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Motor Vehicle Tax Manual

Maintained by the Audit Division (Revised 04/2008)

 

CHAPTER 1 - INTRODUCTION

General Information

Source Documents

Audit Areas

Application for Texas Certificate of Title/Form 130U

     Form 130U Examples

Tax Assessor-Collector's Receipt - Title Application Receipt

     Title Application Receipt, Example

     Form 31- RTS - Example

Other Documents

Definitions

Total Consideration

Tax Imposed

Standard Presumptive Value

General Collection Procedures

Documentary Fees

Rebates

Lien Assumptions

Recording and Releasing Liens

Motor Vehicle - Definition

Taxability

Example 1, Accessories Attached at the Time of Sale

Example 2, Separately-Purchased Motor Vehicle and Accessories

Example 3, Accessories Added to a Completed Truck

Example 4, Accessories Purchased to Combine into a Motor Vehicle

Mopeds and Motorcycles

Off-Road Vehicle

Moveable Specialized Equipment

Modified Motor Vehicles

Taxability (Modified Motor Vehicles)

Effect of Titling and Registration

Examples of Moveable Specialized Equipment

House Trailer - Definition

Travel Trailer - Definition

Mobile Office - Definition

Bunkhouse - Definition

Taxability (House/Travel Trailer, Mobile Office, Bunkhouse)

Trailers and Semi-trailers

Gift Tax

New Resident Tax

Credit

Former Texas Resident

Texas Resident Temporarily Out-of-State

When the New Resident Tax Does Not Apply

Dealer Plates

Manufacturer Plates

 


General Information

The motor vehicle sales and use tax is levied on:

  • The retail sale of every motor vehicle sold in Texas

  • The even exchange of vehicles

  • Motor vehicles purchased at retail sale outside the state and brought into the state and used on the public highways

  • Vehicles brought into the state by new residents

  • The gift of a motor vehicle

Motor vehicle sales and use tax is collected by the tax assessor-collector in each county at the time of registration of the vehicle. The registration and payment of the tax is the obligation of the purchaser of a motor vehicle. However, since January 1, 1996, a seller who is a licensed motor vehicle dealer must collect the tax from the purchaser and remit it to the tax assessor-collector.

The Comptroller's Office:

  • Has general supervision over the motor vehicle tax

  • Is responsible for furnishing rules and regulations to the county tax assessor-collectors to assure the tax can be consistently applied.

The major difference between auditing for limited sales tax and motor vehicle sales tax is that a return is not filed by either the seller or the purchaser of a motor vehicle.

Instead, a joint affidavit, Texas Department of Transportation Form 130U (Application for Texas Certificate of Title) is completed and signed by both the buyer and seller for each retail sale.

 

Note:

A Texas licensed motor vehicle dealer may purchase vehicles for resale without an Application for Texas Certificate of Title but must issue a Texas Motor Vehicle Sales Tax Resale Certificate to the selling dealer.

 

MOTOR VEHICLE RESALE CERTIFICATE

Texas Motor Vehicle Sales Tax Resale Certificate


Source Documents

The Application for Texas Certificate of Title (Form 130U) shows the title application information, the amount of tax due, and is also used to document tax-exempt transfers. 

 

Beginning in November 1994, the Texas Department of Transportation began a phased-in on-line registration system. This on-line registration system is explained further in the chapter dealing with tax assessor-collectors.


AUDIT AREAS

The major categories of taxpayers of motor vehicle tax audits are as follows:

 

Motor Vehicle Dealers and Purchasers

Prior to January 1, 1996:

If the dealer understates the taxable value on the affidavit, collects more tax than was due, collects more tax than was reported, and/or fails to furnish proper documentation to the customer, the dealer will be held liable for tax, penalty and interest.

 

If a purchaser fails to register a vehicle from a cash sale, pays less tax than was due, or registers the vehicle in another state to reduce the tax liability, the purchaser will be held liable for tax, penalty and interest.

 

On or after January 1, 1996:

Since a licensed motor vehicle dealer must collect the tax from the purchaser and remit it to the tax assessor-collector, a dealer will be held liable for tax, penalty, and interest due to discrepancies on the affidavits.

 

County Tax Assessor-Collectors

The Comptroller's office periodically reviews the tax receipts of each county to determine that all tax collected is being paid. Tax assessor-collectors will be held liable for unpaid tax, but penalty or interest will not be assessed.


Application for Texas Certificate of Title/Form 130U

This form is required by both the Motor Vehicle Division of the Texas Department of Highways and Public Transportation and the Comptroller's Office whenever a title application is requested for a motor vehicle. This joint affidavit is executed by both the previous owner and the new owner of a motor vehicle.

A Form 130U must be completed for all:

  • Retail sales between a seller and a purchaser

  • Even trades

  • Gifts

  • Motor vehicles purchased at retail sale outside Texas for use in Texas

  • Motor vehicles brought into Texas by new Texas residents.

  • Exempt Sales

In the first three cases above, the previous owner and the new owner must sign a statement that all facts on the affidavit are true. Only the signature of the owner is necessary on the final three cases.

The Form 130U will provide the:

  • Assessor-Collector's transaction ID#

  • Texas dealer number of seller, if applicable

  • Vehicle description

  • License plate number

  • Lienholder information, if applicable

  • Sales price

  • Trade-in value and description, if applicable

  • Amount of tax due

  • If an exempt transaction, reason for exemption

  • Seller's address and signature

  • Purchaser's address and signature

The Form 130U is used by a county tax assessor-collector to determine the tax due and is the source document used to complete the tax receipt which is issued to the new owner. The title applications are forwarded to the Motor Vehicle Division of the Texas Department of Transportation daily. The Department of Transportation processes and issues the titles, and sends the source documents to a contracted company to be microfilmed. The microfilm record includes both the Form 130U and the tax receipt and is retained by the Motor Vehicle Division of the Texas Department of Transportation.

 

What if the New Buyer of a Used Vehicle Will not Go to the County Tax Office?

