How did Texas tax and register mopeds, and what happened when a merchant mistakenly collected ordinary sales tax?

Plain-English summary

A qualifying moped was a motor vehicle taxed at registration, not an item subject to ordinary limited sales tax.

The bulletin used former article 6701D's definition: a bicycle propelled by human power, a motor, or both, with displacement under 60 cubic centimeters and a maximum speed no greater than 20 miles per hour on the stated flat-surface grade.

Mopeds were not titled but had to be licensed for public-road use. At registration, the collector required a completed Seller, Donor, or Trader's Affidavit and collected historical motor vehicle sales tax.

If a merchant had instead collected limited sales tax, the customer received a refund from the merchant. The merchant could take credit on its next sales-tax return, but the mistaken tax could not offset motor vehicle tax.

What this means for you

The bulletin used the vehicle's statutory specifications, not the merchant's sales-tax treatment, to determine the correct tax and registration path.

Common questions

Q: Was a moped titled?
A: No, but it was licensed for public roads.

Q: Could mistaken limited sales tax be credited against motor vehicle tax?
A: No.

Q: Did the same policy extend beyond mopeds?
A: The bulletin said it also applied to motor vehicles such as tent trailers, boat trailers, and motorcycles sold by similar stores.

Citations and references

• Article 6701D, Texas Motor Vehicle Laws

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7807L2017E01

Original ruling text

ALERT: The tax rates cited in this article are no longer the current motor vehicle sales tax
or motor vehicle rental tax rates.

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

July 17, 1978

Motor Vehicle Sales and Use Tax Bulletin No. 1978-D

All Tax Assessor-Collectors

Ladies and Gentlemen:

It has come to our attention that many merchants in Texas are selling mopeds and charging their customers State and City Sales Tax unaware that the 4% Motor Vehicle Sales Tax is due. Our office is in the process of notifying those merchants, but you may continue to have customers who have paid the Sales Tax in error.

Mopeds are motor vehicles and are subject to the Motor Vehicle Sales and Use Tax. They are not titled, but must be licensed for use upon the public roads.

When a person presents a moped to you for registration, you should require a completed Seller, Donor, or Trader's Affidavit and collect 4% Motor Vehicle Sales Tax. If the person has paid the 5% Limited Sales Tax to the selling merchant, you must inform him that the tax was paid in error and that he is entitled to a refund from the merchant. The merchant in turn can take credit on his next Sales Tax return. Credit cannot be allowed for tax paid under the Limited Sales Tax Law on a motor vehicle subject to the Motor Vehicle Sales and Use Tax.

Article 6701D of the Texas Motor Vehicle Laws defines a "motor-assisted bicycle" or "moped" as "a bicycle which may be propelled by human power or a motor, or by both, with a motor of a capacity of less than sixty (60) cubic centimeters piston displacement, which is capable of a maximum speed of not more than twenty (20) miles per hour on a flat surface with not more than one (1) percent grade in any direction when the motor is engaged."

To help identify a moped, the State Department of Highways and Public Transportation periodically issues an updated list of certified motor assisted bicycles that qualify by having a piston displacement of less than 60 cubic centimeters.

A picture of a moped is attached for clarification along with a sample Seller, Donor, or Trader's Affidavit and Form 31 tax receipt.

This same policy on mopeds applies to any other motor vehicle such as tent trailers, boat trailers, and motorcycles that may be sold by a department store or similar store.

If you have any questions, you may write the Motor Vehicle Sales Tax Division or call toll free 1-800-252-5555.

Yours very truly,

Richard Montgomery, Director

Motor Vehicle Sales Tax Division