1 R-506
OFFICE OF
THE ATTORNEY GENERASL
June 5, 1947
Honorable George Ii.Sheppard
Comptroller of Public Accounts
Austin, Texas Opinion No. V-236
Re: The effect to be ac-
corded the l$ sales
tax on transfer of
motor vehicles under
Dear Sir: the submitted facts.
You have requested the opinion of this Depart-
ment upon the following factual situation:
"9 car owner trades a Second Hand Auto-
mobile valued at $3,043.00 to a dealer for a
new unregistered automobile valued at $2,471.00.
The dealer pays the difference of $572.00 to
the original car owner in cash.
'The'Tax Aas~essor-Collectorupon &he ap-
plication~for registration of these two auto-
mobiles demanded the 1% Sales Tax on the
$3,043.00 automobile as authorized by subsec-
tion b of Section I of Article 7047-X. The oar
dealer refused the payment of this tax relying
on subsection b of Section II of Article 7047X.
The Tax Assessor-Collector has written this De-
partment as to whether he Is required to ool-
lect the taxes from the above mentioned. hue
shall, therefore,.thank you to advise us wheth-
er the dealer 1s required to pay the taxes.
"The dealer alleges that the Second Hand
car was puzyzhasedby him for re-sale only, and
the tirlginal-owner of the Second Hand car al-
leges~that the new car acquired by him Is for
personal use.
"Due to the fact that no tax has been paid
upon the sale of the new automobile valued at
$2,471.00, and It Is to be used upon the high-,
ways, you will please advise us whether or not
a tax should be paid even though the value of
Honorable George H. Sheppard - Page 2
the new car was lees than the value of the
oar that was traded to the deeler for it.”
Your query iv whether or not the l$ motor ve-
hicle retail sales tax Is due on the sale of the auto-
mobile valued at $3,043.00 or on the sale of the automo-
bile valued at $2471.00.
The pertinent parts of House BLll Ho. 8, 'lots
of the 47th Legislature, Regular Session, 1941, Chapter
184, Article VI, p. 269 (Codlfled as Article 7047-X,
Vernon’s Civil Statutes), are as follows:
“Section 1. (a) There Is hereby lev-
ied a tax upon every retail sale of every
motor vehicle sold In thl Stat such tax
to be equal to one (1) pe: -enteA* the total
consideration paid or to be paid to the sell-
er by the buyer, which conalderetlon shell
include the amount paid or to be paid for said
motor vehicle end all aecessorlea attaohed
thereto at the time of,the sala, vhethep ouoh
consldemtlon be In the nature of aaeh, credit,
or exchange of other property, or a oomblnat;on
of these . . .
“(b) In all cases of retell sales lavolv-
int$the exohange OT motor vehloleu, the partz
transre~rlng the title to the motor vehlole NV-
&g the greeter vs1ue Shall be ooMieeraa the
seller, and no tex is Imposed upon the trclnafor
Of a motor vehiole tredea Ln UDOll the DuroMIe
prlOe 0T acme ,OthOFmotor VOhlOle.
”
. . .
“Sootion 3. (a) The term ‘#ale’ a6 here-
in used shall lnolude lnstalment and oredit
mle#, and the exahenge of propetir, (16well
ea the sale thsrsoS Tar money, evet~ olosed
trars9otion aonotltuting a mle. The trem-
action whereby the possesrlon of propezrtg18
transferred but the seller retain8 title II
eaouritg for the payment of the prioe ah811 bo
deemed a sale.
l’(b) The term Wtall srls’ or 9etall
mleef 88 herein used shell inolude rlZ~rrlrr
Honorable George B. ~Sheppard+Page 3
I
’of Cotor vehicles exckpt thoaa..rhsreby’t~s“;..’
purchasere’cqu%tiaa .~
motor vehicle f OI?the,
exclusive purpose of resale and not for use.”
@mphaala added]
The q otok:vdhltil$~
retail sales tax composes
Article VI of House aill No. 8, known as the “Omnibus
Tax Bill”, thb,pimsry object of whlah was the raising
of general ,revenuefor the State. The general rule of
law, in the.construotion of tax statutes when the legls-
lative intent Is ambiguous or obscure, of strict con-
struction against the State and liberal construction In
favor of the taxpayer, must be applied. (See 40 Tex.
Jur. Par. 45,~~. 69).
In that pert of the transaction lnvolvlng the
automobile valued at $3043.00, the.owner transferrl its
.tltle$ecamd the “seller” as defined In Section 1 (b“5
aslpre,allice alich,motorvehicle had the greater value’ln
the exchange of vehicles. The dealer became the “pur-
chaser” of such vehicle and having acquired It for the
“exc1ua.lvepurpose of resale” is exempt from the payment
bf the tax thereon by the provisions of Section 3 (b)
aupra.*
As to that part of the transa,ctlonwhen the oar
dealer transfers the title to the new unregistered auto-
mobile valued ~3%$2471.00, as’a part of the “retail sale
lnrolvlng the exchange.of.motor vdhicleti”,since this auto-
m6biU wee 'tredbd ln,up& the purchas&prlce of some oth-
er moto%.‘~ehial&“,vhioh was of .leaser ‘value than the oth-
er motor vehicle ltivolvedin the “exchange,” the car deal-
er Is not the.“seller” as defined in Section 1 (b) supra,
and no tax is imposed upon Its transfer. Therefore, such
motor vehicle wg be registered without the payment of
the 1% sales tax by either psrtg.
SUMMARY
Wh6re an .exchangeIs made by the :owner of
a used motor vehicle with a ca~rdealer for a
new unregistered motor vehicle together with an
additional cash consideration paid by the oar
dealer to the owner, the used vehicle being ac-
quired by the car dealer for the eizzlualvepur-
pose of resale, each of the motor vehicles may
be registered without the payment of the 1%
Honorsble George H..Sheppard - pa:ge4~
motor.~vehiale rate13 aslea tax,the~~on. Arti-
cle 7047-K, Vernonb C$vU Ste$utea.- -.
C. I.~Riabarda
Assistant
*e
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