In many instances of sales of used motor vehicles between individuals, the new buyer is unwilling to go to the county tax office to register the vehicle in his/her name and to pay the applicable motor vehicle taxes.  The previous owner should submit a written vehicle transfer notification to the Texas Department of Transportation (TxDot Form Number VTR-345, Revised 7/2007).  TxDot will update the vehicle record to show that the vehicle was sold and the date that it was sold.  Effective January 1, 2008, TxDot will establish procedures that permit the previous owner to submit the notice of transfer through TxDot’s Internet website.  Also effective January 1, 2008, the previous owner must submit the notice of transfer before the 30th day after the date the new buyer took possession of the vehicle.

 

TxDot recommends submitting this form even if the vehicle was sold or traded in to a motor vehicle dealer.

 

 

Motor Vehicle Tax Manual - Application for Texas Certificate of Title


Application for Texas Certificate of Title

 

Tax Assessor-Collector's Receipt - Title Application Receipt

The Registration and Title System (RTS) of the Texas Department of Transportation allows a motor vehicle title application to be directly entered by county tax assessor-collector employees.  The application information is taken from the Form 130U.  The vehicle information obtained from the Form 130U is entered onto the RTS System, and the motor vehicle sales and use taxes are collected by the employee.  A multi-copy RTS receipt is printed and given to the purchaser.  On occasion, such as when the on-line system is down, the tax assessor-collector will issue a handwritten receipt, Form 31-RTS. However, once the system is back on-line, the information is entered onto the system, and a computer-generated receipt is printed. This computer-generated receipt is mailed to the purchaser.

 

The Title Application Receipt is a numbered receipt issued by a county tax assessor-collector. The receipt serves as both a tax receipt and as a receipt for title application. These RTS receipts are identified by transaction ID numbers and are issued state-wide as needed.  A central computer in Austin generates the numbers as the various counties access them.  The transaction ID number contains seventeen digits.

 

Example:

101 361 35926 145032

 

Breakdown:

  • 3-digit county code
  • 3-digit workstation ID
  • Gregorian date (number of days since 01/01/1900)
  • Military time (hour, minute, and second)



Information contained on a Title Application Receipt includes:

  • Purchaser's name and address

  • Description of the vehicle registered

  • Lienholder's information, if applicable

  • Date the receipt is issued

  • County in which the receipt is issued

  • Name of the tax assessor-collector

  • ID# of the deputy issuing the receipt

  • Previous owner's name

  • Sales price

  • Trade-in allowance

  • Amount of tax collected

An example of a Title Application Receipt follows:

Title Application Receipt, Example

COUNTY: TAC NAME:

STICKER NO: 6508953WX             DATE: 08/21/2006        EFFECTIVE DATE: 08/21/2006
PLATE NO: TTL30P                  TIME: 9:29AM            EXPIRATION DATE: 7/2007
DOCUMENT NO: 04630335296092448    EMPLOYEE ID: 0103940    TRANSACTION ID: 04630335296092448
 
OWNER NAME AND ADDRESS
 
 
 
 
                                   REGISTRATION CLASS: PASSENGER-LESS/EQL. 6000
                                   PLATE TYPE: PASSENGER PLT
                                   STICKER TYPE: WS
 
 
VEHICLE IDENTIFICATION NO: 1FALP6539SK206008       VEHICLE CLASSIFICATION: PASS
YR/MAKE: 2005/FORD  MODEL: CGL  BODY STYLE: 4D    UNIT NO:
EMPTY WT: 3400    CARRYING CAPACITY: 0       GROSS WT: 3400   TONNAGE: 0.00  TRAILER TYPE:
BODY VEHICLE IDENTIFICATION NO:                         TRAVEL TRLR LENGTH: 0
PREV OWNER NAME: BLUEBONNET MOTORS INC     PREV CITY/STATE: NEW BRFLS, TX
 
INVENTORY ITEM(S)              YR
UNIVERSAL WINDSHIELD STKR      2007
PASSENGER PLT                               FEES ASSESSED
                                            TITLE APPLICATION FEE          $        13.00
VEHICLE RECORD NOTATIONS                    SALES TAX FEE                  $       754.38
ACTUAL MILEAGE                              UNIVERSAL WINDSHIELD STICKER   $        58.80
SPECIAL EXAMINATION REQUIRED                CNTY ROAD BRIDGE ADD-ON FEE    $        10.00
                                                              TOTAL        $       836.18
                                                    METHOD OF PAYMENT AND PAYMENT AMOUNT:
                                                           CHECK #6580     $       836.18
 
 
                                                             AMOUNT PAID   $       836.18
                                                             CHANGE DUE    $         0.00
ODOMETER READING: 16056   BRAND: A                    SALES TAX CATEGORY:  SALES/USE
OWNERSHIP EVIDENCE: OUT-OF-STATE TITLE
1ST LIEN           DATE: 07/31/2006                           SALES PRICE  $    12,070.00
SAN ANTONIO CREDIT UNION                               TRADE IN ALLOWANCE  $         0.00
P O BOX 1356                                               TAXABLE AMOUNT  $    12,070.00
SAN ANTONIO, TX 78295-1356                                 SALES TAX PAID  $       754.38
                                                   OTHER STATE TAX PAID -  $         0.00
                                                              TAX PENALTY  $         0.00
2ND LIEN                                                   TOTAL TAX PAID  $       754.38
                                        BATCH NO: 3033529601       BATCH COUNT:  3
 
3RD LIEN
 
 
                               THIS RECEIPT TO BE CARRIED IN ALL COMMERCIAL VEHICLES.


VTR-500-RTS (DHT 144625)(REV. 3/96)

Form 31-RTS, Example

This is an example of a tax receipt issued when the RTS System is offline.

