SECTION 3.481. Imposition and Collection of Manufactured Housing Tax

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Charitable or eleemosynary organization--A nonprofit organization devoting all or substantially all of its activities to the alleviation of poverty, disease, pain, and suffering by providing food, clothing, drugs, treatment, shelter, or psychological counseling directly to indigent or similarly deserving members of society with its funds derived primarily from sources other than fees or charges for its services. If the organization engages in any substantial activity other than the activities described in this section, it will not be considered as having been organized for purely public charity, and therefore, will not qualify for exemption under this section. No part of the net earnings of the organization may inure to the benefit of any private party or individual other than as reasonable compensation for services rendered to the organization. Some examples of organizations that do not meet the requirements for exemption under this definition are fraternal organizations, lodges, fraternities, sororities, service clubs, veterans groups, mutual benefit or social groups, professional groups, trade or business groups, trade associations, medical associations, chambers of commerce, and similar organizations. Even though not organized for profit and performing services which are often charitable in nature, these types of organizations do not meet the requirements for exemption under this section.

(2) Educational organization--A nonprofit organization or governmental entity whose activities are devoted solely to systematic instruction, particularly in the commonly accepted arts, sciences, and vocations, and which has a regularly scheduled curriculum, using the commonly accepted methods of teaching, a faculty of qualified instructors, and an enrolled student body or students in attendance at a place where the educational activities are regularly conducted. An organization that has activities consisting solely of presenting discussion groups, forums, panels, lectures, or other similar programs, may qualify for exemption under this section, if the presentations provide instruction in the commonly accepted arts, sciences, and vocations. The organization will not be considered for exemption under this section if the systematic instruction or educational classes are incidental to some other facet of the organization's activities. No part of the net earnings of the organization may inure to the benefit of any private party or individual other than as reasonable compensation for services rendered to the organization. Some examples of organizations that do not meet the requirements for exemption under this definition are professional associations, business leagues, information resource groups, research organizations, support groups, home schools, and organizations that merely disseminate information by distributing printed publications. Entities that are defined in Education Code, §61.003, as "institutions of higher education" are recognized for exemption under this section. Included in the definition of "institutions of higher education" are state and private universities and colleges.

(3) Exempt use--A use to promote the purpose for which an exempt organization was created.

(4) House trailer--A trailer designed for human habitation, including a park model as defined in this section. The term does not include mobile offices as defined in §3.306 of this title (relating to Sales of Mobile Offices, Oilfield Portable Units, Portable Buildings, Prefabricated Buildings, and Ready-Built Homes); manufactured homes as defined in this section; or portable buildings, prefabricated buildings, and ready-built homes, as defined in §3.306 of this title.

(5) HUD-code manufactured home--A structure constructed on or after June 15, 1976, according to the rules of the United States Department of Housing and Urban Development; transportable in one or more sections, which in the traveling mode is eight body feet or more in width or 40 body feet or more in length, or when erected on site is 320 or more square feet; built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities; and which includes the plumbing, heating, air conditioning, and electrical systems.

(6) Industrialized housing--A residential structure that is designed for the occupancy of one or more families; constructed in one or more modules, or one or more modular components built at a location other than the home site; designed to be used as a permanent residential structure when the module or the modular component is transported to the permanent site and erected or installed on a permanent foundation system; and that includes the structure's plumbing, heating, air conditioning, and electrical systems. Industrialized housing does not include a residential structure that exceeds three stories or 49 feet in height; housing constructed of a sectional or panelized system that does not use a modular component; or a ready-built home constructed in a manner in which the entire living area is contained in a single unit or section at a temporary location for the purpose of selling and moving the home to another location.

(7) Manufactured home--A HUD-code manufactured home that has a label or decal issued by the U.S. Department of Housing and Urban Development and the Texas Department of Housing and Community Affairs permanently affixed to each section, industrialized housing that has a label or decal issued by the Texas Department of Licensing and Regulations permanently affixed to each module or modular component, or a mobile home. A manufactured home does not include a recreational vehicle, park model, or house trailer, as those terms are defined in this section. Further, the term does not include a structure designed as a residence and constructed since June 15, 1976, that lacks a label or decal issued by the U.S. Department of Housing and Urban Development and the Texas Department of Housing and Community Affairs or by the Texas Department of Licensing and Regulations permanently affixed to each section, module, or modular component.

(8) Manufacturer--Any person who constructs or assembles manufactured housing for sale, exchange, or lease-purchase within this state.

(9) Mobile home--A structure constructed before June 15, 1976; transportable in one or more sections, which in the traveling mode is eight body feet or more in width or 40 body feet or more in length, or when erected on site is 320 or more square feet; built on a permanent chassis; designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities; and that includes the plumbing, heating, air conditioning, and electrical systems.

(10) New manufactured home--One that has not been subject to a retail sale.

