Was providing a concrete pump truck with a skilled operator a Texas motor vehicle rental or a service?

Plain-English summary

The Texas Comptroller treated the provision of a concrete pump truck with a skilled driver-operator as a service rather than a motor vehicle rental.

Tax Code § 152.001(5) made “exclusive use” by the customer central to the rental definition. The Comptroller relied on earlier motor vehicle hearings treating a truck supplied with a driver as a service because the customer wanted material transported rather than possession of the truck.

The concrete-pumping arrangement gave the customer even less operational control. The provider's operator drove the costly, complex unit and used the necessary expertise to place the concrete. The customer's staff never operated the pump truck, and the customer's instructions about where to place concrete could not override safe operation by the provider's operator.

The letter also discussed a Chapter 151 hearing involving a blood-transfusion machine supplied with an operator. It treated that hearing only as additional guidance because Chapter 151 did not use the same exclusive-use language as the motor vehicle tax statute.

What this means for you

Concrete-pumping and equipment-service companies

Supplying both specialized equipment and the operator who retains control supported service treatment under the historical analysis.

Construction contractors

Directing the result or destination did not amount to exclusive use when the provider's operator controlled the equipment.

Accountants and tax professionals

Focus on actual possession and operational control, not merely whether equipment appears at the customer's job site.

Common questions

Q: Was the pump truck rented to the customer?

A: No.

Q: Why was it a service?

A: The provider's skilled operator retained control, and the customer did not receive exclusive use of the truck.

Q: Which prior decisions did the letter discuss?

A: Motor vehicle Hearings 8233 and 8390, plus limited sales tax Hearing 34,807 as noncontrolling guidance.

Citations and references

• Tex. Tax Code § 152.001(5)
• Tex. Tax Code ch. 151
• Comptroller Hearings 8233 and 8390
• Limited sales tax Hearing 34,807

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9709823L

Original ruling text

September 15, 1997

Dear *****:

Some time ago you wrote concerning the Comptroller's position as to whether a
concrete pump provided with an operator would qualify as a rental or a service.
I apologize for the delay in the response.

The issue is whether the statutory definition of rental in Section 152.001(5),
which
hinges on addressing whether "exclusive use" is given to the customer, is met.
Although there are few hearings addressing exclusive use, the Comptroller has
maintained the long term administration that the providing of a motor vehicle
with an operator is a service and not a rental. I do not believe a different
conclusion could be arrived at by this office without statutory change.

Hearings has indicated that the providing of a motor vehicle (a truck) and a
driver is in fact a service and not a rental, thus we have an indicator that
exclusive use of the truck is not given to the customer (Hearings 8233 & 8390).
In these hearings the customer's apparent intention is to get material
transported from one location to another.

In the situation at hand, not only is a driver/operator provided to transport
the motor vehicle
to the job site, but also whose expertise is necessary to operate the complex
and costly unit in order to place the concrete at the desired point. It appears
that the customer's intent is to get the concrete moved from one location to
another similar to the customer's intention in the hearings. The pump truck is
not turned over to the customer's staff for operation. In no case could the
customer's direction override the cautious and knowledgeable operation by the
provided operator. The customer's activity is limited to directing where the
concrete is to be placed, more similar to the customer who desires that
material be transported from one location to another in the referenced
hearings.

Some additional guidance may be obtained from limited sales tax hearing 34,807.
This hearing involves a different chapter of the Tax Code and is not the
determining factor in this situation any more than attempting to apply limited
sales tax rules to motor vehicle tax. Limited sales tax, Ch. 151, does not
contain similar exclusive use language. In this hearing, a primary issue was
whether providing a blood transfusion machine with an operator to a hospital
was a lease or a non-taxable service. The hospital's surgeon had supervisory
control or direction of when the machine was to be operated and overall
authority over the equipment and persons in the operating room. The Judge
concluded that given the nature of the process (i.e., transfusions) and the
required expertise of the operator, a service had been performed and not a
lease.

If you have any questions, please feel free to give me a call.

Sincerely,

Curt Swenson
Tax Policy Division