1
R-894
THE A’ITORNEY GENERAL.
‘09~TEXAS
November 24, 1947
Ron. George H. Sheppard
Comptroller of Public Accounts
Austin, Texas Opinion No. V-4 j$i
Re: The appllcablllty of the
1% motor vehicle use tax
when automobiles are ex-
changed outside Texas by
Texas residents for use
In ~the State .
Dear Sir :
You have requested the opinion of this Department
in answer to the following questions:
“You will please edvise this departTent
whether or not the 1% Motor Vehicle Use ,x should
be paid by e resident of Texas who goes outside the
State and purohases a motor vehicle, and brings It
back Into Texas for use upon our public highvays,
in the following cases:
“1. In regard to the 1% Motor Vehicle Use
Tax to be charged on motor vehicles that are pur-
chased outside of this State by a resident of the
State and brought Into Texas for use upon our pub-
lic hlghvags, a motor vehicle having a value of
$1,500.00 is evenly traded for another motor ve-
hFcle having a value of $1,500.00, and the resident
of Texas brings the motor vehicle, for which he
traded in another State, back Into Texas for use
upon our highways. Should the tax be paid?
“2. A resident of Texas trades a motor ve-
hlcle having a value of l,OOO.OO for a motor ve: ~”
hlcle havin a value of t 1,500.00, paying the&f-
ference of 8 500.00 in cash, and brings the $1,500.00
motor vehicle back into Texas for use upon our high-
vags. Must the tax be paid on the $1,500.00 motor
vehlc le?
Hon. Geo. H. Sheppard, Page 2 (no. v-439)
,
“3. The resident of Texas trades a motor
vehicle
___ having
_ _ a velue of l,OOO.OO for a motor
vehicle mvmg a value _of_ t sOO.00_ and
__. receives._
a difference of $200.00 in casn, and brings the
$800.00 vehiole back into Texas for use upon our
Must a tax be paid on the $800.00 ve-
;gps *
The answers to your questions must be governed by
the provisions of Article VI, Chapter 184, Acts of the 48th
Legislature, Regular 3esslon, 1941, page 269, known as the
“Omnibus Tax Bill” and codified as Artlole 7047k, V. C. 3.
The pertinent ,~seatlons OS the above Article are as follovs:
“Sectlon 1. (a) There Is hereby levied a tax
upon every retail sale of every motor vehicle sold
in this State, such tax to be equal to one (1) per
cent OS the total consideration paid or to be paid
to the seller by the buyer, which consideration shall
include the amount paid or to be paid SrcPsaid motor
vehicle and all accessories attached thereto at the
time OS the sale, whether such consideration be in
the nature of cash, credit, or exchange of other prop-
erty, or a combination OS these. In the event the
consideration received b7 the seller Includes any
tax imposed by the Federal Government, then such
Federal tax shall be deducted from such consldera-
tlon for the purpose of computing the amount of tax
levied by this Article upon suah retail sale.
“(b) In all cases OS retail sales Involvingthe
exchange of motor vehicles, the party transferring
the title to the motor vehicle having the greater
value shall be considered the seller, and no tax is .
imposed upon the transfer of a motor vehicle traded
In upon the purchase price OS some other sotor ve-
hlcle.
“Sec. 2.. There fs hereby levied a use tax upon. ‘.
every motor vehicle purchased at retail mts.$de ~‘,
of this State and brought into this State for use upon
the public highways thenof by a resident OS this State
or by Sims OF c
In this State.
cent of the tota
said vehicle et said retail sale. The tax shall be the
obligation of and be paid by the persod, firm, or Oorpora-
tion operating said motor vehicle upon the public hlgh-
ways of this State.
.
Hon. Gee., Ii. Sheppard - Page 3 (Ho. V-439)
‘Sea. 3. (a) The term ‘aale’ or ‘saleaf as
herein used shall Include lnstalment and credit
sales, and the exohange OS property, as well as the
sale thereof for money, every closed transaction
constituting .a sale. The transaotlon whereby the
possession OS property Is transferred but the seller
retains title as security for the payment OS the
price shall be deemed .a sale.
“(b) The term ‘retail sale’ or ‘retail aales’
aa herein used shall Include all sales of motor ve-
hicles except those whereby the purchaser acquires
a motor vehiole for the exclusive purpose of resale
and not for use.
“(0) The term ‘mOtOr vehicle’ as herein used
shall mean every self-propelled vehicle In, or by
which, any person or property Is or may be transported
upon a public highway, except devices moved only by
human power or used exclusively upon stationary rails
or tracks; but this definition shall not Include trao-
tors used exclusively to pull farm machinery or rosd-
bulldlng mschinery.
“Sec. 4. The license fees and taxes imposed by
or under this Article shall be in addition to any and
all license fees and taxes imposed by or under any other
law of this State.