(11) Park model--A trailer designed to be used for human habitation, with or without a permanent foundation, when connected to the required utilities, and that:

(A) is less than eight feet six inches in width and 45 feet in length in the traveling mode;

(B) includes the plumbing, heating, air conditioning and electrical systems; and

(C) is not required to be affixed with a label or decal issued by the U.S. Department of Housing and Urban Development and by the Texas Department of Housing and Community Affairs.

(12) Person--An individual, partnership, company, corporation, association, or other group, however organized.

(13) Recreational vehicle--A vehicle which is self-propelled or designed to be towed by a motor vehicle, but is not designed to be used as a permanent dwelling, and which contains plumbing, heating, and electrical systems that may be operated without connection to outside utilities. Examples include, but are not limited, to travel trailers, camper trailers, and motor homes. For information on the taxability of recreational vehicles, see §3.72 of this title (relating to Trailers, Farm Machines, and Timber Machines).

(14) Religious organization--A nonprofit organization that is an organized group of people regularly meeting for the primary purpose of holding, conducting and sponsoring religious worship services, according to the rites of their sect. The organization must be able to provide evidence of an established congregation showing that there is an organized group of people regularly attending these services. An organization that supports and encourages religion as an incidental part of its overall purpose, or one whose general purpose is furthering religious work or instilling its membership with a religious understanding, will not qualify for exemption under this section. No part of the net earnings of the organization may inure to the benefit of any private party or individual other than as reasonable compensation for services rendered to the organization. Some examples of organizations that do not meet the requirements for exemption under this definition are conventions or associations of churches, evangelistic associations, churches with membership consisting of family members only, missionary organizations, and groups who meet for the purpose of holding prayer meetings, bible study, or revivals.

(15) Retail sale--Sale to a consumer as opposed to a sale to a retailer for resale or for further processing and resale.

(16) Retailer--Any person engaged in the business of buying for resale, selling, or exchanging manufactured homes or offering them for sale, exchange, or lease-purchase to consumers, including a person who maintains a location for the display of manufactured homes. No person will be considered a retailer unless engaged in the sale, exchange, or lease-purchase of two or more manufactured homes to consumers in any consecutive 12-month period.

(17) Sales price--The total amount to be paid, as set forth in the invoice or bill of sale, excluding any separately stated shipping, freight, or delivery charges from the manufacturer to the retailer or other person.

(18) Use--The exercise of any right or power over a manufactured home incident to its ownership, including the sale, lease, or rental, or the incorporation of any manufactured home into real estate or into improvements on real estate.

(19) Used manufactured home--One that has been subject to a retail sale.

(b) Imposition of tax.

(1) The manufactured housing sales tax is due on all new manufactured homes sold or consigned by a manufacturer to a retailer or other person in this state.

(A) Invoices for all new manufactured homes sold by manufacturers must set forth the amount of tax imposed at the rate of 5.0% of 65% of the sales price (equivalent to 3.25% of the sales price).

(B) The manufacturer must report and pay the tax to the comptroller on or before the last day of the month following the month in which the manufactured home was sold.

(C) A manufactured home is presumed to be "sold" at the time the home is sold or consigned by the manufacturer to a retailer or other person in this state or is shipped to any point in this state for the use and benefit of any person.

(2) Parts and accessories added to a manufactured home by the retailer. Limited sales or use tax is due on parts or accessories installed by a retailer in or on a manufactured home, pursuant to Tax Code, Chapter 151. For information on the taxability of parts and accessories added to a manufactured home, see §3.306(c) of this title.

(3) Repair, remodeling, restoration, and maintenance of a manufactured home. The labor to repair, remodel, restore, or maintain a manufactured home may be subject to the limited sales and use tax, pursuant to Tax Code, Chapter 151. For more information, see §3.306(c) of this title.

(c) Use tax.

(1) Manufactured homes purchased outside Texas.

(A) New manufactured homes. A use tax of 5.0% of 65% of the purchase price (equivalent to 3.25% of the purchase price) is due on a manufactured home that was purchased new outside of this state for use, occupancy, resale, or exchange in this state. The tax is to be paid by the person to whom or for whom the home was sold, shipped, or consigned. It is presumed that a manufactured home was not purchased for use or occupancy in this state if the purchaser has purchased the home at a retail sale at least one year prior to its being brought or shipped to this state.

(B) Used manufactured homes. The use tax does not apply to a manufactured home that was purchased used at a retail sale outside of this state.

(2) Manufactured homes purchased in this state.

(A) New manufactured homes.

(i) A use tax of 5.0% of 65% of the purchase price (equivalent to 3.25% of the purchase price) is imposed on a manufactured home that was purchased new in this state.

(ii) The use tax is not due if the manufacturer has paid the sales tax on the home to this state. It will be presumed that the sales tax has been paid on a manufactured home sold, shipped, or consigned by the manufacturer to a retailer or other person in this state. The comptroller, the manufacturer, the retailer, and the user of the home may introduce evidence to establish whether or not the sales tax has been paid.

