SECTION 3.83. Sales and Use of Motor Vehicles Purchased or Leased by Public Agencies; and Sales and Use of Motor Vehicles Purchased by Commercial Transportation Companies

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

(1) Application for Texas Title and/or Registration--Form 130-U, its electronic equivalent, or a successor form, promulgated jointly by the comptroller and the Texas Department of Motor Vehicles, which is used by a person to apply for a title and registration and to pay any motor vehicle sales or use tax due. The Application for Texas Title and/or Registration is available at comptroller.texas.gov.

(2) Lease--An agreement, other than a rental, by an owner of a motor vehicle to give for longer than 180 days exclusive use of a motor vehicle to another for consideration. For more information on motor vehicle leases, see §3.70 of this title (relating to Motor Vehicle Leases and Sales).

(3) Motor vehicle--A vehicle described by Tax Code, §152.001(3) (Definitions). In general, a motor vehicle includes a self-propelled vehicle designed to transport persons or property upon the public highway and a vehicle designed to be towed by a self-propelled vehicle while carrying property. The term includes, but is not limited to: automobiles; buses; vans; motor homes; motorcycles; trucks; truck tractors; truck cab/chassis; semitrailers; trailers and travel trailers, as defined by §3.72 of this title (relating to Trailers, Farm Machines, and Timber Machines). The term does not include a vehicle to which the certificate of title has been surrendered in exchange for a salvage vehicle title or a nonrepairable vehicle title issued pursuant to Transportation Code, Chapter 501 (Certificate of Title Act).

(4) Open-enrollment charter school--A school that has been granted a charter under Education Code, Chapter 12, Subchapter D (Open-Enrollment Charter School).

(5) Public agency--A department, commission, board, office, institution, or other agency of this state or of a county, city, town, school district, hospital district, water district, or other special district or authority or political subdivision created by or under the constitution or the statutes of this state, or an unincorporated agency or instrumentality of the United States. The term includes:

(A) any college or university created or authorized by the Texas constitution or Texas statutes;

(B) all independent boards, commissions, agencies, or corporations that are instrumentalities of the United States and are wholly owned by the United States or by another corporation wholly owned by the United States, including organizations specifically exempted as an instrumentality of the United States by federal statute, such as a federal credit union, federal reserve bank, or federal home loan bank; and

(C) effective September 1, 2017, an open-enrollment charter school.

(b) Motor vehicles purchased or leased by a public agency or an entity exempted by another statute.

(1) The sale or use of a motor vehicle is exempt from the taxes imposed by Tax Code, Chapter 152 (Taxes on the Sale, Rental, and Use of Motor Vehicles), when the motor vehicle is:

(A) purchased and used by a public agency and operated with an exempt license plate issued under Transportation Code, §502.451 (Exempt Vehicles);

(B) purchased and used by a public agency and exempted from inscription requirements as provided by Transportation Code, §721.003 (Exemption from Inscription Requirement for Certain State-Owned Motor Vehicles) or §721.005 (Exemption from Inscription Requirement for Certain Municipal and County-Owned Motor Vehicles), regardless of whether the vehicle is operated with an exempt or regularly designed license plate;

(C) purchased and used by a public agency and issued a regularly designed license plate, pursuant to Transportation Code, §502.451(f), because the motor vehicle is dedicated to law enforcement activities;

(D) purchased by the federal government, its agencies, and its instrumentalities, regardless of whether the vehicle is operated with an exempt or regularly designed license plate; or

(E) purchased and used by an entity who is exempted from the taxes imposed by Tax Code, Chapter 152 or by another Texas or federal statute, regardless of whether the vehicle is operated with an exempt or regularly designated license plate.

(2) The sale or use of a motor vehicle is exempt from taxes imposed by Tax Code, Chapter 152, when the motor vehicle is purchased to be leased to a public agency, including the federal government, its agencies, and its instrumentalities; and operated with an exempt license plate issued under Transportation Code, §502.451.

(3) To claim an exemption under this section, a Texas seller and purchaser must complete and sign an Application for Texas Title and/or Registration and any other documents required by the Texas Department of Motor Vehicles to apply for title or register the motor vehicle in Texas. The purchaser must indicate the reason an exemption is claimed on the Application for Texas Title and/or Registration at the time of purchase. For example, when a motor vehicle is purchased by public agency, the purchaser may write "exempt as a public agency," or "exempt as a public agency, as provided by §152.082 Sale of Motor Vehicle to or Use of Motor Vehicle by Public Agency." When a motor vehicle is purchased to be leased to a public agency, the purchaser may write, for example, "leased to a public agency" or "exempt as a lease to a public agency, as provided by §152.083 Lease of Motor Vehicle to Public Agency." The Application for Texas Title and/or Registration is submitted to the county tax assessor-collector.

(4) When a motor vehicle purchased tax-free and leased to a public agency ceases to be leased to a public agency, and is not held for sale, the owner must remit motor vehicle tax directly to the comptroller by completing Motor Vehicle Sales/Use Tax Payment, Form 14-112, its electronic equivalent, or a successor form, promulgated by the comptroller. The amount of motor vehicle tax due is based on the owner's book value of the motor vehicle at that time. For more information concerning lease vehicles, see §3.70 of this title (relating to Motor Vehicle Leases and Sales).

(c) Sale, use, or lease of a motor vehicle by a commercial transportation company.

(1) The sale or use of a motor vehicle is exempt from taxes imposed by Tax Code, Chapter 152 (Taxes on Sale, Rental, and Use of Motor Vehicles), when the motor vehicle is operated with an exempt license plate issued under Transportation Code, §502.451 and purchased by a commercial transportation company to provide transportation services under a contract with:

(A) a board of county school trustees or school district board of trustees under Education Code, §34.008 (Contract with Transit Authority, Commercial Transportation Company, or Juvenile Board); or

(B) the governing body of an open-enrollment charter school.

(2) To claim an exemption under this section, a Texas seller and purchaser must complete and sign an Application for Texas Title and/or Registration and any other documents required by the Texas Department of Motor Vehicles to apply for title or register the motor vehicle in Texas. The purchaser must indicate the reason an exemption is claimed on the Application for Texas Title and/or Registration at the time of purchase. For example, a commercial transportation company agency may write "exempt as a commercial transportation company, as provided by §152.082." The Application for Texas Title and/or Registration is submitted to the county tax assessor-collector.

(3) This exemption under this section does not apply to a motor vehicle leased to a commercial transportation company, or a motor vehicle purchased by a third party to be leased to a commercial transportation company, even if the commercial transportation company uses the motor vehicle to provide transportation services under a contract with the board of county school trustees, the school district board of trustees, or the governing body of an open-enrollment charter school. For more information concerning lease vehicles, see §3.70 of this title.

Source Note: The provisions of this §3.83 adopted to be effective February 14, 2017, 42 TexReg 568; amended to be effective February 7, 2018, 43 TexReg 581