Motor Vehicle Tax Guidebook 2011 - Texas Comptroller of Public ...

• If a partner assumes a lien on a motor vehicle
or gives the dissolving/terminating partnership
any consideration, motor vehicle tax is due. SPV
procedures may apply.
Changes in Partners
When a partner joins or leaves a partnership and
the partnership entity remains intact, the following
guidelines apply:
• If a new partner joins an existing partnership and
contributes a motor vehicle, tax is due whether
or not consideration is paid. SPV procedures
may apply.
• If a partner leaves a partnership and the
partnership transfers a motor vehicle into the
partner’s personal name, tax is due whether
or not the partner paid consideration. SPV
procedures may apply.
If the change of partner(s) causes the partnership
entity to dissolve/terminate, the two above guidelines
do not apply. For example, a general partnership
without a partnership agreement that provides for the
continuation of the partnership entity upon a change
of partner(s) automatically dissolves. Refer to Transfers
Upon Dissolution/Termination of a Partnership in this
topic. If a new partnership entity is then formed/
organized, refer to Transfers to Newly Formed/Organized
Partnership in this topic.
Incorporation of a Partnership
When a partnership incorporates and transfers a motor
vehicle from the partnership name to the corporate
name in connection with that incorporation, the
following guidelines apply:
• If a newly formed corporation pays no
consideration (other than stock) to the
partnership, no tax is due. The owners of the
business simply have adopted a different form of
doing business. The transfer of a motor vehicle to
the newly formed corporation is not a change in
ownership and is not a sale.
• If the corporation pays consideration to the
partnership, motor vehicle tax is due since the
corporation purchased the vehicle from the
partnership. SPV procedures may apply.
Lien Assumption
Any motor vehicle transfer involving the assumption of
a lien is subject to motor vehicle tax. SPV procedures
may apply.
Partnership as a New Resident
When a partnership enters Texas for the first time to
establish residency and to begin doing business, the
partnership is considered a new resident.
To be a new resident, the partnership cannot presently
be doing business in Texas or be domiciled in Texas.
When a partnership brings a motor vehicle into Texas,
the following guidelines apply:
• If the partnership owned the motor vehicle and
brought it into Texas at the time the partnership
became a new resident, and the partnership
previously registered the motor vehicle in the
partnership name in another state or country,
the new resident tax applies.
• If the partnership had not previously registered
the motor vehicle in the partnership name in
another state or country, the motor vehicle use
tax is due. SPV procedures apply if the sale of
the motor vehicle is a private-party purchase.
Credit may be applied for legally imposed sales
or use tax paid to another state. Credit may not
be applied for sales or use tax paid to another
country.
• If the partnership acquired the motor vehicle
out of state and brought it into Texas for public
highway use after the partnership became a
resident, motor vehicle use tax is due. SPV
procedures apply if the sale of the motor vehicle
is a private-party purchase.
A partnership presently doing business in Texas cannot
be considered a new resident of Texas.
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Motor Vehicle Tax Guidebook