1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Accessories--Nonessential tangible personal property attached to a boat for the convenience or comfort of the operator or passengers. For purpose of this rule, the term "accessories" includes, but is not limited to, radios, mirrors, transom-mounted ladders, electric trolling motors, and depth finders.
   2. (2) Dealer--A person or entity engaged in the business of buying, selling, or exchanging boats or boat motors at an established or permanent place of business in this state. At each such place of business a sign must be conspicuously displayed showing the name of the dealership so that it may be located by the public, and sufficient space must be maintained for an office, service area, and display of boats and boat motors.
   3. (3) Department--The Texas Parks and Wildlife Department.
   4. (4) Manufacturer--A person or entity engaged in the business of manufacturing new and unused boats and boat motors for the purpose of sale or trade.
   5. (5) Retail sale--Any sale of a boat or boat motor other than a sale in which the dealer or manufacturer acquires the boat or boat motor for the exclusive purpose of resale. Dealers and manufacturers, as defined, are the only persons or entities that may acquire a boat or boat motor for resale.
   6. (6) Tax assessor-collector--Any of the county tax assessors-collectors in the State of Texas.
   7. (7) Taxable boat--Any watercraft, other than a seaplane on water, not more than 65 feet in length. This includes federally documented boats, motorboats, sailboats, jet skis, and boats designed to accommodate an outboard motor. Excluded from this definition are canoes, kayaks, rowboats, inflatable rafts, or other watercraft designed to be propelled by paddle, oar, or pole. These excluded watercraft are taxed under Limited Sales, Excise and Use Tax, unless some other exemption applies.
   8. (8) Taxable motor--Any self-contained internal combustion propulsion system of any horsepower, excluding fuel supply, used to propel a watercraft, that is detachable from the boat. Electric boat motors are excluded.
   9. (9) Total consideration--The amount paid or to be paid for a taxable boat or boat motor, including all accessories attached at the time of or before the sale. This amount includes the costs of transportation before the sale and any manufacturer's or importer's excise tax imposed by the United States government. This amount does not include any separately stated finance charges, service charges, or other interest charges. Also excluded from total consideration will be the value of a taxable boat or boat motor taken by the seller as all or part of the consideration for the sale of the boat or boat motor. No other tangible, intangible, or real property will be excluded from total consideration. Also excluded from total consideration are charges for transportation of the boat or boat motor after the sale.
   10. (10) Use--Any storage or other exercise of rights of ownership in this state by any person or entity, excluding the storage, display, or holding of a boat or boat motor exclusively for sale by a dealer or manufacturer, as defined in this subsection.

2. (b) General principles.

   1. (1) The purchase of a taxable boat and boat motor and all accessories attached thereto at the time of sale is subject to the boat and boat motor sales and use tax (Tax Code, Chapter 160). The purchase of a taxable boat or boat motor for purposes of rental is subject to Tax Code, Chapter 160.
   2. (2) The purchase of accessories for a boat and boat motor attached after the time of sale of the boat or boat motor is subject to the limited sales, excise, and use tax (Tax Code, Chapter 151). The rental of a taxable boat or boat motor is subject to Tax Code, Chapter 151.
   3. (3) The purchase of tangible personal property is subject to the limited sales, excise, and use tax, if no item can be identified as a boat or boat motor even if the combination of items of tangible personal property becomes a boat or boat motor. If items of tangible personal property are combined to produce a boat or boat motor, the initial titling or registration of the boat or boat motor in the name of the person who produced the boat or boat motor is not subject to the provisions of the boat and boat motor sales and use tax. If, however, the boat or boat motor is titled or registered in any other person's name, the transfer is subject to the provisions of the boat and boat motor sales and use tax.
   4. (4) Safety equipment required by the Parks and Wildlife Code, §§31.064-31.071, including life preservers and fire extinguishers, purchased with a taxable boat or boat motor are considered to be attached to the boat or boat motor and subject to the provisions of the boat and boat motor sales and use tax.

3. (c) Imposition of the tax.

   1. (1) A sales tax is imposed on each retail sale of a taxable boat or boat motor in this state. The tax is the obligation of and shall be paid by the purchaser of the taxable boat or boat motor.
   2. (2) The tax rate is 6.25% of total consideration paid or to be paid.

4. (d) Payment of the tax.

   1. (1) After the completion of the seller, donor, or trader's affidavit for the sale of a boat or boat motor, if the seller collects the tax from the purchaser, the seller must remit the tax to either a county tax assessor-collector or to the department within 20 working days from the date the taxable boat or boat motor is delivered to the purchaser.
   2. (2) After the completion of the seller, donor, or trader's affidavit for the sale of a boat or boat motor, the seller may give the original affidavit to the purchaser. The purchaser is then required to remit the tax to either a county tax assessor-collector or to the department within 20 working days from the date the taxable boat or boat motor is delivered to the purchaser.
   3. (3) The payment of the boat or boat motor use tax is the responsibility of the user and is due within 20 working days after the date that the taxable boat or boat motor is brought into this state.

5. (e) Purchase of accessories/components for resale.

   1. (1) Items combined into a boat or boat motor. A resale certificate as provided for in the Limited Sales, Excise, and Use Tax Act may be used in purchasing tangible personal property to be combined into a boat or boat motor held for sale in the purchaser's regular course of business. This includes all accessories that are included in a single sales price for the accessory, boat, and boat motor. These accessories include water skis and tow ropes. The lump-sum sales price will be subject to the boat and boat motor sales and use tax.
   2. (2) Accessories purchased to be attached to a boat or boat motor that is not subject to the boat and boat motor sales and use tax (boats over 65 feet in length), are subject to the limited sales, excise, and use tax. See also §3.285 of this title (relating to Resale Certificate; Sales for Resale), §3.294 of this title (relating to Rental and Lease of Tangible Personal Property), and §3.297 of this title (relating to Carriers).

Source Note:The provisions of this §3.741 adopted to be effective December 5, 1996, 21 TexReg 11518; amended to be effective August 4, 1998, 23 TexReg 7840.