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R-506 OFFICE OF THE ATTORNEY GENERASL June Honorable George Ii. Sheppard
Comptroller of Public Accounts Opinion No. V-236
Austin, Texas
Re: The effect to be ac- corded the l$ sales tax on transfer of motor vehicles under the submitted facts.
Dear Sir:
You have requested the opinion of this Depart- ment upon the following factual situation:
"9 car owner trades a Second Hand Auto- mobile valued at $3,043.00 to a dealer for a new unregistered automobile valued at $2,471.00. The dealer pays the difference of $572.00 to the original car owner in cash.
'The' Tax Aas~essor-Collector upon &he ap- plication~for registration of these two auto- mobiles demanded the 1% Sales Tax on the automobile as authorized by subsec- $3,043.00 tion b of Section I of Article 7047-X. The oar dealer refused the payment of this tax relying on subsection b of Section II of Article 7047X.
The Tax Assessor-Collector has written this De- partment as to whether he Is required to ool- lect the taxes from the above mentioned. hue shall, therefore,.thank you to advise us wheth- er the dealer 1s required to pay the taxes.
"The dealer alleges that the Second Hand car was puzyzhased by him for re-sale only, and the tirlginal -owner of the Second Hand car al- leges~that the new car acquired by him Is for personal use.
"Due to the fact that no tax has been paid upon the sale of the new automobile valued at $2,471.00, and It Is to be used upon the high-, ways, you will please advise us whether or not a tax should be paid even though the value of *2 Honorable George H. Sheppard - Page 2
the new car was lees than the value of the oar that was traded to the deeler for it.”
Your query iv whether or not the l$ motor ve- hicle retail sales tax Is due on the sale of the auto- mobile valued at $3,043.00 or on the sale of the automo- bile valued at $2471.00.
The pertinent parts of House BLll Ho. 8, 'lots of the 47th Legislature, Regular Session, 1941, Chapter 184, Article VI, p. (Codlfled as Article 7047-X, Vernon’s Civil Statutes), are as follows:
“Section 1. (a) There Is hereby lev- ied a tax upon every retail sale of every vehicle sold In thl Stat such tax to be equal to one (1) pe: -enteA* the total consideration paid or to be paid to the sell- er by the buyer, which conalderetlon shell include the amount paid or to be paid for said motor vehicle end all aecessorlea attaohed thereto at the time of, the sala, vhethep ouoh consldemtlon be In the nature of aaeh, credit, or exchange of other property, or a oomblnat;on of these . . .
“(b) In all cases of retell sales lavolv- int$ the exohange OT motor vehloleu, the partz transre~rlng the title to the motor vehlole NV- &g the greeter vs1ue Shall be ooMieeraa the seller, and no tex is Imposed upon the trclnafor Of a motor vehiole tredea Ln UDOll the DuroMIe prlOe 0T acme ,OthOF motor VOhlOle.
” . . .
“Sootion 3. (a) The term ‘#ale’ a6 here- in used shall lnolude lnstalment and oredit mle#, and the exahenge of propetir, (16 well ea the sale thsrsoS Tar money, evet~ olosed trars9otion aonotltuting a mle. The trem- action whereby the possesrlon of propezrtg 18 transferred the seller retain8 title II but eaouritg for the payment of the prioe ah811 bo deemed a sale. l’(b) The term Wtall srls’ or 9etall
mleef 88 herein used shell inolude rlZ~rrlrr *3 Honorable George B. ~Sheppard +Page
’ of Cotor vehicles exckpt thoaa..rhsreby’t~s “;..’
purchaser e’cqu%tia a .~ motor vehicle f OI? the, exclusive purpose of resale and not for use.” @mphaala added]
The q otok:vdhltil$~ retail sales tax composes Article VI of House aill No. known as the “Omnibus Tax Bill”, thb,pimsry object of whlah was the raising of general ,revenue for the State. The general rule of law, in the.construotion of tax statutes when the legls- lative intent Is ambiguous or obscure, of strict con- struction against the State and liberal construction In (See 40 Tex. favor of the taxpayer, must be applied. Jur. Par. 45,~~. 69).
In that pert of the transaction lnvolvlng the automobile valued at $3043.00, the. owner transferrl its .tltle $ecamd the “seller” as defined In Section 1 (b “5 aslpre, allice alich,motor vehicle had the greater value’ln the exchange of vehicles. The dealer became the “pur- chaser” of such vehicle and having acquired It for the “exc1ua.lve purpose of resale” is exempt from the payment bf the tax thereon by the provisions of Section (b) a upra .*
As to that part of the transa,ctlon when the oar dealer transfers the title to the new unregistered auto- mobile valued ~3% $2471.00, as’ a part of the “retail sale lnrolvlng the exchange.of. motor vdhicleti”, since this auto- m6biU wee 'tredbd ln,up& the purchas&prlce of some oth- er moto%.‘~ehial&“, vhioh was of .leaser ‘value than the oth- er motor vehicle ltivolved in the “exchange,” the car deal- er Is not the. “seller” as defined in Section 1 (b) supra, and no tax is imposed upon Its transfer. Therefore, such vehicle wg be registered without the payment of the 1% sales tax by either psrtg.
SUMMARY Wh6re an .exchange Is made by the :owner of a used motor vehicle with a ca~r dealer for a new unregistered motor vehicle together with an additional cash consideration paid by the oar dealer to the owner, the used vehicle being ac- quired by the car dealer for the eizzlualve pur- pose of resale, each of the motor vehicles may be registered without the payment of the 1% *4 Honorsble George H.. Sheppard - pa:ge 4~
motor.~vehiale rate13 aslea tax,the~~on. Arti- cle 7047-K, Vernonb C$vU Ste$utea.- -. C. I.~Riabarda Assistant *e -% CKR/lh :I ATToRmcimIqRAL L