(B) Used manufactured homes. The use tax does not apply to a manufactured home purchased used at retail in this state.

(3) A credit equal to the amount of any legally imposed sales or use tax paid to another state on a manufactured home may be taken against the use tax imposed in this state.

(4) The use tax imposed is to be paid directly to the comptroller by the person to whom or for whom the home was sold, shipped, or consigned. The use tax is due and payable by the last day of the month following the month after the home is sold, shipped, or consigned to a person in this state.

(d) Interstate sales of manufactured housing.

(1) A manufacturer engaged in business in this state but located outside this state must collect and remit to the comptroller the manufactured housing sales tax on the initial sale, shipment, or consignment of a manufactured home to a retailer or other person in this state.

(2) The sales tax is not imposed on a manufactured home that is sold, shipped, or consigned to a retailer or other person when a manufacturer located in this state ships the home to a point outside this state by means of:

(A) the facilities of the manufacturer; or

(B) delivery by the manufacturer to a carrier for shipment under a bill of lading to a consignee at a location outside this state.

(3) The sales tax is not imposed on a manufactured home that is sold to a retailer in this state for resale at retail to a resident of another state if the home is transported to and installed for occupancy on a home site located in another state.

(A) This exemption does not apply if the home is titled or registered in this state or if the home is used for any purpose other than display prior to being transported outside of the state.

(B) The manufacturer may accept an exemption certificate which has been properly completed and signed by the retailer and the consumer in compliance with subsection (e) of this section.

(C) A retailer who has previously paid the sales tax imposed by this chapter to the manufacturer on a transaction exempt under this section may claim a credit or a refund from the manufacturer.

(e) Exemption Certificates.

(1) An exemption certificate may be issued by:

(A) the United States;

(B) any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States;

(C) federal credit unions organized under 12 United States Code, §1768, federal land bank associations organized under 12 United States Code, §2098, or farm credit banks organized under 12 United States Code, §2023;

(D) the State of Texas, its unincorporated agencies and instrumentalities;

(E) any county, city, special district, or other political subdivision of the State of Texas, and any college or university created or authorized by the State of Texas;

(F) nonprofit corporations formed under Local Government Code, Chapter 501, Provisions Governing Development Corporations or Health and Safety Code, Chapter 221, Health Facilities Development Act when purchasing items for their exclusive use and benefit. The exemption does not apply to items purchased by the corporation to be lent, sold, leased, or rented;

(G) any organization created for religious, educational, charitable, or eleemosynary purposes, provided that such organization must have requested and been granted exempt status by the comptroller. In order to qualify for exempt status the organization must meet all of the following requirements:

(i) An organization must be organized or formed solely to conduct one or more exempt activities. All documents necessary to prove the purpose for which an organization is formed will be considered when exempt status is sought.

(ii) An organization must devote its operations exclusively to one or more exempt activities.

(iii) An organization must dedicate its assets in perpetuity to one or more exempt activities.

(iv) No profit or gain may pass directly or indirectly to any private shareholder or individual. All salaries or other benefits furnished officers and employees must be commensurate with the services actually rendered.

(H) A resident of another state who purchases a new manufactured home from a retailer in this state for immediate transport, installation, and occupancy at a home site located outside of this state, provided the home:

(i) has not been used by the retailer for any purpose other than display; and

(ii) is not titled or registered in this state.

(2) A manufacturer who accepts an exemption certificate in good faith is relieved of the responsibility for collecting the tax as required by Tax Code, §158.053. A retailer must submit to the manufacturer an exemption certificate which has been signed and completed by itself and the purchaser.

(A) A retailer must keep a copy of the exemption certificate attached to the invoice or bill of sale transferring title to the purchaser.

(B) The manufacturer must retain the original of the exemption certificate attached to the invoice or bill of sale.

(3) Any person who issues an exemption certificate for a manufactured home and then uses the home for other than exempt use will be liable for the tax. The tax will be based on the selling price of the manufactured home to the person who issued the exemption certificate.

(4) The exemption certificate must include:

(A) names and addresses of the manufacturer, retailer, and purchaser;

(B) a description of the manufactured home;

(C) the address where the manufactured home will be installed;

(D) reason for exemption; and

(E) signatures of both the retailer and purchaser.

(5) Form of an exemption certificate. An exemption certificate must be in substantially the form of a Texas Manufactured Housing Sales and Use Tax Exemption Certificate (Form 18-301). Copies of the exemption certificate are available at: https://comptroller.texas.gov/forms/18-301.pdf.

Source Note: The provisions of this §3.481 adopted to be effective December 6, 1996, 21 TexReg 11510; amended to be effective November 14, 2013, 38 TexReg 7971; amended to be effective February 11, 2018, 43 TexReg 582