Example of Form 31RTS


Other Documents

The following source document is also available, during a motor vehicle tax audit, for the auditor to use:

Title History

The title history can be obtained from the Motor Vehicle Division of the Texas Department of Transportation. It shows all the title activity on a particular vehicle beginning with a manufacturer's statement of origin (MSO), or the first titling of a vehicle brought into this state. Included in a title history are copies of:

  • Titles issued showing assignments from one owner to another.

  • Application for Title (Form 130-U)

  • Lienholder information.

  • Title Application Receipt

To order title histories, complete a " Request for Texas Motor Vehicle Information " (TxDot Form # VTR-275) and attach an Excel spreadsheet with a list of vehicles.  This list must include:

  • The purchaser’s name
  • Vehicles VIN number
  • Year/make/model

 

Fax the form and the Excel spreadsheet to:

            Rachel Lindley, Supervisor

            Department of Transportation

            Vehicle Titles & Registration

            Fax:      (512)465-3034

            Phone:  (512)465-7961 (Direct Line)

 

Note:

The TxDot Form VTR-275 can be downloaded from the Texas Department of Transportation website:  http://www.dot.state.tx.us/forms/vehicle_titles.htm


Definitions:

Assigned Title

When the previous owner of a motor vehicle (or his power of attorney) has signed the back of a title and indicates the name the person to whom the vehicle is being transferred.

Certificate of Title

The certificate of title is issued through the Motor Vehicle Division of the Texas Department of Transportation. A blue copy is the original and becomes the "owner's" copy when the vehicle is paid off.

Dealer

The term dealer, as used in this tax guide, means a person, firm, or corporation licensed under Tex. Rev. Civ. Stat. Ann. art. 6686 for the purpose of regularly and actively engaging in the business of buying, selling, or exchanging motor vehicles.

Draft

A means of securing payment for the seller. The negotiable title or the lienholder's copy of the Form 31 receipt showing the name of the lienholder is enclosed in the draft envelope. Upon approval, the lienholder directs a financial institution to pay the amount to the seller. The draft is drawn up by the seller who takes it to his bank, who then directs the draft to the lienholder's bank for payment. Drafts are handled similar to checks except credit is not given until the draft is accepted by the payor.

Floor Plan

A method by which a dealer finances his inventory of motor vehicles. The dealer is required to pay only a percentage of the cost of a vehicle with a financial institution providing the balance. The financial institution is paid when a vehicle is sold.

Franchised Dealer

A dealer who holds a franchise with a motor vehicle manufacturer to sell a particular make of car, such as Buick, Chevrolet, or Toyota.

Holdback

A reduction of a vehicle's cost to the dealer, which is held by the original manufacturer until the end of the year. The invoice will show the dealer cost plus the amount of holdback. The dealer must pay the dealer cost when the invoice is due, but eventually will receive the amount of holdback.

Independent Dealer

Usually a used car dealer.

Manufacturer

The term manufacturer means a manufacturer of motor vehicles.

Manufacturer's Statement of Origin (MSO)

A document generated by the original manufacturer of a motor vehicle showing the date manufactured, the serial number assigned to the vehicle, and other pertinent information pertaining to the vehicle. Think of it as a "birth certificate" for a motor vehicle. The MSO is surrendered to the county tax assessor when application for title is made. This is also referred to as a manufacturer's certificate of origin (MCO).

Negotiable Title

A title that is free of liens or other encumbrances and can be freely transferred.

Non-Negotiable Title

A duplicate of a negotiable title with the words "Non-Negotiable" printed on the face. If there is a lien on a vehicle, the lienholder gets the negotiable title, and the owner gets the non-negotiable title, which serves to show ownership, but which cannot be transferred.

Open Title

When the previous owner of a motor vehicle (or his power of attorney) has signed the back of a title but has not filled in the name of the person to whom the vehicle is to be transferred.

Overallowance

When stating a price to a customer, a dealer may inflate both the sales price and the trade-in allowance by the same amount. The transaction normally will be booked at the lower amounts. We are concerned only with the taxable difference, which should be the same in both instances.

Payoff

The net unpaid balance on a motor vehicle due to a lienholder.

 

Related Finance Company (RFC)

A related finance company is a separate entity set up by a seller-finance dealer that will purchase the accounts receivables (notes) from the dealer.  In order for the sale of the notes not to trigger acceleration of the unpaid taxes due, the ownership of the qualifying related finance company must be at least 80 percent identical as the ownership of the dealer who sells the notes.

 

Retail Sale

A retail sale is the transfer of a motor vehicle in return for consideration, including the assumption of a lien on a vehicle, by a purchaser. However, a retail sale has NOT occurred when a purchaser acquires a motor vehicle for the exclusive purpose of resale. (Example: A motor vehicle purchased at an auction by a dealer who is holding that vehicle exclusively for resale. This is not a retail sale.)

A vehicle operated with a dealer tag in accordance with Tex. Rev. Civ. Stat. Ann. art. 6686 is not considered a retail sale.

Roll-Out (Turn-Key)

The total amount paid by the customer, including tax, title, license fee, and documentary fees.

Sale

A sale is the transfer of a motor vehicle in return for anything of value (consideration) including the assumption of a lien on a vehicle by a purchaser.

A sale includes installment and credit sales, and exchanges for property and/or for money.

Seller-Finance (Tote the Note) Dealer

A dealer who finances the sales of motor vehicles from his inventory.

 

 

Stock Number

The inventory control number assigned to new and used vehicles by the dealer.

Third-Party Trade-In

When a customer purchases a new vehicle and sells his used vehicle directly to a third party rather than trading the vehicle to the dealer. The affidavit lists the used vehicle as a trade-in towards the purchase price of the new vehicle, thus reducing the customer's tax liability. This type of trade-in is not allowed for tax purposes, and can not reduce the amount subject to tax.

Title Application Receipt

                        Receipt issued by county tax assessor-collectors which serves as both proof of title application and registration and payment of the motor vehicle tax.

 

Trade-In Allowance

If a motor vehicle is traded to the seller, the trade-in allowance is the amount the seller allows as credit against the purchase price of the new vehicle. Tax is computed on the trade difference without considering any payoff.

