Motor Vehicle Rental Tax Guide

Once your rental tax permit is active, you must report the motor vehicle rental tax you collect from your customers to the Comptroller’s office. The Comptroller’s office will mail you Form 14-103, Texas Motor Vehicle Rental Tax Return (PDF), each period you are required to file so you can report your rentals and remit the motor vehicle rental tax you collect. Unless you are required to file or pay electronically, you can file and pay by mail using the preprinted return. All motor vehicle tax forms are available online.

Returns must be filed for each monthly or quarterly filing period even if you have no amount subject to tax or no tax due.

It is your responsibility to file a tax return and payment on time even if you did not receive a preprinted tax return. A $50 late filing penalty will be assessed each time a return is filed after the due date.

Forms can be downloaded online, or ordered by calling Taxpayer Services at 800-252-1382 from 8 a.m. to 5 p.m. Monday through Friday, or through Texas Taxes Help webpage.

Your rental tax reports will be due either quarterly or monthly, depending on how much rental tax you remit. The Comptroller’s office will notify you of your filing frequency once your rental permit account is set up and let you know if it changes.

If you owe $1,500 or more per month in motor vehicle rental tax, you must file monthly or prepay the tax. If you owe less than $1,500, you can file quarterly.

All returns are due by the 20th of the month following the end of the reporting period: Monthly returns are due by the 20th of the next month; quarterly returns are due April 20, July 20, Oct. 20 and Jan. 20.

Report due dates falling on holidays or weekends are moved to the next working day.

Due dates may be adjusted for rental permit account holders who are required to pay electronically.

If you file your motor vehicle rental tax return and payment on time, you can withhold 0.5 percent of the tax you collect. Your discount is calculated on your motor vehicle rental tax return.

If you prepay your motor vehicle rental tax you can withhold an additional 1.25 percent of the tax you collect. Anyone can prepay, and if you would normally be a monthly filer, you can file quarterly reports instead.

To prepay, estimate your quarterly tax liability on Form 14-105, Texas Motor Vehicle Rental Tax Declared Estimate and Prepayment (PDF). Your prepayment must be equal to at least 90 percent of the tax due for the reporting period or the amount of tax you paid for the same period in the preceding year.

Your Form 14-105 (PDF) and tax prepayment must be sent to the Comptroller’s office by the 15th of the second month of the quarter. Your motor vehicle rental tax return is due by your regular reporting due date.

For example, if you prepay for the first quarter of the calendar year, you must prepay by Feb. 15 and file your quarterly report by April 20.

If your prepayment is late, you must file returns and make payments monthly for that quarter. If your prepayment is late or underestimated, it will be applied as a credit on your regular monthly return and you will not receive a prepayment discount.

Tax paid 1-30 days late is assessed a 5 percent penalty. If the motor vehicle rental tax is paid 31-60 days late, there is an additional 5 percent penalty, for a total of 10 percent. For tax paid more than 60 days late, interest accrues at 1 percent over the prime rate as published in the Wall Street Journal on the first business day of the year.

If you do not pay a liability determination issued by the Comptroller’s office before it becomes final, you may be assessed an additional 10 percent determination penalty.

In addition to penalties and interest, all late reports are assessed a $50 late filing fee.

If you go out of business or stop renting motor vehicles, you can use your motor vehicle rental tax return to let us know.

If you do not notify us that you are no longer renting motor vehicles, the Comptroller’s office expects you to continue to file your motor rental tax returns each period and will assess late filing fees on any reports that are postmarked after the due date.

Any unpaid portion of your minimum motor vehicle rental tax on vehicles still in your rental fleet must be reported and paid on your last return.

Anyone can use the Comptroller’s electronic filing options to file and pay their motor vehicle rental tax, but certain rental permit account holders are required to pay and/or report electronically, depending on how much rental tax they collect. To get started, taxpayers will need to have their assigned Webfile Number.

If you collect $10,000 or more per fiscal year, Texas law requires that you pay your motor vehicle rental tax by electronic funds transfer. If you collect $50,000 or more, you are required to pay and report electronically.

Certain electronic payments (PDF) must be submitted by 8 p.m. Central Time on the business day prior to the due date.

The table below shows your payment and filing options based on the amount of motor vehicle rental tax you collect.

*Certain electronic payments must be submitted by 8 p.m. Central Time on the business day prior to the due date.

For questions about electronic filing and paying, please email Electronic Reporting or call 800-442-3453.

If you need to correct a motor vehicle rental tax return that was already filed, you can submit an amended return for the appropriate reporting period. You can amend a return to correct an overpayment or underpayment when you refund motor vehicle rental tax to a customer, or to update any other information on the return.

To amend a report filed by mail using Form 14-103, Texas Motor Vehicle Rental Tax Return (PDF), do the following:

• Write "amended" across the top of the form;
• Correct the information; and
• Send the amended report plus payment (if additional tax is due) to the Comptroller’s office.

If you file and pay electronically, you can amend your report online only if you will owe additional tax. If you do not owe additional tax, you must mail your amended motor vehicle rental tax return.

When amending a report to claim a refund, you must also include a cover letter that details each reason for the refund and identifies the reporting period(s) during which the claimed overpayment was made.

Owner of a Rental Vehicle

If you own a motor vehicle used for rental, you must keep records and supporting documents showing:

• The taxable value of the vehicle;
• A description and the value of any trade-in or FMVD of a replaced vehicle;
• Any amount of motor vehicle sales or use tax paid;
• The amount of motor vehicle rental receipts; and
• The amount of motor vehicle rental tax remitted to the Comptroller’s office.

You must keep these records for every vehicle you rent.

If you rent tax free to an exempt customer, you must attach their exemption certificate to the rental contract.

Seller

If you sell motor vehicles, you must keep complete records of each retail sale, including a complete copy of the invoice pertaining to the transaction described in the joint statement (Form 130-U (PDF)) completed by you and the buyer. The invoice must show the full sales price of the motor vehicle, plus the itemized price of all accessories attached to the vehicle.

Availability of Records

You must keep accurate records for four years from the date of a sale or rental. All records must be available for inspection and audit by the Comptroller’s office or an authorized representative.

Accounting Methods

If you keep records using a cash or accrual method, or using any generally recognized accounting basis that correctly reflects the operation of the business, you can file tax returns on that basis as long as the method used is consistent.