34 TAC §3.73
The Comptroller of Public Accounts proposes an amendment
to §3.73, concerning the qualification for and determination of fair
market value deduction for replaced vehicles. This proposed amendment incorporates
legislatives changes made by SB1125, 77th Legislative Session, 2001, and by
HB3211, 76th Legislative Session, 1999, allowing lessors and renters to claim
fair market value deductions for replaced vehicles that are owned by certain
affiliated companies. This proposed amendment also makes clarification changes.
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be in (providing new information regarding tax responsibilities).
This rule is proposed under the Tax Code, Title 2, and does not require a
statement of fiscal implications for small businesses. There is no significant
anticipated economic cost to individuals who are required to comply with the
proposed rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This amendment is proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
Tax Code, Title 2. Texas Administrative Code
The amendment implements Tax Code, §152.002.
§3.73.Qualifying for Fair Market Value Deduction and Determination of Fair Market Value for Replaced Vehicles.
(a)
A person is
engaged
[
engaging
] in
the
business
of selling, renting or leasing motor vehicles if
[
when
] the person regularly and actively
sells
[
engages in selling
] motor vehicles as a primary function of his business
and sells at least five different vehicles acquired for the exclusive purpose
of resale and not for use within any given 12-month period, or regularly and
actively
rents
[
engages in renting
] or
leases motor
vehicles
[
leasing
], as defined by the Tax Code, §152.001,
as a primary function of his business, and rents or leases at least five different
motor vehicles in any given 12-month period.
(b)
For purposes of computing motor vehicle sales tax, a person
who is engaged
[
engaging
] in the business of selling, renting
,
or leasing motor vehicles may deduct the fair market value of a replaced
motor vehicle
that is titled in Texas
from the total consideration
that is
paid for a replacement motor vehicle.
(c)
Determining the fair market value of
a
[
the
] replaced motor vehicle.
(1)
If the
[
The fair market value of a
]
replaced motor vehicle
is
[
that has been
] sold
before
[
prior to
] the purchase of a replacement motor vehicle
, then
[
shall be
] the total consideration
that is
received from the sale of the replaced motor vehicle
is the fair market
value of the replaced motor vehicle
.
(2)
If
[
The fair market value of
] the
replaced motor vehicle
is not
[
that has not been
] sold
before
[
prior to
] the purchase of the replacement motor vehicle
, then the fair market value of the replaced motor vehicle
is the
title owner's
book value of
that
[
the
] motor vehicle
[
on the title owner's books
] at the time the motor vehicle is retired
from business or personal use, provided
that
the owner's book value
is based on
generally
accepted accounting principles. If the
comptroller
[
Comptroller of Public Accounts
] determines that
the
title
owner's book value is not based on
generally
accepted accounting principles,
then
the fair market value shall
be the total purchase price of the vehicle, less depreciation
, which
is calculated by applying a
[
at the rate of
] 2.0%
rate
per month
for
[
of
] the first 36 months
following
[
from
] the date of purchase
, and
then
[
at a rate of
]
a
1.0%
rate
per month for
the remainder of the depreciable life of the vehicle.
(d)
Deducting the fair market value of a replaced
motor vehicle that is titled to another person.
(1)
A lessor that is described in paragraph (2) of this subsection
may deduct the fair market value of a replaced motor vehicle that has been
leased for longer than 180 days and that is titled in Texas to another person,
if the replaced motor vehicle is offered for sale and if either one of the
following requirements is met:
(A)
the lessor that wants to claim the fair market value deduction
holds at least 80% beneficial ownership interest in the titled owner of the
replaced vehicle, or the titled owner of the replaced vehicle holds at least
80% beneficial ownership interest in the lessor; or
(B)
the lessor that wants to claim the fair market value deduction
acquires all of its vehicles exclusively from franchised dealers whose franchisor
shares common ownership with the titled owner of the replaced vehicle, or
the titled owner of the replaced vehicle acquires all of its vehicles exclusively
from franchised dealers whose franchisor shares common ownership with the
lessor.