T,T,L

Tax, Title, and License

VIN

Vehicle Identification Number, which is unique to every motor vehicle.

Wash-Out

This occurs when a trade-in on a new vehicle is assigned the stock number of the new vehicle prefixed or suffixed by the letter "A". If a vehicle is traded in when "A" is sold, that trade-in will be assigned the same number plus "B" instead of "A". This goes on until there is no trade-in. This system can aid in determining if a trade-in existed and subsequent disposition of the trade-in.

Wholesale Sale

Sale by a dealer to another dealer for resale.

 


Total Consideration

 

Total consideration is the total amount paid or to be paid for a motor vehicle and all accessories that are attached to it at the time of the sale.

 

The term "total consideration" includes anything given as payment and could include a boat, airplane, land, livestock, labor, or the assumption of a lien.

 

Motor vehicle tax is imposed on the total consideration paid or to be paid for a motor vehicle.

 

Total Consideration Includes...

The amount of the sales price of the motor vehicle without deducting for:

  • the cost of the motor vehicle,

  • the cost of materials, labor, service, interest, loss, or any other expense ("Dealer Prep"),

  • the cost of transportation of the motor vehicle prior to its sale or purchase, and

  • any manufacturer's or importer's excise tax imposed on the motor vehicle by the United States.

 

Total Consideration DOES NOT Include...

The following can be deducted from the selling price for purposes of computing motor vehicle tax:

  • cash discounts allowed on a sale (this does not include a cash down payment, a cash payment for the vehicle, or cash insurance proceeds toward the purchase of a vehicle)

  • sales price of a motor vehicle returned by a customer when the full sales price is refunded either in cash or credit

  • the amount charged for labor or services rendered in installing, remodeling, or repairing the motor vehicle sold

  • the amount charged for finance charges, carrying charges, service charges, or interest from credit extended on sales of motor vehicles under conditional sales contracts or other contracts providing for deferred payments of the purchase price

  • the value of a trade-in, as all or part of the consideration for the other motor vehicle

  • documentary fees

  • charges for transportation of the motor vehicle after the sale

  • Federal Retail Sales Excise Tax (imposed on heavy trucks)

  • Motor Vehicle inventory tax

  • rebates

  • grants issued by participating counties to qualifying low-income people for the replacement purchase of a motor vehicle (see below)

  • fee charged by a seller of a motor vehicle for a debt cancellation agreement.

 

Grants for the Accelerated Retirement of Certain Vehicles

Effective June 8, 2007, participating counties may offer qualifying low-income people a grant of up to $3500 for the replacement purchase of a motor vehicle from a dealer participating in the grant program.  The grants are to assist qualifying low-income people to replace a pre-1996 vehicle that would have failed the EPA Final Acceleration Simulation Mode Standards emission test, or other criteria established by the Texas Commission on Environmental Quality.  The grants are not part of the total consideration for the purchase of qualifying vehicles and are, thus, not subject to Texas motor vehicle sales tax.  Participating dealers must document the amount of the grant on the title application and in their accounting records.

 

Debt Cancellation Agreement

The Finance Code was amended, effective September 1, 2009, to allow a seller of a motor vehicle to charge a purchaser a fee for a debt cancellation agreement. If the vehicle sold is later destroyed or stolen, the purchaser is no longer under any obligation to pay any outstanding balance due on the vehicle. This fee is not subject to motor vehicle sales and use tax.


Tax Imposed

§152.021 and §152.022

(b) The tax is 6 ¼ percent of the total consideration.

 

Historical Tax Rates:

07-01-71 through 07-31-84                 4.00%

08-01-84 through 08-31-87                 5.00%

09-01-87 through 08-31-91                 6.00%

09-01-91 through Present                     6.25%

 

In addition, there is a surcharge on diesel-powered motor vehicles with a gross vehicle registered weight exceeding 14,000 pounds (§152.0215.  Texas Emissions Reduction Plan Surcharge).

  • Effective January 3, 2002, a 2.5 percent surcharge is assessed on model year vehicles 1996 and earlier on vehicles purchased in Texas only
  • Effective July 1, 2003, there is a two-tier surcharge on both new and used vehicles
    • 2.5 percent surcharge on model year vehicles 1996 and earlier — assessed on both vehicles purchased in Texas and purchased out-of-state
    • 1 percent surcharge on model year vehicles 1997 and later — assessed on both vehicles purchased in Texas and purchased out-of-state
  • Effective September 1, 2005, the surcharge does not apply to a non-commercial recreation vehicle

 

The surcharge is effective until September 30, 2010, when it is scheduled to expire.  The surcharge may not be offset by sales or use tax paid to another state.

Effective June 17, 2011, a person who registers or renews the registration of a motor vehicle in Texas may contribute $5 or more to the Parks and Wildlife Department.

 

 

Standard Presumptive Value

Standard presumptive value is the private-party transaction value of a motor vehicle, as determined by the Texas Department of Transportation based on an appropriate regional guidebook of a nationally recognized motor vehicle value guide service.  A private party transaction is a retail sale of a motor vehicle in which neither the buyer nor the seller of the motor vehicle is a motor vehicle dealer.

 

Effective October 1, 2006, the county tax assessor-collector will determine the tax due of a used vehicle based on one of the following when the transaction is between individuals:

  • The purchase price of the used vehicle, if the purchaser paid is at least 80 percent or more of the standard presumptive value for the vehicle;
  • 80 percent of the standard presumptive value for the used vehicle, if the purchaser paid less than 80 percent of the standard presumptive value for the vehicle; or
  • The appraised value of the used vehicle, if the purchaser paid less than 80 percent of the standard presumptive value for the vehicle and provides a certified appraisal of the vehicle.

