Did federal excise or retail sales taxes enter the Texas motor vehicle tax base for heavy trucks and trailers after April 1, 1983?

Plain-English summary

Texas included the former federal manufacturer excise tax but excluded the new federal retail sales tax when computing historical motor vehicle tax.

For a heavy truck or trailer manufactured before April 1, 1983, the old ten-percent federal excise tax stayed in total sales price, while the added two-percent retail tax on a later sale was excluded. For a vehicle manufactured and sold after March 31, the new twelve-percent federal retail sales tax was excluded.

The attachment also gives historical weight thresholds, installed-parts rules, and a four-percent Texas rate. None should be assumed current.

What this means for you

Identify the specific federal tax, who pays it, and the governing state-law version before deciding whether it enters a state vehicle-tax base.

Common questions

Q: Was the new twelve-percent federal retail tax included?
A: No.

Q: Was the old ten-percent manufacturer excise tax included?
A: Yes for the pre-April vehicles described.

Citations and references

The guidance cites no numbered federal or Texas provision. All printed percentages and thresholds are historical.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/8303L0534C06

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.

March 31, 1983

Dear Sir:

As of April 1, 1983, a 12 percent federal retail sales tax will beimposed on certain trucks and trailers previously subject to a 10 percent federal excise tax paid by the manufacturer.

The new 12 percent federal retail sales tax applies to heavy duty trucks and trailers manufactured after March 31, 1983.

Heavy duty trucks and trailers manufactured before April 1, 1983, but sold after March 31, 1983, will be subject to a 2 percent federal retail sales tax in addition to the 10 percent federal excise tax.

The Texas 4 percent motor vehicle sales and use tax is due on the total sales price of a vehicle: The total sales price of a vehicle manufactured before April 1, 1983, includes the 10 percent federal excise tax.

For Texas tax purposes, the total sales price does not include the 2 percent federal retail sales tax levied on a vehicle manufactured before April 1, 1983, and sold after March 31, 1983.

The 12 percent federal retail sales tax levied on a vehicle manufactured and sold after March 31, 1983, is not included in the total sales price on which Texas' motor vehicle tax is due.

I've enclosed an explanation of the relationship between Texas motor vehicle tax and the federal taxes which may prove helpful.

If you have a question, please call 1-800-252-5555 toll free from anywhere in Texas to reach someone in our Motor Vehicle Tax Division. The regular number is 512/475-1935.

Sincerely,

Richard Montgomery, Director

Motor Vehicle Tax Division

PRESENT LAW

The 10 percent federal excise tax is due on the following items if suitable for use with vehicles over 10,000 pounds gross vehicle weight:

• Truck chassis

• Truck bodies

• Truck trailer and semitrailer bodies

• Truck trailer and semitrailer chassis

The 10 percent federal excise tax is due on highway tractors (truck-tractors) for use in combination with a trailer and semitrailer (including parts and accessories).

PARTS AND ACCESSORIES

The 8 percent federal excise tax is due on parts and accessories (excluding tires and tubes) for truck chassis and bodies, truck trailer and semitrailer chassis and bodies and highway tractors used in combination. Parts for light duty vehicle (less than 10,000 pounds) are exempt from this tax.

TEXAS MOTOR VEHICLE SALES TAX

Texas tax is 4 percent of the total sales price of a vehicle which includes any federal excise tax.

AFTER APRIL 1, 1983

A 12 percent federal retail sales tax is due on the following:

• Truck chassis and bodies over 33,000 pounds

• Truck trailer and semitrailer chassis and bodies over 26,000 pounds gross vehicle weight

• Truck tractors used in combination with a trailer or semitrailer

• Parts and accessories installed within six months of the date the vehicle is first placed in service.

If a vehicle is purchased fully equipped for service and a part is a replacement or the aggregate price of installed parts does not exceed $200, the installation is not taxable.

PARTS AND ACCESSORIES

The 8 percent federal excise tax is repealed. Parts are taxed only as outlined above.

TEXAS MOTOR VEHICLE SALES TAX

Texas tax is 4 percent of the total sales price of a vehicle, excluding any federal retail sales tax.