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Ezel / Tax Rulings / TX
TX 8001T2025E09 Motor Vehicle Tax 1981-01-28

Was providing advertising on a sign trailer a taxable rental, and how were the trailer and sign taxed when bought or sold?

Short answer: Providing advertising on a trailer was a service, not a rental, because customers lacked exclusive use or control; the provider collected neither rental-receipts tax nor limited sales tax on the service. A purpose-built advertising trailer was movable specialized equipment subject to limited sales tax. For a regular motor-vehicle trailer with a sign attached, acquisition could split vehicle tax on the trailer and sales tax on the sign, while a later unit sale drew motor vehicle tax on the total price.

Apply this to your situation

This page answers the general question as of 1981. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1981
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 STAR document preserves TR 0324 as issued February 22, 1978, revised January 11, 1980, and amended January 28, 1981. This page uses the latest printed amendment date. STAR warns that the four-percent rate is not current. The old Rules .014/.069, Chapter 6, movable-specialized-equipment treatment, trailer registration, service classification, and tax bases may have changed. The amended text controls where it differs from earlier versions. This is field taxability guidance, not a modern taxpayer-specific PLR. STAR documents may no longer represent current policy even when not marked superseded. 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

Providing advertising through a sign trailer was an advertising service, not a rental, because the customer did not receive exclusive use or control of the trailer. The provider therefore did not collect motor vehicle gross rental receipts tax or limited sales and use tax on the service charge.

The January 28, 1981 amendment distinguished the equipment itself:

  • A trailer built specifically for advertising was movable specialized equipment subject to limited sales tax rather than motor vehicle tax.
  • If a regular Chapter 6 trailer was bought and a sign later mounted on it, motor vehicle tax applied to the trailer and limited sales tax to the sign.
  • If the regular trailer and attached sign were later sold as one unit, motor vehicle tax applied to the total sales price.

The earlier 1980 and 1978 versions generally treated the service provider as consumer of trailers and signs and printed a four-percent vehicle-tax rate. The latest amendment refined the purpose-built specialized-equipment treatment; the historical rate is not current.

What this means for you

Control separated a service from a rental. Equipment design and whether components were attached at purchase or later sold together determined which historical tax applied.

Common questions

Q: Did removing the trailer's license make the advertising service a rental?
A: No; lack of customer control was decisive.

Q: How was a purpose-built sign trailer taxed?
A: As movable specialized equipment under limited sales tax.

Q: What if a regular trailer and sign were sold together?
A: Motor vehicle tax applied to the total unit price under the amendment.

Citations and references

  • TR 0324 (Amended), issued January 28, 1981
  • Former Rule .069 — cited by the amendment
  • Former Rule .014 — cited by the 1980 and 1978 versions
  • Former Chapter 6 — motor vehicle tax provisions referenced in the amendment

Source

Original ruling text

Note: This document is also indexed as a Sales Tax document at STAR 8101T0477B01.

ALERT: The tax rates cited in this article are no longer the current motor vehicle sales tax or motor vehicle rental tax rates.

TR 0324 (Amended)

DATE ISSUED: 1-28-81

TO ALL FIELD OFFICES: The following taxability question was received
from the Field and the interpretation provided by Sales Tax Division

RE: Sign Trailers
Rule .069
Walter Welsh, Field Office 2H30

SITUATION: Taxpayer applied for permit to collect limited sales tax
on what he thought to be the rental of licensed trailers with
advertising sign attached. Control of the trailer is not passed to
the customer.

QUESTION: Is the providing of advertising by means of a sign mounted
on a trailer subject to either sales tax or motor vehicle gross rental
receipts tax? If the license or machinery tag is removed from the
trailer, would it make any difference?

ANSWER: The furnishing of trailers equipped with advertising is
the providing of an advertising service, not a rental, since
customers do not have exclusive use or control of the trailers.
Because the transactions are not rentals, the provider of the
service should not collect motor vehicle gross rental receipts tax
or limited sales and use tax.

When a "trailer" is built specifically for advertising functions,
the unit is considered to be movable specialized equipment subject
to the limited sales tax and not a motor vehicle. When the
components for such a unit or a complete unit are purchased, the
limited sales tax is due.

If a trailer, subject to the provisions of Chapter 6, is purchased
and a sign mounted there, the owner of the trailer must pay the
motor vehicle sales tax on the cost of the trailer and the limited
sales tax on the cost of the sign. If the trailer and sign are
sold as a unit, the motor vehicle sales tax is due on the total
sales price.

