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Ezel / Tax Rulings / TX
TX 8412L0653C12 Motor Vehicle Tax 1984-12-07

Could a contractor buy a trailer tax-free because it would use the trailer on a job for a tax-exempt customer?

Short answer: No. Texas treated the trailer as a motor vehicle under Chapter 152, which imposed tax on each retail sale and contained no pass-through exemption for a vehicle a contractor used on a job for an exempt entity. The Comptroller distinguished Chapter 151, where the customer apparently expected such an exemption, from the separate motor vehicle tax statute.

Apply this to your situation

This page answers the general question as of 1984. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1984
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 a short 1984 Texas Comptroller taxpayer-response letter distinguishing Chapters 152 and 151. It does not identify the exempt entity, contract terms, or a numbered exemption provision. Current contractor exemptions, motor vehicle definitions, trailers, and exempt-entity rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 contractor owed motor vehicle tax on a trailer even though it planned to use the trailer on a job for a tax-exempt entity.

Chapter 152 taxed each retail sale of a motor vehicle, including the trailer, and the Comptroller found no pass-through exemption for this contractor purchase. The customer's theory apparently came from Chapter 151, but that separate limited-sales-tax provision did not carry over to motor vehicle tax.

What this means for you

An exempt customer's status does not automatically transfer to a contractor's vehicle purchase. Confirm the exemption under the tax chapter that actually governs the property.

Common questions

Q: Did the exempt customer's status pass through?
A: No.

Q: Which chapter controlled?
A: Chapter 152.

Citations and references

  • Texas Tax Code ch. 152 — motor vehicle tax on retail sales
  • Texas Tax Code ch. 151 — separate limited-sales-tax regime distinguished by the letter

Source

Original ruling text

December 7, 1984

Dear ***:

Thank you for your letter concerning the taxability of a trailer.

Motor Vehicles (including trailers) are taxed under TEX. TAX CODE ANN. ch.

  1. This act imposes a tax on each retail sale. The provision contains no
    "pass through" exemption for a purchase of a vehicle which is used on a job
    for an exempt entity.

I assume that your customer has in mind the limited sales act, ch. 151,
where such an exemption is available.

Please do not hesitate to contact this office if we may be of assistance.

Sincerely,

Tax Policy Section
Tax Administration

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