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

SPV applies to complete motor vehicle kits sold in
private-party purchases (no licensed dealer involved).
Glider Kits
Glider kits, also called “glove frames” or “rebuild kits,”
consist of a set of parts that enable an owner to upgrade
a truck or truck tractor to the equivalent of a later
model motor vehicle and establish a different VIN for
the vehicle. Since the glider kit is only a set of parts
and not the entire components of a motor vehicle, no
motor vehicle tax is due on the purchase of the kit. The
purchaser should pay limited sales or use tax at the time
of purchase. The TAC has no responsibility to determine
whether limited sales and use tax has been paid.
Since upgrading the motor vehicle is not a sale of a
motor vehicle and does not change the ownership, no
motor vehicle tax is due. At the time of registration
of the upgraded vehicle with a different VIN, both
Form 130-U and the tax receipt should indicate that
no change in ownership occurred and that the owner
installed a glider kit.
If the owner sells the motor vehicle after installing
the glider kit, motor vehicle tax is due on the entire
purchase price to the new owner. SPV applies for a
private-party purchase.
Leases
• Definition of Operating Lease
• Frequent Transactions at TAC Office
- Motor Vehicle Titled to Lease Company
Motor Vehicle Leased Outside Texas by New
Resident – Title to Leasing Company
- Motor Vehicle Leased Outside Texas by
Texas Resident – Title to Leasing Company
- Title to Lease Customer at End of an
Operating Lease
• Conditional Sale (Lease/Purchase)
• Subsequent Lease of Lessor’s Unit (Re-Lease)
• TRAC Lease
Definition of Operating Lease
A lease is an agreement by an owner (lessor) to give
exclusive use of a motor vehicle to a lessee for a
consideration for a specified period of more than 180
days. Under the terms of an operating lease agreement,
a lessor remains the title owner of a motor vehicle and a
lessee has no ownership rights.
Frequent Transactions at TAC Office
The following situations involving operating leases are
frequently presented to the county TAC.
Motor Vehicle Titled to Lease Company
Tax is imposed on the leasing company’s Texas purchase
of a motor vehicle and is due at the time of titling and
registration. Tax is calculated on the leasing company’s
purchase price. The leasing company may use the fair
market value deduction to reduce the vehicle’s taxable
value.
Motor Vehicle Leased Outside Texas by New
Resident – Title to Leasing Company
If a new Texas resident brings a leased motor vehicle
into Texas, the new resident owes the new resident
tax. The vehicle may be registered in the lessor’s name
and still qualify for the new resident tax. No credit is
allowed against the new resident tax for tax paid to
another state.
Motor Vehicle Leased Outside Texas by Texas
Resident – Title to Leasing Company
When a motor vehicle is leased in another state and
the lessee is a Texas resident or is domiciled or doing
business in Texas and brings the motor vehicle to Texas,
the lessee (as the operator) owes motor vehicle use
tax. This includes the situation where a Texas resident
assumes a lease on an out-of-state vehicle and brings it
into Texas.
The use tax is based on the price the lessor paid for the
motor vehicle. Credit is given for any tax the lessor or
the lessee paid to another state, Puerto Rico or any U.S.
possession or territory. Either the lessor or the lessee
must document tax payment.
Some states collect any motor vehicle tax due in full at
the time of lease while other states allow the tax to be
paid as part of the monthly lease payments. Credit is
allowed for tax paid on a monthly basis up to the time
the motor vehicle is brought into Texas, if paid by the
same lessee. The credit is limited to tax paid prior to
the motor vehicle’s entry into Texas. Credit cannot be
allowed at time of registration for tax payments not
yet made to the other state. At the end of the lease,
however, the lessee may request a refund from the
Comptroller of up to the amount of additional tax paid
to the other state.
Motor Vehicle Tax Guidebook
III-15