The administrative law judge determined that the frac trailers were not specialized equipment but were trailers because the frac trailers were designed to also carry separate property in addition to performing hydraulic fracturing. For example, the trailers included fuel tanks and racks to carry high-pressure iron and discharge hoses.
Citing 2006 Texas administrative hearings decisions 41,202 and 42,326, Comptroller staff argued that the frac trailers were not motor vehicles because their "primary" function was not to transport separate property on the highway. The administrative law judge rejected this argument, reminding staff that neither the law nor the Comptroller's regulation regarding specialized equipment (34 TAC Sec. 3.88) included this requirement.
Taxpayers who have paid sales tax on leases of similar equipment may be entitled to sales tax refunds.
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