How are office/vending trailers taxed in Texas after the 10/1/1993 change, and what happens when an out-of-state buyer picks one up here?

Subject

Food And Beverage Vending Trailers — Designed To Be Used As Sales Outlets — Subject To Sales Tax Effective 10/1/93

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9401L1283C12

Plain-English Summary

This ruling is a follow-up letter from the Comptroller's office answering several questions from a manufacturer/seller of trailers (described in the ruling as office trailers, in a fact pattern the Comptroller treats as covering the food vending trailers referenced in this letter's subject). Before October 1, 1993, these trailers were taxed under Texas Tax Code Chapter 152, the Motor Vehicle Tax. As of that date, they are taxed under the sales tax instead. The Comptroller notes that even though the trailers are no longer treated as motor vehicles for sales tax purposes, they still remain motor vehicles for certificate-of-title, registration, and ad valorem (property) tax purposes — those are separate, unaffected regimes, and the letter encloses a copy of Property Tax Code § 23.12A for reference.

The letter also addresses three specific questions the taxpayer had asked (numbered 3, 4, and 5 in the taxpayer's original letter), noting that the other questions were outside the Comptroller's jurisdiction and were forwarded to other agencies:

• Question 3 (paperwork): Sellers no longer have to give purchasers of an office trailer the "Delivery of Ownership Documents and Notice to Purchaser" document.
• Question 4 (out-of-state purchasers): When an out-of-state purchaser takes possession of an office trailer in Texas, Texas sales tax is legally due to Texas. The Comptroller notes that most other states give credit for tax legally due and paid to another state, and that the only way to avoid the Texas tax is to have the trailer shipped out of Texas by a carrier (rather than the purchaser taking possession here).
• Question 5 (reporting frequency): The Comptroller agreed to change the taxpayer's sales tax reporting status to quarterly, noting that if tax collected exceeds $1,500 in a quarter, the filing frequency will be changed to monthly.

What This Means For You

If you manufacture or sell office/vending trailers in Texas: As of October 1, 1993, collect and remit sales tax on these trailers rather than treating them under the motor vehicle tax regime. You no longer need to provide purchasers with the "Delivery of Ownership Documents and Notice to Purchaser" form for this type of trailer.

If you sell to an out-of-state buyer who picks up the trailer in Texas: Texas sales tax is due because the purchaser takes possession here, even though the buyer will use the trailer elsewhere. The buyer's home state may give credit for the Texas tax paid. The only way to avoid Texas tax on that transaction is to have the trailer shipped out of Texas by a carrier instead of letting the buyer take possession in-state.

If your filing frequency needs to change: The Comptroller's Account Maintenance Section can adjust a business's reporting basis (e.g., to quarterly), but filing frequency can shift again — for example, to monthly — if the tax collected in a quarter exceeds $1,500.

Q&A

Q: Are office/vending trailers still taxed as motor vehicles in Texas?
A: No, not for sales tax purposes as of October 1, 1993 — they are taxed under the sales tax. However, they remain motor vehicles for certificate of title, registration, and ad valorem (property) tax purposes.

Q: Do I still need to give purchasers the "Delivery of Ownership Documents and Notice to Purchaser" form?
A: No. The ruling states it is no longer necessary to give purchasers of an office trailer that document.

Q: Is Texas sales tax due if an out-of-state customer takes possession of the trailer in Texas?
A: Yes. Texas sales tax is legally due when an out-of-state purchaser takes possession of an office trailer in Texas. The purchaser's home state will often give credit for tax legally paid to Texas. The only way to avoid the Texas tax is to have the trailer shipped out of Texas by a carrier rather than the purchaser taking possession here.

Original ruling text

January 10, 1994

Dear ****:

This is in response to your second letter dated January 3, 1994,
regarding the food vending trailers manufactured and sold by
****.

Prior to October 1, 1993, office trailers were taxed under Texas
Tax Code 152 (Motor Vehicle Tax). Although the trailers are not
motor vehicles for sales tax purposes, they remain motor vehicles
for certificate of title and registration purposes and for ad valorem
tax purposes.

I am enclosing a copy of the Property Tax Code 23.12A for your
reference.

Only questions 3, 4, and 5 of your letter come under the jurisdiction
of this agency. A copy of your letter will be forwarded to the
agencies identified below for assistance with the remainder of your
letter.

Regarding question #3, it will no longer be necessary to give a
purchaser of an office trailer the document titled Delivery of
Ownership Documents and Notice To Purchaser.

Regarding question #4, when an out-of-state purchaser takes possession
of an office trailer in Texas, the Texas sales tax is legally due to
this state. Generally, most states give credit for tax that was
legally due an paid to another state. The only alternative is to have
the trailer shipped out of Texas by a carrier.

Regarding question #5, I will advise our Account Maintenance Section
to change your reporting status to a quarterly basis. If the tax
collected exceeds $ 1,500 in a quarter, it will be changed to a monthly
basis.

This opinion is based on the facts presented. Different facts, though
similar, might lead to different answers. If you have any questions or
need more information, please write or call me toll free at
1-800-531-5441, extension 50330, or 512-475-0330.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9402004L.4 and/or 9402004L