(2)
The following lessors may qualify for fair market value
deduction under paragraph (1) of this subsection:
(A)
A lessor that holds a lessor license that the Motor Vehicle
Board of the Texas Department of Transportation has issued under the Texas
Motor Vehicle Commission Code, Article 4413(36);
(B)
A lessor that is a state or federally chartered financial
institution or a regulated subsidiary of a state or federally chartered financial
institution;
(C)
A lessor that holds a franchised dealer license that the
Motor Vehicle Board of the Texas Department of Transportation has issued under
the Texas Motor Vehicle Commission Code, Article 4413(36), and that is engaged
in the business of leasing motor vehicles that the lessor is licensed to sell;
or
(D)
Any other lessor that is specifically not required to obtain
a lessor license under Texas Motor Vehicle Commission Code, Article 4413(36), §4.01(a).
(3)
A person who is in the business of renting motor vehicles
for a period not to exceed 180 days under a single agreement and who holds
a motor vehicle rental permit that is issued under Tax Code, §152.065,
may deduct the fair market value of a replaced motor vehicle that is titled
in Texas to another person if the replaced motor vehicle is offered for sale
and if either one of the following requirements is met:
(A)
the renter that wants to claim the fair market value deduction
holds at least 80% beneficial ownership interest in the titled owner of the
replaced vehicle, or the titled owner of the replaced vehicle holds at least
80% beneficial ownership interest in the renter; or
(B)
the renter that wants to claim the fair market value deduction
acquires all of its vehicles exclusively from franchised dealers whose franchisor
shares common ownership with the titled owner of the replaced vehicle, or
the titled owner of the replaced vehicle acquires all of its vehicles exclusively
from franchised dealers whose franchisor shares common ownership with the
renter.
(4)
A lessor or rental company may not use the fair market
value of a replaced motor vehicle to reduce total consideration paid for a
replacement motor vehicle if the fair market value of that vehicle has been
previously used by either the lessor or rental company or other entity.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on April 2, 2002.
TRD-200202093
Martin Cherry
Deputy General Counsel for Taxation
Comptroller of Public Accounts
Earliest possible date of adoption: May 19, 2002
For further information, please call: (512) 475-0387
Subchapter L. MOTOR FUEL TAX
34 TAC §3.199
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Comptroller of Public Accounts or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Comptroller of Public Accounts proposes the
repeal of §3.199, concerning unregulated mixtures. This rule is being
repealed because the authority for the administration and collection of the
motor fuel testing fee was transferred from the comptroller to the Texas Department
of Agriculture, effective May 22, 2001. The rule was previously necessary
to describe the types of fuel that were excepted from motor fuel testing because
the fuel types did not contain sufficient quantities of alcohol to warrant
regulation.
James LeBas, Chief Revenue Estimator, has determined that repeal of the
rule will not result in any fiscal implications to the state or to units of
local government. Since the Comptroller of Public Accounts no longer has any
administrative or collection authority regarding the motor fuel testing fee,
the repeal of this rule will conform our rules to the statutes.
Mr. LeBas also has determined that there will be no cost or benefit to
the public from the repeal of this rule. This repeal is proposed under the
Tax Code, Title 2, and does not require a statement of fiscal implications
for small businesses. There are no additional costs to persons who are required
to comply with the repeal.
Comments on the repeal may be submitted to Bryant K. Lomax, Manager, Tax
Policy Division, P.O. Box 13528, Austin, Texas 78711.
This repeal is proposed under Tax Code, §111.002 and §111.0022,
which provides the comptroller with the authority to prescribe, adopt, and
enforce rules relating to the administration and enforcement of the provisions
of the Tax Code, Title 2, and taxes, fees, or other charges which the comptroller
administers under other law.
The repeal implements Texas Civil Statutes, Title 132, Art. 8614, §9(b).
§3.199.Unregulated Mixtures.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on April 2, 2002.
TRD-200202064
Martin Cherry
Deputy General Counsel for Taxation
Comptroller of Public Accounts
Earliest possible date of adoption: May 19, 2002
For further information, please call: (512) 475-0387