Did an auto-crushing business need a Texas sales-tax permit when buying title-surrendered salvage units and selling crushed vehicles to a steel mill?

Plain-English summary

An auto crusher bought salvage units from wrecking yards after their titles had been surrendered to the state highway department.

The units had lost their identity as motor vehicles, so buying and selling them involved tangible personal property subject to limited sales and use tax. The crusher needed a sales-tax permit.

The crusher could give the wrecking yard a properly completed resale certificate, and the steel mill buying the crushed vehicle could give the crusher its own resale certificate.

What this means for you

The operative ruling text addressed title-surrendered units and the resale chain. It did not decide the later-law repair-labor issue stated in STAR's subject metadata.

Common questions

Did the crusher need a sales-tax permit? Yes.

Were the units still treated as motor vehicles? No.

Could both transactions use resale certificates? Yes, with properly completed certificates.

Citations and references

• Comptroller Rule 3.285 — resale certificates and sales for resale

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1045G13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller September 12, 1990

Dear ** :

Thank you for your recent letter asking if your new auto crushing
business is required to have a sales tax permit.

It is my understanding that you are purchasing salvaged units from
wrecking yards which have had their titles surrendered to the state
highway department.

Because the units have lost their identity as a motor vehicle you
are buying and selling tangible personal property subject to the
limited sales and use tax and a sales tax permit is required for
your new business.

A properly completed resale certificate should be provided to the
wrecking yard in lieu of the sales tax. The steel mill you sell
the crushed vehicle to should give you a properly completed resale
certificate in lieu of the sales tax. See Rule 3.285 on Resale Cer-
tificates; Sales for Resale.

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

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The regular
number is 512/463-4600, or write me at Tax Correspondence.

Sincerely,
Bettie U. Peterson
Tax Correspondence Division