Did a parking-contract rider qualify for prior-contract treatment, how were exemptions documented, and when was prepaid parking script taxed?

Plain-English summary

The Texas Comptroller said the submitted parking rider did not qualify for a prior-contract exemption because it lacked a definite price and terms. Questions premised on qualification were therefore not answered.

A parking exemption had to be valid and documented with an exemption certificate, and the payment records had to reflect the claimed exemption. The letter said it was difficult to identify a valid parking exemption without specific facts.

If a customer refused to pay tax, the operator could pursue collection in the same way as the parking fee because the tax was part of the parking cost and a debt to the operator.

Tax was collected when prepaid parking script was sold, so no tax was due again when the script was redeemed.

What this means for you

The letter separated contract-rate protection, exemption proof, collection rights, and prepaid redemption. A vague contract rider did not create prior-contract status, and prepaid script avoided only duplicate taxation at use.

Common questions

Did the submitted rider qualify as a prior contract? No.

What did an exemption require? A valid claim, a certificate, and payment records matching the exemption.

Could unpaid tax be collected like the parking fee? Yes.

Was tax due again when script was redeemed? No, because it was collected when sold.

Citations and references

• Comptroller Rule 3.287 — exemption certificates.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8611L0769D06

Original ruling text

November 7, 1986

Dear **:

Thank you for your letter of October 1, 1986, concerning tax on parking fees.

I apologize for the delay in getting back with you.

The rider you sent does not state a set price for parking. In order for a
contract to qualify for the prior contract exemption, it must be definite as to
price and terms. The rider does not qualify for the prior contract exemption.
If you have other contracts you would like me to look at, I'll be happy to do
so. I'm not going to address your questions which were based on the assumption
that the rider qualified for the prior contract exemption.

You asked about exemptions. An exemption from tax must be valid and documented,
i.e., your customer must give you an exemption certificate claiming a valid
exemption and the payment must also reflect the exemption claimed. I'm hard
pressed to come up with a valid exemption from tax on parking. I'm enclosing a
copy of Rule 3.287, Exemption Certificates, for your information. Please let me
know if you have a question on a specific exemption claimed.

If the customer refuses to pay the tax, you may pursue the collection through
the same means you use to pursue collection of the parking fee. (By statute the
tax is a part of the cost of parking, a debt to you and recoverable in the same
manner as the parking fee.)

Your last question concerns tax on script. Since tax is collected on the
parking script when it is sold, no tax will be due on the script when it is
redeemed.

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

Please feel free to contact me if you have additional questions. You may write
me, call toll free 1-800-252-5555 from anywhere in Texas or phone 512/463-4600.

Sincerely,

Adina Whittemore
Tax Policy Section
Tax Administration Division