# TEIICATI-ORNEY GENERA& OF TEXAS
**AUSTIN.** 

### TEXAS WEWll

A,ugust 26, 1974 The Honorable Robert S. Calvert Comptroller of Public Accounts State Finance Bldg. Austin, Texas Opinion No. H- 381 Re: May an auto dealer, his employees and members of his family, use an auto without paying tax under Art. 

### 6686 (a)(I), V. T. C.S. Dear Mr. Calvert:

Inour Opinion No. H-173 we considered three questions from your office, the last ofthem being: Where title is held in the name ofthe dealer or seller and is used unregistered inaccordance with Article 6686, Revised Civil **Statutes** of Texas, for reference Article 6.03, Section B, does Attorney General Opinion No. M-141 apply onmotor vehicles that are used by the dealer, his employees, and members offamily. Also, does it apply to registered vehicles used before sale from someone other than the dealer. Our discussion of that question in Opinion H-173 and our answer to it was:
Article 6.03B defines the term “retail sale” as follows: “The term ‘retail sale’ as herein used shall include all sales of motor vehicles except those whereby the purchaser acquires a motor vehicle for the exclusive purpose of resale and not for use

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and shall not include those operated under and in accordance with the terms ofArticle 6686, Revised Civil Statutes of Texas, 1925, as amended. ” Attorney General Opinion No. M-141 construed this provision in October, 1967, before the reference toArticle 6686, V. T. C.S., was added by the 60th Legislature, effective October 1,1968. Article 6686, V. T. C.S.

__pertains to dealers’ licenses and regulates those instances when automobile dealers may operate unregistered vehicles through the use of such dealers’ temporary licenses. Some ofthe conclusions inAttorney General Opinion M-141 are affected by this amendment. For instance, the conclusion in the opinion that “demonstrators” are taxable to dealers would no longer be correct because $4(a) ofArticle 6686 allows **unregistered** vehicles to be used as demonstrators. However, with specific reference toyour question, the last paragraph of $4 ofArticle 6686 provides in part: “Such tags shall not be used to operate vehicles for the personal use ofa dealer or his employees.” Of course, as pointed out inAttorney General Opinion M-141, whether a vehicle is being used personally is a question, offact. However, it is plain that a vehicle employed for the personal use ofthe dealer, his employees, his or their families, or of someone other than the dealer is subject tothe tax, Such use with dealers’ licenses is prohibited bythe above - quoted provisions ofArticle 6686. This would be **true** even though the same automobile is also being used for proper purposes specified inArticle 6686 for unregistered vehicles. Again, as inAttorney General Opinion M-141, we suggest that you clarify these matters by rules and regulations promulgated under the authority ofArticle 6.02, V. T. C.S., TaxationGeneral.

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The Summary of our opinion was in part: (3)An automobile devoted wholly or partially to the personal use ofa dealer, a dealer’s employees or their respective families, or to someone other than the dealer is subject to the Motor Vehicle Sales and Use Tax. You now submit the following inquiries:

We would, therefore, appreciate a clarification onwhether **your** original answer applies to both the **use** ofmotor vehicles with dealers’ plates as provided in Article 6686 (a)(l) and the **use** of motor vehicles with temporary cardboard tags under Article 6686 (a)(4). Ifthe limitation contained inArticle 6686 (a)(4) does not apply toArticle 6686 (4 (I), may a dealer, his employees, and members ofhis family use such vehicle without paying Chapter 6tax. In 1967 you submitted substantially the same basic question to this office and itwas answered inAttorney General Opinion M-141 which concluded: The Motor Vehicle Sales Tax applies to all sales ofmotor vehicles to a dealer where the vehicle is extensively utilized for the personal or business purposes ofthe dealer, his family or employees, including **use** ofthe vehicle as a demonstrator to effect the sale of other vehicles. The tax does not apply where thevehicle is driven in connection with an attempted sale to aprospective purchaser; nor to other incidental use in connection therewith. However, as we noted in Opinion H-173, the tax statutes, at that time, contained no reference toArticle 6686, V. T. C.S. We are ofthe opinion that Attorney General Opinion **M-141** was correct when itwas decided and the only question here ia the extent towhich the added reference inArt. 6.03(B),

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Taxation-General toArticle 6686, requires a different answer.

