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

• reimbursement charges for the dealer’s vehicle
inventory tax, if separately stated;
• charge for debt cancellation agreement.
Substitution of Collateral or
Transfer of Equity
Sometimes a person purchases a motor vehicle but
retains the same loan that applied to a previously
financed vehicle. The TAC should not accept a
Form 130-U application indicating no tax is due
because of a “substitution of collateral” or “transfer
of equity”. The purchase of a vehicle is a taxable sale,
whether or not an existing loan has a different vehicle
associated with it as the collateral.
Rebates
Both manufacturer’s and dealer’s rebates passed directly
to customers reduce the sales price when computing the
taxable value of a motor vehicle.
When a manufacturer provides a rebate to a selling
dealer and the dealer passes the identifiable rebate—
or any portion of it—to the customer, it should be
considered a cash discount and deducted from the
sales price.
Liens
When a lien is assumed and an amount is paid to the
seller as equity, the sum of both amounts is the total
taxable consideration. SPV may apply.
When a lien is assumed and no equity is paid to the
seller or lienholder, the amount to be paid to release
the lien, commonly called “net payoff,” is the total
consideration for the sale. SPV may apply.
Proof of Total Consideration
The selling dealer’s signature on the title application
is an acceptable record of the sales price. The county
TAC, however, can request the dealer’s invoice or sales
receipt from the purchaser.
For a private-party purchase of a used motor vehicle
in Texas or from out of state for Texas use, the person
applying for a certificate of title or registration for the
motor vehicle must furnish the county TAC with a
Form 130-U, which includes a joint statement signed
by both the buyer and seller, attesting to the sales price
information on the Form 130-U. If the county TAC
has reason to question the truth or accuracy of the
information, or if both parties to the transaction have
not signed the form, the county TAC can require either
party to furnish additional documentation about the
motor vehicle’s sales price. For a motor vehicle acquired
out of state, the person could provide a bill of sale
signed by the seller.
Purchase Price Not Available
Sometimes a sale and change of possession take
place, but the purchaser has not obtained a valid
Form 130-U with the seller’s signature. If the seller’s
signature is not on the Form 130-U, the purchaser
must make a diligent effort to obtain it. Acceptable
evidence of that diligent effort can take the form of a
receipt obtained by sending a certified letter, return
receipt requested, to the seller’s last known address.
Other credible documentation may be accepted by the
county TAC. If a motor vehicle is purchased out of
state, a seller’s signed bill of sale may be accepted in lieu
of the seller’s signature on the 130-U.
If, after making the necessary diligent effort, the
purchaser has been unable to locate the seller to obtain
the necessary signature on the Form 130-U application,
the taxable value must still be established for the sale
and may be determined in the following ways:
Seller Is Known to be a Dealer
• Use a seller-signed bill of sale.
• If a signed bill of sale is not available, use the
SPV value.
• If the SPV value is not available, then require an
appraisal from a dealer, insurance adjuster or at
the discretion of the county TAC, someone who
would have special knowledge of the vehicle’s
value. Such a person may include an antique
dealer or antique auction. The Comptroller’s
appraisal form may be used, but is not required.
In lieu of the appraisal, a title applicant who is
obtaining a title through the bonded title process
may use two-thirds of the bond amount (bond is
for 150 percent of vehicle value).
Seller Is Not a Dealer or is Unknown
For a Motor Vehicle Fewer than 25 Years Old
• Use the SPV procedure, which includes
comparing the price to other documentation
(e.g., bill of sale, canceled check), if available.
• If the SPV is not available, require an appraisal
on Form 14-128.
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Motor Vehicle Tax Guidebook