 

A purchaser who decides to provide an appraised value for the used vehicle must obtain the certified appraisal on a Comptroller-prescribed form within 20 county working days after the date of the purchase or after bringing the vehicle into Texas.  A purchaser will be able to get a certified appraisal in one of two ways:

  • From a licensed Texas motor vehicle dealer for a fee of no less than $100 and no more than $300 for a certified appraisal for a motor vehicle; no less than $100 and no more than $500 for a certified appraisal of house trailer, travel trailer, or motor home,
  • From a licensed motorcycle dealer for a fee of no less than $40 and no more than $300 for a certified appraisal of a motorcycle, or
  • From a insurance adjuster for a fee determined by the adjuster

 

The standard presumptive value does not apply to:

  • Vehicles involved in an even exchange or trade
  • Vehicles received as a gift
  • Vehicles acquired through a mechanic’s lien
  • Vehicles acquired through a storage lien
  • Abandoned or abandoned nuisance vehicles acquired under Transportation Code, Chapter l83
  • Vehicles eligible for a specialty license plate as classic motor vehicle, as provided in the Transportation Code, §504.501
  • Effective September 1, 2007, vehicles sold by a governmental entity at public auction

_____________________________________________________________________

General Collection Procedure

§152.021

(a)  A tax is imposed on every retail sale of every motor vehicle sold in this state.  Except as provided by this chapter, the tax is an obligation of and shall be paid by the purchaser of the motor vehicle.

 

§152.022

(a) A use tax is imposed on a motor vehicle purchased at retail sale outside this state and used on the public highways of this state by a Texas resident or other person who is domiciled or doing business in this state.

 

 

NOTE:

Before the motor vehicle use tax is assessed, credit is allowed for any legally imposed sales or use taxes paid by the purchaser to another state.

 

The tax assessor-collector of the county in which an application for registration or for a Texas certificate of title is made shall collect the taxes from the purchaser of the vehicle.  The motor vehicle sales tax is due by the 20th working day after the day that the motor vehicle is delivered to the purchaser.  The motor vehicle use tax is due by the 20th working day after the day that the motor vehicle is brought into Texas.  The tax assessor-collector will issue a receipt to the purchaser as proof that the taxes have been paid on the vehicle.

Effective January 1, 2012, the motor vehicle sales tax is due within 30 calendar days from the date that the motor vehicle is delivered to the purchaser. The motor vehicle use tax is due within 30 calendar days after the motor vehicle is brought into Texas. However, this does not apply to active military personnel (see below).

 

Effective January 1, 2008, if the purchaser of a used motor vehicle is a member of the

  • Armed forces of the United States,
  • A member of the Texas National Guard or of the National Guard of another state serving on active duty under an order of the President of the United Stated, or
  • A member of a reserve component of the armed forces of the United States serving on active duty under an order of the President of the United States

The taxes on the vehicle are due not later than the 60th working after the date of the receipt of the vehicle by the purchaser.

 

If the purchaser does not file the application for the vehicle and pay the applicable taxes within the allowable period, the purchaser is liable for $10 late fee to be paid to the county tax assessor-collector when the application is filed. 

 

Effective January 1, 2008, the late fee is

  • $10 if the purchaser is a motor vehicle dealer and has a general distinguishing number;
  • $25 if the purchaser is not a motor vehicle dealer.  If the application is filed after the 31st working date after the purchaser took possession of the vehicle, there is an additional late fee of $25.  In addition, the purchaser accrues an additional penalty of $25 for each subsequent 30-day period or portion of a 30-day period in which the application is not filed.

A county assessor-collector or the Texas Department of Motor Vehicles (DMV) may refuse to register a motor vehicle if the assessor-collector or the DMV receives information that the owner of the vehicle:

(1) owes the county money for a fine, fee, or tax that is past due; or
(2) failed to appear in connection with a complaint, citation, information, or indictment in a court in the county in which a criminal proceeding is pending against the owner.

 

The late transfer fee does not apply to motor vehicles eligible to be issued

  • Classic vehicle license plates under Section 504.501 of the Transportation Code, and

  • Antique vehicle license plates under Section 504.502 of the Transportation Code

 


Documentary Fees

A separately stated charge for the preparation and processing of documents relating to the transfer of a motor vehicle (usually called a "documentary fee") is not part of the total consideration paid for the motor vehicle and is not subject to motor vehicle tax.


Rebates

Both manufacturer's and dealer's rebates passed directly to the customer should be deducted from the total sales price when computing the taxable value of a vehicle. The rebates do not need to be in the form of cash, and they may be assigned to the dealer.

 

When a manufacturer makes a rebate to a selling dealer and the rebate, or any portion of it, is passed to the customer and can be identified as a rebate, it should be considered a cash discount and deducted from the sales price.

 

Factory and dealer rebates passed on to a customer should be shown on the Application for Texas Certificate and on the Title Application Tax Receipt. The amount of the rebate should be added in with any trade-in amounts and shown on the trade-in line.


Lien Assumptions

Motor vehicle tax is due from any person assuming an existing lien on a motor vehicle. The taxable amount is the amount required to release the lien (commonly called "net payoff").

 

However, if the person assuming the lien pays an amount in addition to the amount of the lien, tax is due on the total amount. A lien assumption between family members is subject to tax. Gift tax does not apply if there is a lien assumption.


Recording and Releasing Liens

A lien may be recorded or deleted by the title owner of the vehicle without motor vehicle tax being due.


WHAT IS A MOTOR VEHICLE?

A motor vehicle is a self-propelled unit designed to transport property separately from itself or persons other than the driver upon public highways.

 

In addition, trailers, semi-trailers, house trailers, and motorcycles are specifically defined as motor vehicles. The definition also includes jeeps, stingers, auxiliary axles, converter gears, and dollies.

