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

Vehicle Inventory Tax (VIT)
• Property Tax and Not Sales Tax
• Sales Price
Property Tax and Not Sales Tax
For local property tax purposes, Texas law requires a
motor vehicle dealer’s motor vehicle inventory to be
appraised based on the total sales of motor vehicles
in the prior year. Dealers must file with their county
appraisal districts an annual declaration of total sales in
the prior year. Dealers also file a monthly form with the
county TAC to report motor vehicles sold during the
prior month and prepay to an escrow account a vehicle
inventory tax (VIT) for those sold vehicles.
The VIT is not, by statute, a part of “total
consideration.” Dealers may, however, separately list
a reimbursement of the VIT on the sales agreement
for customers to reimburse the dealers for the prepaid
property tax on the vehicle. The VIT is a property
tax assessed on the dealer, not the purchaser, and is a
negotiable item on the sales agreement.
For more VIT information, see Publication 96-545,
Motor Vehicle Dealer’s Special Inventory.
Sales Price
If the dealer and seller agree to include a reimbursement
of the VIT in the transaction, the VIT reimbursement
must be listed separately because it cannot be included
in the sales price. Motor vehicle sales tax is not assessed
against the separately stated VIT.
The VIT is based on the sales price on Form 130-U,
Line 21, after deducting any rebate, including factory
and dealer rebates passed on to the customer. The net
sales price on Line 21(a) is the sales price used for the
VIT. For example, if the initial sales price is $20,000
and a $1,000 rebate is available, then Line 21(a) should
reflect the $19,000 net figure.
Vehicles Purchased Through
Another Name
• Not Purchaser’s Name
• Tax
• Exceptions
Not Purchaser’s Name
Occasionally, a purchaser will title and register a motor
vehicle in a person’s or company’s name rather than the
purchaser’s name for fleet price, insurance/financial,
convenience or personal reasons.
Tax
When a purchaser titles and registers a motor vehicle in
a name other than the purchaser’s name, motor vehicle
tax is due on the purchase price.
If the motor vehicle is later transferred back to the
purchaser, the motor vehicle sales or use tax may be due
again, since this would be a second transaction. If no
consideration (including a lien assumption) is given at
the time of the second transfer, tax would be due on the
SPV supplied by the RTS, unless the transfer qualifies
as a gift. Gift tax would be due in that case.
Exceptions
Exceptions to this provision, because there has been no
sale or change in ownership, include:
• a transfer of title to the purchaser who was a
minor (under 21) at the time of purchase;
• a transfer of title from an individual’s name
into a living trust in that person’s name;
• changing from a maiden name to a married
name; and
• changing from an individual’s name to a sole
proprietor business name.
Neither motor vehicle sales or use tax nor gift tax
is due.
Motor Vehicle Tax Guidebook
III-29