Did a licensed wholesale auto auction have to collect Texas motor vehicle tax when selling a government vehicle to an unlicensed public buyer?

Plain-English summary

The Texas Comptroller said a wholesale auto auction holding a general distinguishing number had to collect motor vehicle tax when it sold a government-owned vehicle to an unlicensed public buyer.

The auction also had to remit the tax to the county tax assessor-collector and complete and file the documents needed to transfer title and register the vehicle in the buyer's name.

The response distinguished these public-buyer sales from wholesale sales to licensed motor vehicle dealers.

What this means for you

Auto auction companies

The historical wholesale-auction license did not remove the seller's tax and paperwork duties when the buyer was not licensed.

Government fleet sellers and dealership accountants

The buyer's licensed status affected who handled collection, title transfer, and registration.

Common questions

Q: Did the government ownership of the vehicle eliminate tax collection?

A: No. The licensed auction had to collect tax on the described sale to a public buyer.

Q: Who received the remittance?

A: The county tax assessor-collector, together with the title and registration documents.

Citations and references

• Article 6686, Revised Statutes — historical dealer-license citation in the letter.
• Article 4413(36), Vernon's Texas Civil Statutes — historical Texas Motor Vehicle Commission Code citation.
• Texas Transportation Code Chapter 503 — identified by the letter as the then-current codification.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9704156L

Original ruling text

April 3, 1997

Dear ***:

Thank you for your letter requesting motor vehicle tax information.

Facts: Yours is an auto auction company. Once a month you sell vehicles on
government certificates. You ask for a written statement as to your
responsibility for collecting motor vehicle sales tax when you sell a
government vehicle to a public buyer (not sold wholesale to a licensed motor
vehicle dealer).

Response: The tax law requires a seller who holds a dealer license issued
pursuant to the authority of Article 6686, Revised Statutes, or the Texas Motor
Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil Statutes; now
codified in the Transportation Code, Chapter 503), to collect the tax from the
purchaser and remit it to the tax assessor-collector in the time and manner
provided by law. I spoke with a representative in the licensing department of
the Texas Department of Transportation who told me that a holder of a wholesale
motor vehicle auction general distinguishing number may also sell
government-owned motor vehicles to a non-licensed buyer. However, when selling
to the non-licensed purchaser, the licensed seller is required to complete and
file all documents necessary to transfer title and/or register the motor
vehicle in the name of the purchaser. Since your company holds a wholesale
motor vehicle auction general distinguishing number issued under the
Transportation Code, you are required to collect the tax from the purchaser and
remit it to the tax assessor-collector, along with documentation to transfer
and register the vehicle.

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

If you have any questions, please do not 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