Owners of leased motor vehicles can claim a tax exemption if the vehicle is not held or used for producing income, and several filing and reporting rules apply.
Sec. 11.252. MOTOR VEHICLES LEASED FOR USE OTHER THAN PRODUCTION OF INCOME. (a) The owner of a motor vehicle that is subject to a lease is entitled to an exemption from taxation of the vehicle if: (1) the lessee does not hold the vehicle for the production of income; and (2) the vehicle is used primarily for activities that do not involve the production of income. (b) For purposes of this section, a motor vehicle is presumed to be used primarily for activities that do not involve the production of income if: (1) 50 percent or more of the miles the motor vehicle is driven in a year are for non-income producing purposes; (2) the motor vehicle is leased to this state or a political subdivision of this state; or (3) the motor vehicle: (A) is leased to an organization that is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as an organization described by Section 501(c)(3) of that code; and (B) would be exempt from taxation if the vehicle were owned by the organization. (c) The comptroller by rule shall establish exemption application requirements and appropriate procedures to determine whether a motor vehicle subject to a lease qualifies for an exemption under Subsection (a). (d) In connection with the requirements and procedures under Subsection (c), the comptroller by rule shall adopt a form to be completed by the lessee of a motor vehicle for which the owner of the vehicle may apply for an exemption under Subsection (a). The form shall require a lessee who is an individual to provide the lessee's name, address, and driver's license or personal identification certificate number. The form shall require a lessee that is an entity described by Subsection (b) to provide the lessee's name, address, and, if applicable, federal tax identification number. The form shall require a lessee who is an individual, or the authorized representative of a lessee that is an entity described by Subsection (b), to certify, either under oath or by written, unsworn declaration, that the lessee does not hold the vehicle for the production of income and that the vehicle is used primarily for activities that do not involve the production of income. The comptroller shall include on the form a notice of the penalties prescribed by Section 37.10, Penal Code, for making a false statement on the form. (e) The owner of a motor vehicle that is subject to a lease shall maintain the form, an electronic image of the form, or a certified copy of the form completed by the lessee of the vehicle and make the form, electronic image, or certified copy available for inspection and copying by the chief appraiser of the applicable appraisal district at all reasonable times. If the owner does not maintain a completed form, electronic image of the completed form, or certified copy of the completed form relating to the vehicle, the owner: (1) must render the vehicle for taxation in the applicable rendition statement or property report filed by the owner under Chapter 22; and (2) may not file an application for an exemption under Subsection (a) for the vehicle. (f) The governing body of a municipality by ordinance adopted before January 1, 2002, may provide for the taxation of leased motor vehicles otherwise exempted under Subsection (a). If the governing body of a municipality provides for the taxation of leased motor vehicles under this subsection, the exemption provided by Subsection (a) does not apply to that municipality. (g) Repealed by Acts 2003, 78th Leg., ch. 866, Sec. 1. (h) In this section: (1) "Lease" has the meaning assigned by Section 152.001(6). (2) "Motor vehicle" means a passenger car or truck with a shipping weight of not more than 9,000 pounds. (i) In addition to the requirements of Subsections (c) and (d), the comptroller by rule shall prescribe a property report form to be completed by the lessor describing the leased motor vehicles that the lessor owns. The property report form shall require the lessor to list each leased vehicle the lessor owns on January 1, to provide the year, make, model, and vehicle identification number of each leased vehicle, and to provide the name of the lessee, the address at which the vehicle is kept, and an indication of whether the lessee has designated the vehicle as not held for the production and not used for the production of income. (j) The lessor shall provide the chief appraiser with the completed property report form adopted by the comptroller in the manner provided by Subchapter B, Chapter 22. Added by Acts 2001, 77th Leg., ch. 1406, Sec. 1, eff. Jan. 1, 2002. Amended by Acts 2003, 78th Leg., ch. 866, Sec. 1, eff. June 20, 2003. Amended by: Acts 2019, 86th Leg., R.S., Ch. 570 (S.B. 58), Sec. 1, eff. September 1, 2019. Acts 2019, 86th Leg., R.S., Ch. 570 (S.B. 58), Sec. 2, eff. September 1, 2019. Acts 2021, 87th Leg., R.S., Ch. 644 (H.B. 988), Sec. 6, eff. January 1, 2022.