(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Gross rental receipts--Any amount of money or the value of property received by or due the owner of a motor vehicle as consideration for the rental of the vehicle to another including a reimbursement charge for property tax, title fee, and registration fee expenses. Gross rental receipts does not include and tax is not due on: (2) Owner--Theperson named in the Texas certificate of title of a motor vehicle as the owner of the vehicle, or a person having exclusive use of a motor vehicle under a rental agreement and who holds the motor vehicle for re-rental. (3) Rental or renting--An agreement whereby: (4) Rented in Texas--A motor vehicle is "rented in Texas" when the vehicle is delivered to the renter in Texas regardless of the location of the rental agency. A motor vehicle isnot "rented in Texas" if the vehicle is delivered to the renter outside the State of Texas or to a common carrier for transportation to the renter outside of Texas. (5) Retailer--Any owner of a motor vehicle who is responsible for collecting and reporting motor vehicle gross rental receipts tax pursuant to the Tax Code, §152.045. (b) Application of tax. (1) When a motor vehicle is rented in Texas, all of the rental receipts are subject to the Texas motor vehicle gross rental receipts tax. If a person who rents a motor vehicle in Texas subsequently moves the vehicle to another state and pays a legitimately imposed rental receipts tax or sales and use tax, he may claim a credit in the amount of the tax paid to the other state against any Texas motor vehicle gross rental receipts tax due after payment of the tax to the other state. (2) If a motor vehicle is not rented in Texas, the gross rental receiptsfrom the rental are not subject to the Texas motor vehicle gross rental receipts tax. (c) Bad debt. (1) Tax not due on bad debt. (2) Records required. To support a claim for a bad debt deduction or credit, aretailer must maintain complete records which document: (3) Credit. Credit does not qualify as a bad debt. When a retailer extends credit to a customer making a rental, the amount of credit so extended may not be labeled as a bad debt merely for the purpose of delaying the payment of tax. (d) Direct paymentqualifications and procedures. (1) A holder of a motor vehicle rental tax direct payment permit may give an exemption certificate in lieu of paying the taxes for motor vehicles which are rented by the permit holder solely for its own use. A limited sales, excise, and use tax direct payment blanket exemption certificate may not be issued for the rental of motor vehicles. (2) An applicant for a motor vehicle rental tax direct payment permit must comply with the following: (3) Applicants for a motor vehicle rental direct payment permit should write and request an application from the Comptroller of Public Accounts, Austin, Texas 78774. (4) Any person whose motor vehicle rental direct payment permit is either voluntarily forfeited or cancelled by the comptroller's office must immediately notify all owners of the tax-exempt motor vehicles he rents, advising them that the exemption certificate issued to them is no longer valid. (5) The motor vehicle rental direct payment permit may be used only by the legal entity (including its branches and divisions) to which it is issued. A permit holder may not authorize any other person or firm, including related corporations, to rent a motor vehicle tax free by using its permit. Use by other persons or firms is grounds for revocation of the permit. (6) Under no circumstances may a permit holder give a motor vehicle rental tax directpayment exemption certificate to a contractor making an improvement to realty for the permit holder under either a separated or lump-sum contract. A contractor who does not personally hold a motor vehicle rental direct payment permit and who rents a motor vehicle for use in performing a contract must pay the motor vehicle rental tax to the owner of the rented motor vehicle. (7) The holder of a valid motor vehicle rental tax direct payment permit must accrue the motor vehicle rental tax on any motor vehicles rented in Texas and subsequently used out of state. (8) A motor vehicle direct payment permit holder must file a monthly return whether or not it has any motor vehicle rental tax to report. Failure to file returns timely will subject the holder to penalties and interest and revocation of the permit. (9) A motor vehicle rental tax direct payment exemption certificate must comply substantially with the following certificatedescription. Each exemption certificate must bear the motor vehicle rental direct payment permit number of the permit holder. Attached Graphic
Source Note: The provisions of this §3.78 adopted to be effective December 5, 1996, 21 TexReg 11489.