When were a Texas farm trailer, its repair labor, and its repair parts exempt from motor vehicle or limited sales tax?

Plain-English summary

The Texas Comptroller separated three questions about farm trailers: the trailer purchase, repair labor, and repair parts.

Generally, a trailer was a Chapter 152 motor vehicle. A trailer could qualify for the farm-machinery exemption when used primarily on a farm or ranch to produce food, grass, animal feed, livestock, or other agricultural products sold in the regular course of business. The type of registration, including farm tags, did not by itself decide taxability.

Labor to repair a motor vehicle was not taxed.

Repair parts were governed by Chapter 151 and used a stricter test: the farm trailer had to be used exclusively on a farm or ranch. Parts for a trailer registered for highway use were taxable even with farm plates. The letter used a stock trailer hauling livestock to market as a taxable example.

All rates quoted in the 1998 source are historical.

What this means for you

Farmers and ranchers

The purchase exemption's primary-use test differed from the repair-parts exemption's exclusive-use test.

Trailer repair shops

Separate labor from parts and document whether the trailer is registered or used on highways.

Livestock haulers

Farm plates did not exempt repair parts for a stock trailer used to haul animals to market.

Common questions

Q: Did farm tags control the trailer exemption?

A: No.

Q: Was motor vehicle repair labor taxed?

A: No.

Q: When were repair parts exempt?

A: When the farm trailer was used exclusively on a farm or ranch under the letter's Chapter 151 test.

Citations and references

• Texas Tax Code Chapters 151 and 152

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9805608L

Original ruling text

May 4, 1998

Dear Ms. **:

Thank you for your letter postmarked April 16, 1998, concerning the taxability
of the repair of farm trailers.

Generally, a trailer is a motor vehicle subject to Texas Tax Code Chapter 152,
Motor Vehicle Sales and Use Tax (6.25%). Certain trailers may qualify for
exemption from motor vehicle tax as farm machinery or equipment. To qualify
for exemption from the motor vehicle tax a trailer must be used primarily on a
farm or ranch in the production of food for human consumption, grass, feed for
any form of animal life or other livestock or agricultural products to be sold
in the regular course of business. The type of registration (such as farm
tags) does not determine the taxability of a trailer (that is a motor vehicle).
See enclosed copies on farm trailers and vehicles from our Motor Vehicle Tax
Guidebook. I am also enclosing a copy of an edited Hearing on this subject.

No tax is due on the labor to repair a motor vehicle.

Parts used to repair a farm trailer are subject to the Texas Tax Code Chapter
151, Limited Sales and Use Tax (6.25% up to 8.25%). Under this act, a farm
trailer must be used exclusively on a farm or ranch before the repair parts
qualify for exemption. Therefore, tax is due on parts used to repair trailers
that are registered for highway use (even if the license plates are farm tags).
For example, tax is due on parts used to repair a stock trailer that is used
to haul livestock to market, etc.

Rules and other tax information are on the Comptroller's website,
www.window.state.tx.us

This opinion is based on the information you submitted and current law. Other
information, though similar, may result in different answers.

If you have any questions or need more information, I'll be glad to help you.
Please call me toll free at 1-800-531-5441, extension 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division