Could an out-of-state bus lessor qualify for Texas's new-resident motor vehicle tax when it first leased used buses in Texas?

Plain-English summary

An out-of-state lessor qualified for Texas's historical new-resident motor vehicle tax when its previously out-of-state registered buses came to Texas for new leases.

The lessor had bought ten buses for $200,000 each in State X, which had no motor vehicle sales tax. After three-year leases there ended, a Texas leasing company found Texas lessees for the used buses.

The Comptroller said § 152.023 applied whether the lessor brought one bus or all ten into Texas. The Texas leasing company's address could serve as the lessor's new business address for establishing the required residence status.

The lessor did not need to have paid motor vehicle tax to State X. The stated requirement was that the buses had been registered in the lessor's name there and were also registered in Texas.

What this means for you

Out-of-state lessors entering Texas

The historical analysis focused on the vehicles' prior registration, later Texas registration, and establishment of a Texas business address.

Fleet size

The number of buses did not change the answer; the Comptroller expressly treated one and ten alike.

No-tax former state

Prior payment of another state's tax was not required under the interpretation given. Prior registration was the operative fact.

Common questions

Q: Did ten buses disqualify the lessor?
A: No.

Q: Could the Texas leasing company supply the business address?
A: Yes.

Q: Did State X have to impose tax?
A: No. The letter required registration, not prior tax payment.

Citations and references

• Texas Tax Code § 152.023 — historical new-resident motor vehicle tax provision

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/8607L0761B07

Original ruling text

July 28, 1986

Dear ***:

Thank you for your letter following up our telephone conversation.

Lessor A, in the situation you described would qualify as a new resident
under Section 152.023. The new resident tax would apply to one or ten of
the busses owned by Lessor A. Leasing Company B could serve as Lessor
A's new business address for purposes of establishing Lessor A's residential
status.

There is no requirement that Lessor A should have paid the tax to any
other state, only that the busses were registered in Lessor A's name in the
other state and also in Texas.

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. The regular number is
512/463-4600. You may write us at the Tax Administration Division.

Sincerely,

Tax Administration Division

July 14, 1986

Comptroller of Public Accounts
Box 13528
Austin, Texas 78701

RE: Tax Code Section 152.023

Dear ***:

Pursuant to our previous conversations, I submit this request
for an application of Tax Code Section 152.023 and concomitant
rules to the following situation.

Lessor A is a resident of State X and has purchased ten busses
there. The purchase price of each bus is $200,000. Lessor A
hires Leasing Company B, a Texas corporation, to find lessees
for these busses. State X has no motor vehicle sales tax.
Leasing Company B finds lessees for all of Lessor A's busses
in State X. The lessees sign a three-year lease on each bus.
At the end of three years, none of the lessees chooses to
renew its lease from Lessor A. Lessor A contacts Leasing
Company B to find new lessees for its used busses. Leasing
Company B finds a Texas lessee for all ten busses. Lessor A
is not a resident of Texas and has never done business in
Texas. Lessor A's busses were initially registered in State X.

Question 1:

If Lessor A were to export its busses to Texas lessees, could
Lessor A be considered a "new resident" under Section 152.023?

Question 2:

Would it make any difference if Lessor A leased one bus rather
than ten to Texas lessees?

Question 3:

Could Leasing Company X serve as Lessor A's new business
address in Texas for the purposes of Section 152.023?

Question 4:

Must Lessor A have paid a sales tax in State X in order to take
advantage of Section 152023, or must he only have registered
his busses in State X?

I appreciate your taking the time to answer these questions.
Should you need any further information from me, please let me
know.

Sincerely,