. The frac tanks were not designated to transport
property nor
was it constructed from an existing trailer.

This definition excludes the "frac tanks" from being motor vehicles
therefore not
subject to motor vehicles sales, use, or rental tax.

The motor vehicle tax falls under Chapter 6, Vernon's Civil Statutes,
Title 122A,
which is administered by the Comptroller. Titling and registration is
regulated
by a different law and a different agency (Department of Highways and
Public
Transportation). The tax law gives one definition for a motor vehicle
for taxing
purposes. Unfortunately, the other laws give a completely different
definition
for titling and registering motor vehicles. An example would be farm
tractors
are never considered motor vehicles and are not taxed as such however, if
a
tractor is used on the highways the State Department of Highways and
Public
Transportation requires a license tag. This example would be comparable
to our
ruling on the frac tanks.

The tanks would be taxed under the Limited Sales and Use Tax Act, which
taxes
other tangible personal property. Your responsibility for the tax on
tangible
personal property will be answered by the Sales Tax Division.

You have indicated on your rental permit application that motor vehicle
tax
has been paid on the frac tank. If so, you may write this Division for a
refund.
Please enclose a copy of the tax receipt. (Form 31).

Your request for a motor vehicle rental tax permit is being denied since
frac tanks are not considered motor vehicles for taxing purposes.

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

Yours very truly,
Tom Gay
Motor Vehicle Sales Tax Division