FILE NO.: TR 0324 (Amended)

DATE ISSUED: 01-11-80

TO ALL FIELD OFFICES: The following taxability question was received from the Field and the interpretation provided by Sales Tax Division

RE: Sign Trailers

Rule .014

Walter Welsh, Field Office **

SITUATION: Taxpayer applied for permit to collect Limited Sales Tax on what he thought to be the rental of licensed trailers with advertising sign attached. Control of the trailer is not passed to the customer.

QUESTION: Is the providing of advertising by means of a sign mounted on a licensed trailer subject to either Sales Tax or Motor Vehicle Gross Rental Receipts Tax? If the license is removed from the trailer, would it make any difference?

ANSWER: The furnishing of trailers equipped with advertising is the providing of an advertising service, not a rental, since customers do not have exclusive use of the trailers. Because the transactions are not rentals the provider of the service should not collect motor vehicle gross rental receipts tax or limited sales and use tax.

The taxpayer, as the purchaser and provider of the service, is the consumer of the trailer and signs. Therefore, whenever the taxpayer purchases a trailer or a complete unit (trailer and sign), the taxpayer must register the trailer or unit with the county tax assessor-collector. At that time, the taxpayer should pay the 4% motor vehicle sales tax.

Whenever purchasing a sign or component parts not attached to a trailer at the time of purchase of the trailer, taxpayer must pay limited sales and use tax on the sign or component parts. If taxpayer makes the sign which they will use in providing the advertising service, they must pay limited sales and use tax on the materials at the time of purchasing the materials.

Please note: Persons engaged in the business of manufacturing and selling trailer signs exclusively would be entitled to purchase component parts tax-free. Sign trailers manufactured exclusively for sale should not be registered by the manufacturer. The customer is responsible for the 4% motor vehicle sales tax at the time of registration.

This opinion is rendered based upon the facts as presented. Other facts, though similar to those presented, may yield different results.

PREPARED BY: Wanda Hutchinson

APPROVED BY FIELD OPERATIONS HEADQUARTERS: Ledford Kelly

APPROVED BY LEGAL SERVICES: Mark Weiss

BOB BULLOCK

Comptroller of Public Accounts

Of the State of Texas

FILE NO.: TR 0324

DATE ISSUED: 02-22-78

TO ALL FIELD OFFICES: The following taxability question was received from the Field and the interpretation provided by Sales Tax Division

RE: Sign Trailers

Rule .014

Walter Welsh, Field Office **

SITUATION: Taxpayer applied for permit to collect Limited Sales Tax on rental of licensed trailers with advertising sign attached.

QUESTION: Does rental of advertising sign on licensed trailer come under Sales Tax or Motor Vehicle Gross Rental Receipts Tax? If the license is removed from the trailer, would it make any difference?

Or, as the control of the trailer is not passed to the rentee, is this even taxable at all?

ANSWER: The furnishing of trailers equipped with advertising is the providing of an advertising service, not a rental, since customers do not have exclusive use of the trailers. Because the transactions are not rentals the provider of the service should not collect motor vehicle gross rental receipts tax or limited sales and use tax.

The taxpayer, as the purchaser and provider of the service, is the consumer of the trailer and signs. Therefore, whenever the taxpayer purchases a trailer or a complete unit (trailer and sign), the taxpayer must register the trailer or unit with the county tax assessor-collector. At that time, the taxpayer should pay the 4% motor vehicle sales tax.

Whenever purchasing a sign or component parts not attached to a trailer at the time of purchase of the trailer, taxpayer must pay limited sales and use tax on the sign or component parts. If taxpayer makes the sign which they will use in providing the advertising service, they must pay limited sales and use tax on the materials at the time of purchasing the materials.

Please note: Persons engaged in the business of manufacturing and selling trailer signs exclusively would be entitled to purchase component parts tax-free. Sign trailers manufactured exclusively for sale should not be registered by the manufacturer. The customer is responsible for the 4% motor vehicle sales tax at the time of registration.

This opinion is rendered based upon the facts as presented. Other facts, though similar to those presented, may yield different results.

PREPARED BY: Wanda Hutchinson

APPROVED BY FIELD OPERATIONS HEADQUARTERS: Ledford Kelly

APPROVED BY LEGAL SERVICES:

BOB BULLOCK

Comptroller of Public Accounts

Of the State of Texas

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