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Ezel / Tax Rulings / TX
TX 7907L2022E12 Motor Vehicle Tax 1979-07-10

Was a separately stated collision-damage-waiver charge excluded from Texas motor vehicle rental receipts tax as insurance?

Short answer: No. Separately stated fees for actual insurance were excluded from gross rental receipts tax, but a collision damage waiver was taxable. The customer was not buying insurance coverage; the charge merely waived the standard deductible on collision insurance already carried by the rental company.

Apply this to your situation

This page answers the general question as of 1979. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1979
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 internal July 10, 1979 audit memorandum; STAR metadata uses July 1, but this page follows the printed date. Current rental-receipts definitions, collision damage waivers, insurance regulation, separately stated charges, deductibles, and tax rules may differ. The distinction was described as a technical insurance-industry classification and may not map to modern products. This is not taxpayer-specific modern reliance guidance. STAR documents may no longer represent current policy even when not marked superseded. 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

A separately stated collision damage waiver was taxable even though separately stated insurance was excluded from motor vehicle gross rental receipts tax.

Actual insurance bought coverage. The waiver instead charged the customer to eliminate the standard deductible on collision insurance already held by the rental company.

What this means for you

Labels do not control. Determine whether a charge purchases regulated coverage or changes the customer's contractual responsibility under the rental company's policy.

Common questions

Q: Was actual separately stated insurance taxable?
A: No under the memo.

Q: Was the collision damage waiver taxable?
A: Yes.

Citations and references

The memo cites no numbered statute or rule.

Source

Original ruling text

BOB BULLOCK
INTEROFFICE
COMPTROLLER OF
MEMORANDUM PUBLIC
ACCOUNTS

Date: July 10, 1979

To: Jose Lopez - Dallas Audit Office

From: Victoria Bailey - Motor Vehicle Sales Tax

Subject: Collision Damage Waiver Charges

As I indicated to you over the telephone, you are correct in your
understanding that motor vehicle gross rental receipts tax is not
due on separately stated fees or charges for insurance. However,
a charge identified as "collision damage waiver" is not considered
insurance and therefore is taxable.

In the one case, a customer actually purchases insurance coverage;
in the other case, the customer exercises the option of paying a
service charge to waive the standard deductible on the collision
insurance that is already carried by the rental company. The dis-
tinction between these two types of charges is a technical one
made by the insurance industry.

If you have any more questions, please give me a call.

Victoria Bailey

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