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Ezel / Tax Rulings / TX
TX 8509L0680A07 Sales and/or Use Tax (State,Local,MTA) 1985-10-31

Did discretionary parking-rate adjustments preserve a pre-October 2, 1984 contract's Texas sales-tax exemption?

Short answer: No. Discretionary evaluation and adjustment ended the exemption after adjustment; an older contract tied to an outside index could qualify.

Apply this to your situation

This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
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 1985 Texas Comptroller taxpayer-response letter applying a historical prior-contract exemption to one parking lease. The lease allowed discretionary landlord adjustments to current comparable garage rates; the letter contrasts that with an adjustment tied to an outside index such as the consumer price index. It expressly says different facts could change the opinion. Current parking, lease, grandfathering, price-adjustment, contract-modification, and sales-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. 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 lease let the landlord evaluate and adjust parking rent at its discretion to keep it substantially equivalent to current rates for similar spaces. The Comptroller said the contract no longer qualified for the prior-contract exemption after such an adjustment.

If a contract entered before October 2, 1984 instead tied adjustments to an index beyond the provider's control, such as the consumer price index, it would qualify for the prior-contract exemption.

Common questions

Did discretionary rate adjustment preserve the exemption? No.

Could an index-based adjustment preserve it? Yes, under a pre-October 2, 1984 contract and an index outside the provider's control.

What index did the letter use as an example? The consumer price index.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

October 31, 1985

Dear ***:

Thank you for your recent letter regarding the prior contract exemption
on contract parking. A portion of your letter is restated with response
below:

We believe that the relevant provision of the lease is as follows:

"The initial monthly rental shall be $*** [calculated at
$***** per space per month plus 15% to enable Tenant (SIC)
to attain 100% utilization].and subject to adjustment from time to
time by Landlord so as to make such rental substantially equivalent
to then current rentals for similar parking spaces in said parking
garage".(emphasis
supplied)

Response: As we discussed, because you evaluate and adjust your rates
on a discretionary basis the contract will not qualify for the prior
contract exemption after adjustment.

If adjustments were contractually tied to an index which was beyond
your control, (such as the consumer price index), and the contract
was entered into prior to October 2, 1984, it would qualify for the
prior contract exemption.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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