 

A motor vehicle does not include:

  • A device moved only by human power
  • A device used exclusively on stationary rails or tracks
  • Road building machinery
  • A mobile office
  • A vehicle in which the certificate of title has been surrendered in exchange for:
    • A salvage vehicle title issued pursuant to Chapter 501 of the Transportation Code
    • A certificate of authority issued pursuant Chapter 683 of the Transportation Code (abandoned vehicle)
    • A non-repairable vehicle title issued pursuant to Chapter 501 of the Transportation Code
    • An ownership document issued by another state which is similar to any of the three titles listed above
    • A vehicle that has been declared a total loss by an insurance company pursuant to settlement or adjustment of a claim

Effective September 1, 2011, oilfield portable units are now excluded from being taxed as motor vehicles. An oilfield portable unit is a bunkhouse, manufactured home, trailer or semi-trailer designed to be used for temporary lodging or as temporary office space that is used exclusively at any oil, gas, water disposal or injection well site to provide to well site employees, contractors or other workers sleeping accommodations or temporary work space, including office space. The oilfield portable unit must not require attachment to a foundation or to real property to be functional. Qualifying oilfield portable units are subject to sales and use tax rather than motor vehicle or hotel occupancy taxes.

An oilfield portable unit would not include a travel trailer. In addition, bunkhouses, trailers, semi-trailers and manufactured houses used anywhere other than at a well site for sleeping accommodations or work space continue to be subject to motor vehicle, hotel occupancy, and/or sales tax as applicable.

 

Accessories Attached to a Motor Vehicle
Accessories include virtually any item that is not a motor vehicle and that can either be attached to a motor vehicle or combined with other parts to make a motor vehicle.

 

An accessory can be an item such as a side-view mirror, a CB radio, or a major piece of equipment such as a cement mixer or an oil-well-servicing unit.

 

Taxability
Motor vehicle tax is due on the consideration paid or to be paid for a motor vehicle, including all accessories attached at the time of sale.

 

A motor vehicle and accessories are sometimes purchased separately, but are combined before the vehicle is actually registered and tax is assessed. To determine the amount of tax due on a motor vehicle, it is necessary to determine what accessories were attached to the motor vehicle at the time of the sale.

 

Several combinations of circumstances can occur when a motor vehicle or accessories are purchased. Each of these combinations and the resulting tax consequences is discussed on the following pages.


Example 1

ACCESSORIES ATTACHED AT THE TIME OF SALE

When a motor vehicle is purchased with accessories attached to it, motor vehicle tax is due on the total selling price.

A purchaser orders a fully-assembled truck, with accessories attached.

Example 1-1

A purchaser pays motor vehicle tax on the fully-assembled truck and all attached accessories.


Example 2

SEPARATELY-PURCHASED MOTOR VEHICLE AND ACCESSORIES

When a buyer purchases a motor vehicle and makes a separate purchase of accessories, motor vehicle tax is due on the selling price of the motor vehicle. Limited sales and use tax is due on the selling price of the accessories. It doesn't matter if the motor vehicle and the accessories are purchased from different sellers or from the same seller at different times.


A taxpayer purchases a truck chassis and a truck body from separate suppliers and assembles the truck or has it assembled.

Example 1-2

A taxpayer pays motor vehicle tax on the truck chassis and limited sales and use tax on the truck body.


Example 3

ACCESSORIES ADDED TO A COMPLETED TRUCK

 

A taxpayer purchases accessories to add to a completed truck on which motor vehicle tax has already been paid.

Example 1-3

A taxpayer pays Limited sales and use tax on the purchase of the accessories.

 

NOTE:

If the motor vehicle is sold after accessories have been attached, motor vehicle tax is due on the total selling price (including the accessories).


Example 4

ACCESSORIES PURCHASED TO COMBINE INTO A MOTOR VEHICLE

When parts and accessories are purchased to be combined into a motor vehicle and no single part or accessory is a motor vehicle, motor vehicle tax is not due when the builder initially titles the motor vehicle. A motor vehicle built from parts is commonly called a "home-made" or "shop-made" motor vehicle.

Example 1-4

The taxpayer pays Limited sales and use tax on each part or accessory ordered to build a motor vehicle. Motor vehicle tax is not due when the taxpayer (builder) initially titles the truck.

 

Note:

The only time motor vehicle tax is not due on a homemade motor vehicle is when the vehicle is initially titled by the person who actually built it. Once a vehicle has been titled or registered by the person who built it, motor vehicle tax is due on all subsequent sales.

 

Motor vehicle tax is due from the person who custom orders a motor vehicle to be built because someone else is the actual builder. However, no motor vehicle tax is due when an individual purchases component parts and then hires another person to assemble them into a motor vehicle.


 

Mopeds and Motorcycles

A moped is a motor-assisted bicycle which can be propelled either by human power or by a motor with a capacity of less than 60 cubic centimeters piston displacement, or by both. A moped has a maximum speed of 20 miles per hour.

A motorcycle means every motor vehicle having a saddle for the use of the rider and designed to propel itself with not more than three wheels in contact with the ground, but excludes a tractor or any three-wheeled vehicle equipped with a cab, seat and seat belt that is designed to contain the operator of the vehicle inside the cab.

An off-road motorcycle is designed primarily for use off the public streets and highways and does not meet registration and safety inspection requirements for a motor vehicle. (A common example of an off-road motorcycle is a dirt bike.)

Mopeds and motorcycles (excluding off-road motorcycles) are motor vehicles and are subject to motor vehicle tax. A Texas Certificate of Title must be issued on a moped or motorcycle even though that moped or motorcycle is not required to be registered.

An off-road motorcycle is subject to Limited sales tax.

