AUSTINJI~.TEXAS
PRICE IDANIEL
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June 5, 1951
Hon. Robert ‘S. Calvert Opinion No. V-1183.
Comptroller of Public Accounts
Austin, Texas Re: Legality of dedacting amount
of Federal Automobile Man-
ufacturers’ Teat when com-
puting State motor vehicle
retail sales tax on automo-
biles previously registered
Dear Sir:. tax free.
‘. We quote the following excerpt from your letter of Feb-
ruary 16. 1951, requesting the opinion of this office on the above
captioned matter.
“Article 7?47k and 7047k-1. Section l(a) read in
part~as follows:
” ’ * * * In the event the consideration received.
by the seller includes any taximposed by the Federal
Government,..then suCh+F*dpraLti shall be deducted
from such consideration for the purpose of com&ing
th&iiunt of tax levied by this Article upon such re;
taii s.ale.’
.._
“We have been r’equested to .advise’ when ;he Fed-
eral tax loses its identity,’ for example: A dealer re-
ceives a car from the manufacturer is charged kicf
with the Federal tax, however, this particular dmr
registers ,this ;new automobile in the name of the’Com-
pany without paying the Motor Vehicle Retail Sales T.~JK,
levied by Article, 7047k, fi1ing.a.n affidavit with-the Coun-
ty Tax Assessor-Collector stating that he had purchased
the motor vehicle for ,re-sale only and not for use,..sur-
rendering at, the same time the manufacturer’scertifi-
cate to the Tax Assessor-Collector. Aftqrwards the
dT&ex. sells this same, ,put,o~~bila~.toaa individual or
company for use, assigning the title to the purchaser.
This purchq+e.r makes applicatibq to the Asseseor-Cal-
lector for transfer of the title, and files his affidavits
for payment of the Motor Vehicle i2etaiI3ales:Tw; and
in this application deducts the amount of the Federal tax
from the total purchase price.
I
-i
Hon. Robert S. Calvert, Page 2 (V-1183)
“Is the Tax Assessor-Collector a,uthorized to
accept this application for transfer of title, and affi-
davit for the payment of the Motor Vehicle Retail Sales
Tax, with the Federal tax deducted; or was the Federal
tax ,extinguished on the first registration of this car?
“In other cases a used car dealer acquires new
cars from various sources, regis,ters them in his name
without paying the sales tax, filing an affidavit that each.
motor vehicle has been purchased for re-sale only and
not for use. IIpon the sale of such a motor vehicle to a
person or company for use an affidavit is filled out for
the purchaser’s signature to be filed with the Assessor:
Collector and to be used by the Assessor-Collector in
calculating the taxes due on the sale. In each instance
the Federal tax is deducted from the total consideration.
Should the Federal tax be deducted from the total con-
sideration paid to the used car dealer before the tax is
calculated by the Assessor-Collector? “~
Neither the certificate of title act (Article 1436-1, V.
P.G.) nor the provisions of our tegistratjon statutes .(Articles 6675a-
1 et seq, ,V.C.S.) can be ‘considered in construing this specific tax
statute. We are here considering a specific statute dealing with a
specific subject which is ,not related to certificates of title or regis-
tration.
The provisions of the motor vehicle retail sales’tax act
proper, Article 7047k, V.C.S., and of the temporary additional mo-
tor vehicle retail sales tax act, Article 7047k-1, are identical except
that the amount of the temporary additional tax, which is to be levied
only upon the sale or use of motor vehicles prior to mid~nightAugust
31, 1951, is less than the amount of the tax levied by ArticIe 7047k.
Section l(a) of ArtWe 7047k reads as follows:
“There is hereby levied a tax upon every retail
sale of every motor vehicle sold in this State, such tax
to be equal to one (1) per cent of the total consideration
paid or to be paid to the seller by the buyer, which con-
sideration shall include the amount paid or to be paid
for said motor vehicle and all accessories attached
thereto at the time of thensale, whether such consider-
ation be in the nature of cash, credit, or exchange of
other property, or a combination of these. In the event
the consideration received by the seller includes any
tax imposed by the Federal Government, then such Fed-
eral tax shall be deducted from such consideration for
the purpose of computing the amount of tax levied by
this Article upon such retail sale.”
J
Hon. Robe~rt S. Calvert, Rage 3 (V-1183)
Section 3(b) of Article 7047k reads as follows:
‘The term ‘retail sale’ or ‘retail sales’ as here-
in used shall include all sales of motor vthicles except
those whereby the purchaser acquires a motor vehicle
for the exclusive purpose of resale and not for use.”
Section 5 of Article 7047k reads, in part, as follows:’
“The taxes levied in this Article shall be collected
by the Assessor.and Collector of Taxes of the county in
which any such motor vehicle is first registered orfirst
transferred after such a sale; the Tax Collectors shall
refuse to accept for registration or for transfer any mo-
tor vehicle until the tax thereon is paid,”
It is clear from the above quoted statutory provisions
that in both of the submitted fact situations no “retail sale,” within
the meaning of Section 3(b), was made until after the first registra-, ‘.
tion of the cars. The tax levied by Section’ l(a) was levied.uR,op.jhe
second sale of each car since the second sale was a “r.etail sale”
within the meaning of Section 3(b). This being so; we are oft the
opinion that in computing the tax due on these “retail sales” the
amount of the Federal Automobile Manufactur,ers Tax, which tax
was included in the consideration. received by the seller, as evi.t,
dented tiy the buyer’s affidavits (Article 7047k, Sec. 5a). was prop-
erly deducted from the total consideration received by the seller.,
.Our conclusion is consistent with the obvious legisla-
tive purpose in providing for a deduction of Federal taxes. The
Legislature ,was undoubtedly aware of the fact. that the amount of
,the Federal excise tax on a sale by the manufacturer of an. automo-
bile would be included in the consideration paid. by the first buyer
to purchase the car for his own use. The Legislaturr avoided im-
posing a tax upon a tax by allowing a deduction of the amount of the
,Federal tax before computing the amount of the State sales tax. The
preceding. sales which occurred in the submitted fact situations do
not affect the incidence of the tax on the first “retail sales” or the
right to deduct the amount of the Federal tax in the process of its
computation.
We understand that it has been your consistent depart-
mental construction that the rigbt to deduct the amount of the Fed-
eral tax from the total consideration paid is accorded only to the
first buyer of a motor vehicle for use. The continued acquiescence
of the Legislature in your administrative interpretation supports
this view, and it is our opinion the statute is properly so interpreted.
Hon. Robert S. Calvert,‘Page 4 (V-1183)
SUMMARY~
In computing the retail sales tax imposed by
Articles 7047k and 7047k-1, the amount of the Feder-
al Automobile Manufacturer’s Tax which was included
in the consideration paid the seller by the first buyer
of an automobile for his own use may be deducted from
the total consideration paid, despite the fact that the
automobile had been previously registered tax free by
the seller who,had purchased it for purposes of resale
only.
Yours very truly,
PRICE DANIEL
APPROVED:
~Jess,e P. Luton, Jr.
Reviewing Assistant
Charles D. Mathews
First Assistant
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MMC/mwb
Untitled Texas Attorney General Opinion
Combined Opinion