Article 6686, V. T. C.S., is lengthy. Omitting portions which are not relevant tothe question before us ,: it provides: (a) Dealer’s and Manufacturer’s License Plates for Unregistered Motor Vehicles, Motorcycles, ,‘Bouse Trailers, Trailers, and Semitrailers. (1)Dealer’s License. Any dealer in motor vehicles, motorcycles, house trailers, trailers, or semitrailers doing business in this State may, instead of registering each vehicle he operates or permits to be operated for any reason upon the streets or public highways, apply for and **secure** a general distinguishing number which may be attached to any such vehicle he owns and operates or permits to be operated unregistered. (2) Manufacturer’s License
. . . . (3) Buyer’s Temporary Cardboard Tags
. . . . (4) Dealer’s Temporary Cardboard Tags. Each dealer holding a current distinguishing number may issue temporary cardboard numbers, corresponding to such dealer!s license number, which may only be used by such dealer or his employees for the following purposes: [a] to demonstrate or cause to be demonstrated his unregi.stered vehicles toprospective buyers only for the purpose of sale; provided, however, that no provision of this Act shall be construed to prohibit a dealer from permitting a prospective buyer to operate such vehicles in the course ofdemonstration. [b] to convey or cause to be conveyed his unregistered vehicles from the dealer’s place ofbusiness in one part

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ofthe State tohis place of business in another part ofthe State, or from his place ofbusiness toa place to be repaired, reconditioned, or serviced, or from the point in this State where such vehicles are unloaded tohis place ofbusiness, including the moving of such vehicles from the State line tohis place ofbusiness, and such vehicles displaying such tags while being so conveyed shall be exempt from the mechanical inspection requirements ofSections 140and 141ofthe Uniform Act Regulating I Traffic onHighways. Such tags shall not be used to operate vehicles for the personal use ofa dealer or his employees
. . . . (5) Cancellation of License
. . . . (6) Limited Use of Dealer’s Plates and Tags. The use of dealer’s license or facsimiles thereof is prohibited on service or work vehicles or on commercial vehicles carrying aload; provided, however, that a boat trailer carrying a boat will not be coneidered to be a commercial vehicle carrying aload, and a’dealer complying with the provisions ofthis Act may affix to the rear ofa boat trailer he owns or tothe rear ofa boat trailer he sells’ such dealer’s distinguishing number or cardboard facsimiles thereof pursuant to the provisions of Subsections (l), (3) and (4) ofthis Act.
. . .

./ (11)Rules and Regulations. The Department is hereby

authorized to promulgate reasonable rules and regulations for the orderly administration ofthis Act.

. . . Your question suggests that the taxation ofautomobiles operated with metal tags differs from the taxation ofthose operated with temporary cardboard

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The Honorable Robert S. Calvert page 6 (H-381)

**tags.** This theory, apparently is based on the words “to be operated for any reason” inArt. 6686 (a)(1)whereas Art. 6686 (a)(4) restricts the uses ofvehicles with temporary tags. We disagree.

The dealers’ temporary cardboard tag is in reality a replica ofthe metal identification number. Were we toascribe different consequences to this use, we would have the anomalous result ofa dealer being able to vary the allowable use ofa vehicle by exchanging cardboard tags for metal ones, or vice versa. Unless there is no alternative, a statute will not be interpreted so as tolead to afoolish or absurd result. McKinney v. Blankenship, 282 S.W. 2d 691 (Tex. 1955).

Furthermore, were we toadopt the view that automobiles operated with metal tags under 6686 (a)(l) could be operated for any purpose, serious questions would arise as to the constitutionality ofthe taxation rule adopting such a dichotomy between automobiles owned by dealers and those not. Article 8 51. Texas Constitution, requires that “taxation shall be equal and uniform. ” By allowing dealers, their family, friends and employees to **use** automobiles for personal purposes, totally unconnected with legitimate business needs ofthe dealers, without paying the sale or use tax at the time ofacquisition of said automobiles, the legislature would, in effect, exempt this class ofperson,sfrom the tax, while taxing identical uses byall other citizens ofthe state. This would be neither “equal” nor “uniform. ” See Greyhound Lines, Inc. v. Board of lZqualization, 419 S.W. 2d 345 (Tex. 1967); 

### H. Rouw Co.v. Texas Citrus Commission, 247 SiW. 2d 231 (Tex. 1952). Where a statute is susceptible to more than one reasonable construction, the Courts will not adopt that one which would render the statute unconstitutional. State v. Shoppers World, Inc., 380 S.W. 2d 107 (Tex. 1964). We, in our advisory function; ,should follow the same rules of construction.

We are reinforced in this conclusion by the Rules and Regulations Governing the Cancellation of Dealer’s Licenses, promulgated by the Texas Highway Department under the authority ofArticle 6686 (a)(11). They describe as aviolation:

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The Honorable Robert S. Calvert page 7 (H-381)

Using or permitting the use ofa metal Dealers Plate or a Dealer’s Temporary Cardboard Tag onany vehi.cle which the Dealer does not own or control, or onavehicle which is not ‘in stock and for sale. ’ Itis our opinion, therefore, thatan automobile used for the personal **use** ofadealer, his employees, or their families is subject to the tax of Article 6.01, Taxation-General, V. T. C.S., regardless ofwhether it is operated with metal or cardboard tags. SUMMARY An automobile owned by a dealer and used for the personal purposes ofthe dealer, his employees, or their families, is subject to the Motor Vehicle Sales and Use Tax, Article 6.01, Taxation-General, V. T. C.S., regardless of whether it is operated with metal plates or Temporary Cardboard Tags. Very truly yours,

Attorney General of Texas

DAVID M. KENDALL, Chairman Opinion Committee lg

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