Ezel / Tax Rulings / TX
TX 9601936L Motor Vehicle Tax 1996-01-03

What tax-collection and title-filing duties did Texas impose on licensed vehicle dealers beginning January 1, 1996?

Short answer: Licensed dealers had to collect motor vehicle sales tax on all taxable sales, including cash sales, and remit it to a county tax assessor-collector within 20 county working days. They also had to complete and file the title or registration documents within that period and document why any sale was exempt.

Apply this to your situation

This page answers the general question as of 1996. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1996
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller letter explaining Senate Bill 1445 duties effective January 1, 1996. It predates modern Private Letter Ruling reliance terms and cannot be treated by unrelated taxpayers as binding protection. The 20-county-workday deadline, collection, remittance, exemption, title, registration, IMC, and out-of-state-use rules may have changed. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Texas Comptroller said Senate Bill 1445 required every licensed motor vehicle dealer, beginning January 1, 1996, to collect motor vehicle sales tax on taxable sales, including cash sales.

The dealer had to remit the tax to the county tax assessor-collector within 20 county working days. The dealer could submit the tax and paperwork in the county of either the seller or purchaser.

The dealer also had to complete and file the documents necessary to transfer title or register the vehicle within the same historical deadline. When a sale was exempt, the dealer needed records explaining why tax was not collected.

What this means for you

Motor vehicle dealers

The 1996 change put collection responsibility on licensed dealers even for cash transactions.

Title staff and dealership accountants

Tax remittance, exemption documentation, and title or registration filing were linked operational duties.

Common questions

Q: Did the collection rule include cash sales?

A: Yes.

Q: What deadline did the letter state?

A: 20 county working days.

Q: Did exempt sales need records?

A: Yes.

Citations and references

  • Texas Senate Bill 1445, 74th Legislature — cited for the duties effective January 1, 1996.
  • 34 Tex. Admin. Code Rule 3.90 — enclosed guidance for vehicles purchased for use outside Texas.

Source

Original ruling text

January 3, 1996

Dear ** :

I have received your letter requesting information regarding the motor vehicle
dealer's responsibilities when selling a motor vehicle.

The 74th Texas Legislature passed Senate Bill 1445 requiring (effective January
1, 1996) all licensed motor vehicle dealers to collect motor vehicle sales tax
on taxable sales (including cash sales). Dealers must remit this tax to the
local county tax assessor-collector within the usual 20 county working days; as
before, the tax and paperwork may be submitted to the tax assessor-collector in
the county of either the seller or purchaser. If the sale is exempt from motor
vehicle tax (e.g., IMC vehicles or vehicles purchased for use outside of Texas
only), you will want to document in your records why sales tax was not
collected. I am enclosing a copy of Rule 3.90, Motor Vehicles Purchased for
Use Outside of Texas, for your review.

The bill also requires the selling dealer to complete and file all documents
necessary to transfer title and/or register the motor vehicle in the name of
the purchaser (also within the usual 20 county working days). For specifics
regarding the registration/titling requirements, you may contact the Texas
Department of Transportation, Vehicle Title and Registration Division,
Correspondence Section, 40th & Jackson, Austin, Texas 78779.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion could change.

If you have any further tax questions, please don't hesitate to call one of our
tax specialists toll-free at 1-800-252 1382. The direct number is
512/463-4600. You may also write to Tax Policy Division, Comptroller of Public
Accounts.

Sincerely,

Joan Hale
Tax Policy Division

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