December 3, 1973
The Honorable Robert S. Calvert Opinion No. H- 173
Comptroller of Public Accounts
State Finance Building Re: Various questions con-
Austin, Texas cerning the application
and interpretation of
Articles 6. 01, et seq.,
Vernon’s Texas Civil
Statutes, Taxation-
’ General, the Motor
Dear Mr. Calvert: Vehicle Sales and Use Tax
Your opinion request raises several questions relative to the Motor Vehicle
Retail Sales and Use Tax (Articles 6.01, et seq., Vernon’s Texas Civil Statutes,
Taxation-General).
You advise us that on November 16, 1971, an entity we shall call the Mar-
keting Corporation took title to a 1972 automobile which it had acquired from
the manufacturer. The principal, if not the only, business of the Marketing
Corporation was to transfer possession of automobiles to licensed dealers for
leasing and rental to the general public. Marketing Corporation had a con-
tract covering such transactions with another company which we shall call Sales,
Inc., No. 1.
From November 16, 1971, to June 13, 1972,. title to the 1972 automobile
remained in Marketing Corporation, although Sales, Inc. , No. 1, had possession
and was leasing and renting the automobile to the general public.
On June 13, 1972, Marketing Corporation assigned title to the automobile
to Sales Inc., No. 1, which, on the same date, assigned it to a third company
we shall call Sales, Inc., No. 2.
Sales, Inc., No. 2, in turn sold the automobile at retail to a bona fide pur-
chaser.
On June 14, 1972, Marketing Corporation applied for a title to a new auto-
mobile, listing the 1972 automobile as a trade-in and seeking to deduct its value
from the value of the new automobile in determining the sales tax, if any, tha
was due under the provisions of $ D(3) of Article 6. 03, V. T. C. S , Taxation-
General, which provides:
p. 795
The Honorable Robert S. Calvert, page 2 (H-173)
“Any person purchasing motor vehicles for
resale at retail who has obtained a certificate of
title to a motor vehicle which he uses for personal
or business purposes may deduct the fair market
value of such vehicle from the ‘total consideration’
when such person purchases another motor vehicle
upon which he obtains a certificate of title as a sub-
stitute vehicle for personal or business use and the
original vehicle is offered for sale at retail. ”
Your first question asks whether the Assessor-Collector has authority to
take a sales affidavit without the signature of an appropriate officer of Mar-
keting Corporation.
Article 6. 05 requires that each transaction involving the sale or exchange
of a motor vehicle be accompanied by an affidavit from the purchaser and the
seller outlining the terms of the transaction. The statute provides:
“Where any party to a sale, exchange, even
exchange or gift is a corporation, the president,
vice president, secretary, manager or other
authorized officer of the corporation shall make
the affidavit for the corporation. ”
Since the Marketing Corporation is a party to two of the transactions described
in your letter, we believe that, in connection with these two transactions, the
affidavit must be signed by “the president, vice president, secretary, manager
or other authorized officer of the” Marketing Corporation, in conformance with
the ewct wording of the statute and that the Assessor-Collector may not accept
it without such signatures.
Your second question inquires:
“2. Where title is taken in the name of [the
Marketing Corporation], does Article 6. 03, Section
D( 3) apply on a replacement value? ”
We assume that when you refer to title being taken in the name of the Marketing
Corporation, you had in mind the second vehicle that the Marketing Corporation
acquired.
p. 196
The Honorable Robert S. Calvert, page 3 (H-173)
Section D( 3) of Article 6. 03 which we have quoted above, provides for a
deduction from the total consideration used to compute the sales or use tax,
It was enacted in 1971 by the 62nd Legislature and has not been the subject of
judicial interpretation.
Your letter indicates that the Marketing Corporation did not purchase the
vehicle for resale at retail ; that it did not use the vehicle for personal or business
purposes; that the second vehicle was not acquired as a substitute vehicle for
personal or business use; and that the original vehicle was not offered for sale
at retaii. Assuming these facts to be true, the deduction provided in the, statute
would not be applicable.
Your third question, completely separate from the factual situation outlined
in your letter, asks:
“3. Where title is held in the name of the dealer
or seller and is used unregistered in accordance with
Article 6686, Revised Civil Statutes of Texas, for ref-
erence Article 6.03, Section B, does Attorney General
Opinion No. M-141 apply on motor vehicles that are used
by the dealer, his employees, and members of family.
Also, does it apply to registered vehicles used before
sale from someone other than the dealer. ”
Article 6. 03B defines the term “retail sale” as follows:
“The term ‘retail sale’ as herein used shall
include all sales of motor vehicles except those
whereby the purchaser acquires a motor vehicle
for the exclusive purpose of resale and not for use
and shall not include those operated under and in
accordance with the terms of Article 6686, Revised
Civil Statutes of Texas, 1925, as amended, ”
Attorney General opinion No. M-141 construed this provision in October,
1967, before the reference to Article 6686, V. T. C. S. , was added by the 60th
Legislature, effective October 1, 1968. Article 6686, V. T. C. S. , pertains
to dealers’ licenses and regulates those instances when automobile dealers
may operate unregistered vehicles through the use of such dealers’ temporary
licenses.
p* 797
The Honorable Robert S. Calvert, page 4 (H-173)
Some of the conclusions in Attorney General Opinion M-141 are affected
by this amendment. For instance, the conclusion in the opinion that “demon-
strators” are taxable to dealers would no longer be correct because 5 4(a) of
Article 6686 allows unregistered vehicles to be used as demonstrators.
However, with specific reference to your question, the last paragraph
of $4 of Article 6686 provides in part: “Such tags shall not be used to operate
vehicles for the personal use of a dealer or his employees. ‘I
Of course, as pointed out in Attorney General Opinion M-141, whether a
vehicle is being used personally is a question of fact. However, it is plain that
a vehicle employed for the personal use of the dealer, his employees, his or
their families, or of someone other than the dealer is subject to the tax. Such
use with dealers’ licenses is prohibited by the above-quoted provisions of
Article 6686. This would be true even though the same automobile is also being
used for proper purposes specified in Article 6686 for unregistered vehicles.
Again, as in Attorney General Opinion M-141, we suggest that you clarify
these matters by rules and regulations promulgated under the authority of
Article 6.02, V. T: C. S. , Taxation-General.
SUMMARY
1. When a corporation sells or exchanges a motor
vehicle, the sales affidavit required by Article 6. 05, V, T. C. S.,
Taxation-General, must be executed by an authorized officer of
the corporation.
2. A corporation that does not purchase motor vehicles
for resale at retail but is engaged in wholesale leasing and
sales of automobiles is not entitled to deduct the value of such
automobiles as provided in Article 6. 03 D(3), V. T. C. S. , Taxation-
General, when it sells a leased automobile and acquires another
for the same purpose.
3. An automobile devoted wholly or partially to the personal
use of a dealer, a dealer’s employees or their respective families,
p. 798
. . .
The Honorable Robert S. Calvert, page 5 (H-t73)
or to someone other than the dealer is subject to the
Motor Vehicle Sales and Use Tax,
Very truly yours,
*
JOHN L. HILL
Attorney General of Texas
APPRQVED:
DAVID M. KENDALL, Chairman
Opinion Committee
. .. , I 1