Equipment rental: the licensing rule
Construction and Heavy Equipment Rental Companies. Written from the agency's own pages.
Texas requires a sales and use tax permit from any individual, partnership, corporation or other legal entity engaged in business in Texas that leases or rents tangible personal property in Texas 1. The state sales and use tax is 6.25 percent on retail sales, leases and rentals of most goods 2. The Comptroller states that a fee is not charged for the permit, but a security bond may be required 1.
A rental company can buy equipment it intends to lease or rent to customers tax free by giving the seller a resale certificate 3. If the company uses that equipment itself, it owes tax on the fair market rental value for the period of use or on the purchase price 3. Renting diesel-powered equipment of 50 horsepower or more, such as excavators, cranes and graders, also carries a surcharge that the lessor collects with the sales tax 4.
Renting motor vehicles has its own Comptroller guide and permit application 8. The permit application registers a business for sales and use tax, 911 surcharge and fees, and the diesel equipment surcharge, and it does not mention skill, insurance or contractor bonding 6. A business can be looked up in the Comptroller's Taxpayer Search, which shows whether a permit is active or inactive 5.
The Comptroller's list of active permit holders shows a NAICS industry code for each outlet 7. The permit application requires a NAICS code for all businesses 6.
Not found in the pages read
- A Comptroller statement that the NAICS code on the active-permit list is self-reported or checked was not found in the pages read; the application page lists a NAICS code among the items an applicant needs, and the dataset record layout calls the field the 'North American Industry Classification Code'.
- A Comptroller statement in words that the sales tax permit is not a contractor license was not found; the guide reports only what the permit pages list (taxes registered, duties, documents asked for).
- Texas Administrative Code Rule 3.294 (Rental and Lease of Tangible Personal Property) and Tax Code Chapter 151 text were not read: the STAR and statutes sites build their pages with JavaScript and the pages read returned only an empty shell.
- Whether heavy equipment (as opposed to cars and trucks) counts as a 'motor vehicle' for the separate motor vehicle rental tax permit was not found in the pages read.
- A page stating how a rental customer can confirm a rental company's insurance or equipment condition was not found; the guide does not address it.
A guide is a summary for orientation. It is not legal advice, and the agency's pages and statutes control.