Effective September 1, 2009, a motorcycle includes an enclosed three-wheeled passenger vehicle that:

  • Is designed to operate with wheels in contact with the ground;
  • Has a minimum empty weight of 900 lbs.;
  • Has a single, completely enclosed, occupant compartment;
  • Its manufacturer produces at least 300 similar vehicles in any calendar year;
  • Is equipped with:
    • Seats that are certified by the vehicle manufacturer to meet the requirements of the Federal Motor Vehicle Safety Standards;
    • A steering wheel to maneuver the vehicle;
    • A propulsion unit located in front of or behind the enclosed occupant compartment;
    • A seat belt for each vehicle occupant certified by the manufacturer to meet the requirements of Federal Motor Vehicle Safety Standards;
    • A windshield and one or more windshield wipers certified by the manufacturer to meet the requirements of Federal Motor Vehicle Safety Standards;
    • A vehicle structure certified by the manufacturer to meet the requirements of Federal Motor Vehicle Safety Standards;

Motorcycle Moped
MotorcycleMoped


Dirt Bike Three-Wheeled Motorcycle
Dirt BikeThree-Wheeled Motorcycle


Off-Road Vehicles

An off-road vehicle is a self-propelled vehicle designed primarily for use off the public streets and highways. Examples of off-road vehicles are:

  • golf carts

  •  fork lifts

  •  go carts

  •  race cars

  •  three wheelers

  • quad runners

  • other types of vehicles which

    • must be titled under the Texas Certificate of Title Act, but are not designed or intended by the manufacturer to meet registration and safety inspection requirements for motor vehicles

 

Off-road vehicles are subject to Limited sales tax.


Moveable Specialized Equipment

Moveable specialized equipment includes units designed and built to perform a specific function but not to transport separate property or persons other than the driver. For example, a motorized crane with a half-cab for the driver/operator is a piece of moveable specialized equipment. It is designed and built to perform a specific function and not to transport property or persons other than the operator on a public highway.

Examples of Moveable Specialized Equipment

Example 1-5

All moveable specialized equipment is subject to Limited sales and use tax.


Modified Motor Vehicles

A motor vehicle will often have accessories or equipment attached to it which significantly modify the motor vehicle, enabling it to perform a specialized function.

A motor vehicle does not lose its identify as a motor vehicle because of accessories attached to it. For example, a flat-bed truck with an oil-well-servicing unit attached remains a motor vehicle for tax purposes.

Examples of Modified Motor Vehicles

Flatbed Truck with mounted crane                                         Regular Sized Wrecker
 

Flatbed Truck with Mounted Crane                              Wrecker

 

All motor vehicles, regardless of use or accessories attached, are subject to motor vehicle tax unless specifically exempted. To determine the taxable amount paid for a motor vehicle with accessories or equipment attached, it is necessary to determine what accessories or equipment were attached to the motor vehicle at the time of the sale.

 


Effect of Titling and Registration

Whether or not a particular piece of equipment is taxed as a motor vehicle is determined by the criteria discussed in this section. Tax liability is not determined by the type of registration and titling required by the Texas Department of Highways and Public Transportation.

 

For tax purposes, it is often necessary to distinguish between nearly identical pieces of equipment with the same use. For example, some oil-well-servicing units are taxed as motor vehicles, while others are moveable specialized equipment and are subject to Limited sales and use tax. It is a unit's actual design and construction, rather than its use, which determines the applicable tax.

Flat bed trucks used to transport cranes and are motor vehicles.

If the vehicle has room to transport passengers as well as the driver, it is a motor vehicle.


House Trailer/Travel Trailer

The term house trailer includes a travel trailer, park model, and a bunkhouse.

The term house trailer does not include manufactured housing.

A house trailer is a vehicle without automotive power that is:

  • built on a permanent chassis with wheels, axles, and a towing device, and

  • designed so that it can be drawn on the highway by a motor vehicle, and

  • Designed so that it can serve as a temporary dwelling or for eating, sleeping, place of business, or place for storage wherever parked, and

  • Not designed as a year-round single family residence requiring a HUD label for manufactured housing, and

  • May consist of more than one unit which can be joined together or assembled at the location where it is parked for use, and

  • May be self-contained and/or require connection to outside utilities and plumbing

 

 

 

 

Travel Trailer

Travel Trailer


Portable Buildings and Prefabricated Buildings

Characteristics:

  • Manufactured at a location other than its intended use, and

  • Require a structure other than its own frame for support during transportation (lowboy trailer, trailer, truck, dolly, etc.), and

  • Do not qualify for a HUD label or a decal issued by the Texas Department of Labor and standards, and

  • Designed so that they can be carried from site to site and used as a dwelling, for storage, or as a place of business when placed on or attached to realty

 

An example would be a mobile office.

 

Mobile Office

Mobile Office


Bunkhouse

A bunkhouse is a house trailer designed to be used as a sleeping place for a group or crew, but not as a single-family residence.


Manufactured Housing

Characteristics:

  • Constructed on or after June 15, 1976, according to the rules of the United States Department and Urban Development
  • Built on a permanent chassis
  • Designed to be used as a year-round single family residence,
  • Set up with or without a permanent foundation system when the structure is connected to the required utilities
  • Transportable in one or more sections
  • At least eight body feet in width
  • At least 40 feet long
  • At least 320 feet square feet when erected on site
  • Includes the plumbing, heating, air conditioning, and electrical systems of the home
  • Not self-contained
  • Requires a HUD label
  • Built at a location other than the home site

 

________________________________________________________________________

Taxability

House trailers, travel trailers, and bunkhouses are subject to motor vehicle tax.

Manufactured homes are taxed under the Texas Manufactured Housing Sales and Use Tax Act and are not subject to motor vehicle tax. For more information, refer to Chapter 14.

Trailers designed to be used as an office, sales outlet, or other work place are not considered motor vehicles. Mobile offices are taxed under Chapter 151, the Limited Sales, Excise, and Use Tax.


Amount Subject to Tax

Motor vehicle tax is due on the total sales price of a house trailer including all accessories attached at the time of sale.

Transportation charges prior to the sale are taxable.

Transportation charges after the sale (transportation from a place of sale to a setup site) and installation or setup charges are not subject to the motor vehicle tax.

Tax liability is not determined by the type of registration and titling required by the Texas Department of Highways and Public Transportation.


Trailers and Semi-trailers

A trailer is a vehicle designed or used to carry its load entirely on its own structure and is drawn by a motor vehicle.

 

Example 1-6

 

A semi trailer is a vehicle designed or used in conjunction with a motor vehicle so that some part of its own weight and its load rests upon, or is carried by, another vehicle.

