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

Tax-Exempt Registration Requirements
Qualified permit holders are allowed to register a rental
vehicle without paying motor vehicle tax at the time
of registration. Before the county TAC may accept
a Form 130-U for a rental vehicle for tax-deferred
registration, the following must occur:
• the seller or purchaser must complete the
Form 130-U;
• the seller or purchaser must include the rental
permit number in Item 19 on the Form 130-U
application; and
• the seller and the purchaser both must sign the
certification statement.
For motor vehicles subject to the Texas Emissions
Reduction Plan (TERP) surcharge, the surcharge is due
at the time of titling and registration and cannot be
deferred.
Nonqualified permit holders must pay the motor
vehicle tax at the time of registration of the vehicle for
rental.
Repossessions
• Not a Retail Sale
Not a Retail Sale
When a purchaser defaults, a lienholder may repossess
a motor vehicle on which there is a valid lien
recorded without paying motor vehicle tax. The act of
repossession is not a retail sale.
When an owner’s vehicle has been repossessed and the
required repossession documents are completed by the
lienholder, a taxable transaction occurs if the previous
owner purchases the vehicle back from the lender. If
the lender is not a licensed motor vehicle dealer, SPV
procedures apply.
Generally, there is no need for the lienholder to take
title to the vehicle; however, if the lienholder does take
title, then it may do so without tax being collected.
Salvage Motor Vehicles
• Salvage Motor Vehicle Defined
• Tax Due
Salvage Motor Vehicle Defined
A unit is no longer a motor vehicle for tax purposes
if it:
• has a salvage certificate or a non-repairable motor
vehicle certificate of title issued pursuant to the
Certificate of Title Act;
• has a certificate of authority for an abandoned
motor vehicle; or
• is a unit declared a total loss by an insurance
company.
A salvage motor vehicle also includes a unit that has a
similar ownership document issued from another state.
Tax Due
Purchases of unrepaired salvage motor vehicles are
subject to Texas limited sales and use tax. The seller will
collect and remit the state and local sales tax directly
to the Comptroller. The TAC has no responsibility to
ensure sales tax was paid. Refer to Publication 98-776,
County Tax Assessor-Collectors Important Information
About Taxes on Un-repaired Salvage Vehicles.
If the purchaser of an unrepaired salvage motor vehicle
applies for title after repairing the motor vehicle, no
motor vehicle tax is due. Once a person rebuilds a
previously damaged motor vehicle and applies for a
regular motor vehicle title, the person will need to show
documentation on the repair work and pay the titling
fee to return the vehicle to a rebuilt salvage vehicle.
TxDMV Form VTR-61, Rebuilt Vehicle Statement,
indicates who rebuilt the vehicle.
Future sales of the vehicle as rebuilt salvage are once
again subject to motor vehicle tax.
Motor Vehicle Tax Guidebook
III-23