“Se0 . 5. The taxes levied la this Article shall
be oollected by the Assessor and Collector of Taxes of
the county in which any such motor vehicle is first
registered or first transferred after such a sale; the
Tax Collector shall refuse to accept for registration
or for transfer any motor vehicle until the tax there-
on is paid.
‘@Whena tax becomes due on a motor vehicle pur-
chased outside of this State and brought into this
State for use upon the highvays, the person, firm, or
corporation operating said motor vehicle upon the pub-
lic hlghvays of this State shall pay the tax Imposed
by Section 2 to the Tax Collector of the county In
which such motor vehicle is to be registered. The tax
shall be paid at the time application Is q ade.Sor reg-
istration of said motor vehicle, and the Tax Collector
shall refuse to issue the registration license until
the tax Is paid.
.
Hon. Geo. If. Sheppard, Page 4 (Ho. V-439)
%ec. 5rJ. At the time the tax herein
levied is paid to said Tax Collector the
pwchaser shall file with aald Tax Golleotor
the affidavit OS such DurChrrSer (or if a
corporation the atfldavlt of the President,
Vice President, Secretrry, or Manager) set-
ting forth the then value in dbllars of the
total con&erafi
oelved by such seller or his nominee. whether
In money or other thing OS value.” (Emphas,ls
added)
It vi11 be noted that the situations referred to
in your three questions all Involve the exchange of motor
vehicles; and if these exchange8 had taken plrce within the
State OS Texas, the tax would be based upon Section 1 of
the Act, being a “sales” tax. However, the tax imposed by
Section 2 1s.a “use” tax as is disclosed by the speolflc
verbiage above emphasised and which Is based upon the “total
consideration paid or to be paid for said vehicle at such
retail sale.”
,Ho provision is contained in Section 2 similar to
Section l(b), although the term “retell sale” is used without
any quallSlcatlon throughout the act except a8 qualified in
Section 1. Sir&e Section 1 Imposes a “sales” tax and Section
2 imposes a “use” tax, each must be viewed in the light of
the intention of the:Leglslature at the time the law was en-
acted.
I.
.,.
Both thb sa,les. tax and the use tax are revenue .
measureg. HOWeW?rj .lt 18 a well-known principle of law thst
the essential’ bases for-,these two taxes are entirely different.
The sales tax is based upon the sale of the property within
the state, the tax liability accruing at the time of the actual
sale of the property. The use tax Is based upon the use within
the state of the property, vhioh 3.s purchased outside of the
state, and the tax liability accrues upon the first use of the
property within the state. These principles of law are too
well known to necessitate the citation of authorities.
IS the Legislature had intended to apply the methods
of lscertalnlng the bait3 of taxes due upon the retail sales
InVolved In the exchs e of property, as was done by the en-
aotment of Section l(b7 to the use tax levied by Section 2,
it could have easily edcted Section 2(b) In similar terms cr
if the Legislature had desired to apply the same basis where
the exchange of property Is Involved as to both the sale8 and
Eon. Gee. Ii. Sheppard, Page 5 (lo. V-439)
use taxes, It could have included it in the general def-
initions to Abe Sound in Section 3 OS the Act. However,
it did neither of these things; therefore, the presump-
tion must exist that the method OS oomputatlon of all re-
tall sales involved the exchange of property prescribed
In Section l(b) Is applicable only to retail sales OS
motor vehicles sold In this State as provided In Sec. 1
(6).
Section 5a provides that when the tax herein
levied, i.e., both under Sections 1 and 2, Is paid to the
tax collector, the purchaser shall file with the tax col-
lector an affidavit setting forth “the then value in dol-
lars of the total consideration received or to be recelv-
ed by such seller or his nominee, either In money or
other thing of value.”
Based upon the foregoing construction OS the Act
and psrtlcularlg the emphasized portion of Section 5a,
supra, the answers to your questtons are as Sollovs:
1. The 1% motor vehicle use tax should be paid
on the sum’of $1,500.00, being the total consideration re-
celved by the seller In payment of the motor vehicle to be
used upon the highways of Texas.
2. The 1% motor vehicle use tax should be paid
on the sum of $1.500.00. being the total consideration re-
ceived by the seiier In-paymekt of the motor vehicle to be
used upon the highways of Texas.
3. The 1% motor vehicle use tex should be paId
on the sum of $800.00, being the total consideration re-
celved by the seller in payment of the motor vehicle to be
used upon the highva ys of Texas.
SUMMARY
A resident of this State, who goes without
the State and there trades his motor vehicle
for another motor vehicle which he brings Into
this State for use upon the public highways
thereof, is required to pay the use tax Imposed
Hon. Geo. Ii. Sheppard, page 6 (V-439)
by Section 2, Art. 7047k V.C.S., upon such
vehicle calculated on the total conslden-
tlon, measured In dollars, received by the
person from whom he acquired such vehicle.
Yours very truly
ATTORRHY
GXVRRAL9p, ‘PEXILS.
C. K:. Richards
AssLstant
. ATTORNEY
GENERAL
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