 

Semi-trailers include gooseneck trailers.

 

Example 1-7

 

Taxability

All trailers and semi-trailers, except farm trailers, are subject to motor vehicle tax. For more information on farm trailers, refer to Chapter 2, Exemptions.

Tax liability is not determined by the type of registration and titling required by the Texas Department of Highways and Public Transportation.


Gift Tax

A gift is any transfer of a motor vehicle in which a person receiving a vehicle does not pay any consideration.

A $10 gift tax is imposed on any gift of a motor vehicle. The tax is the obligation of the person receiving the vehicle, and is paid to the county tax assessor-collector at the time the vehicle is titled and registered.

Effective September 1, 2009, there are limits as to the transactions that qualify as gifts of motor vehicles. The vehicle must be given to or accepted from a:

  • Spouse;
  • Parent or stepparent;
  • Child or stepchild;
  • Grandparent or grandchild;
  • Sibling;
  • Guardian;
  • Decedent's estate;
  • Donated to or given by a 501(c)(3) nonprofit service organization.

All other transactions without consideration are sales of motor vehicles and are subject to the tax calculated on the vehicleís standard presumptive value.

In order to document a qualifying gift of a motor vehicle, the donor and person receiving the vehicle must complete a joint notarized affidavit of fact (Form 14-317) describing the transaction and the relationship between donor/donee. Either the recipient or donor must file the affidavit in person. A donor includes a person authorized to act on behalf of an estate in the case of an inheritance. A title service required to be licensed under the Transportation Code may not file the affidavit.

The person filing the affidavit must present a current identification document containing the personís photo. Acceptable ID is limited to one of the following:

  • A driverís license or personal ID card from Texas or another U.S. state
  • An original U.S. or foreign country passport
  • An ID card or similar form of identification issued by the Texas Department of Criminal Justice
  • A U.S. Military ID card, or
  • An ID card or document issued by the Department of Homeland Security or U.S. Citizenship and Immigration Services

The required Comptroller affidavit is shown below.

Affidavit of Motor Vehicle Gift Transfer

Form 14-317 is available on the Comptroller's Web site.


Even Trade

An even trade is the exchange of motor vehicles in which no consideration other than the exchange of the vehicles is involved.  

More than one vehicle can be exchanged for one or more vehicles if the net value to both parties remains the same. 

EXAMPLES:

  • Two vehicles traded in return for one

  • One vehicle traded in return for two

 

An exchange of a motor vehicle for a fishing boat would not qualify as an even exchange.  Motor vehicle tax would be due on the vehicle based on the fair market value of the boat.

 

 

A $5 tax is imposed on each person receiving a motor vehicle in an even trade.


New Resident Tax

A new resident tax is imposed:

  • In the amount of $90 upon any motor vehicle which is brought into Texas by a new resident and has been previously registered in the new resident's name in another state or foreign country.
  • In the amount of $90 upon any motor vehicle which has been previously leased out-of-state and subsequently brought into Texas for use upon the public highways by the lessee/new resident.
  • Effective September 1, 2005, the tax is the lesser of $90 or 6¼% of the total consideration if the vehicle brought into Texas is eligible to be issued a specialty license plate (antique vehicle).

The new resident tax is in lieu of the 6 ¼% use tax.  The tax is the new resident's obligation and is paid to the county tax assessor-collector when a vehicle is titled and registered.

If the motor vehicle has not been previously registered in the new resident's name in another state or foreign country, the use tax applies.

Credit is not allowed for motor vehicle tax paid to another state or foreign country for new resident transfers.

 

Former Texas Resident:

A former resident of Texas who moves back to Texas owes the $90 new resident tax, regardless of where the vehicle was purchased. However, the former resident would not owe any tax if documentation is provided that the motor vehicle sales tax has been previously paid on the vehicle being returned to Texas.

A Texas resident who leaves Texas, forfeits Texas residency and then returns to Texas is a new resident and would owe the $90 new resident tax on a vehicle purchased outside of Texas and previously registered to the new resident elsewhere. If a Texas resident leaves the state without forfeiting Texas residency, the resident owes the state motor vehicle use tax on any vehicle purchased outside Texas with credit given for similar tax paid to another state. When a vehicle is purchased in Texas and removed from this state because the vehicle will be titled, registered, and operated exclusively elsewhere, then the purchaser owes tax on the purchase price when returning the vehicle to Texas. Credit is given for similar tax paid to another state. When a person purchases a vehicle in Texas and pays sales tax on the purchase in Texas, no additional tax is due if the person returns to Texas with that vehicle.

 

Texas Resident Temporarily Out of State:

A Texas resident living temporarily out of state may be required to title a motor vehicle out of state on which the resident has previously registered and paid tax on in Texas. There is no liability for additional tax upon returning to Texas with the same motor vehicle. Examples are military personnel who are Texas residents and who are temporarily stationed at military bases around the world.

 

A taxpayer must present a copy of a tax receipt showing that Texas tax has been previously paid on the vehicle and then indicate on the title application that his/her Texas residency was not given up permanently, but only temporarily. Evidence of maintaining Texas residency could include continuing to vote in Texas or maintaining a Texas address.

 

When the New Resident Tax Does Not Apply:

The new resident tax does apply to a:

  • Texas resident in military service, or
  • Vehicle brought into Texas for public highway use by a person or firm already doing business in Texas, or
  • Vehicle apprehended for improper registration which is owned or operated by a person or firm domiciled or doing business in Texas, or
  • An interstate owner-operator applying for a Texas title on an apportioned vehicle

 

All of these examples are subject to the motor vehicle use tax, except (4). Interstate motor vehicles are exempt as of September 1, 1997. For more information refer to Chapter 11 - Interstate Motor Carriers.


Dealer Plates

The tax rate on dealer plates is $25.00 per year per plate.


Manufacturer Plates

At the present time there is no tax on manufacturer plates.


 

 

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