TEIIC ATI-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: 

In our Opinion No. H-173 we considered three questions from 

your office, the last of them being: 

Where title is held in the name of the dealer 

or seller and is used unregistered in accordance with 

Article 6686, Revised Civil Statutes of Texas, for 

reference Article 6.03, Section B, does Attorney General 

Opinion No. M-141 apply on motor vehicles that are used 

by the dealer, his employees, and members of family. 

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 

p0 1787 
The Honorable Robe,rt S. Calve&? page 2 (H-381) 

and shall not include those operated under and in 

accordance with the terms of Article 6686, Revised 

Civil Statutes of Texas, 1925, as amended. ” 

Attorney General Opinion No. M-141 construed this provision 

in October, 1967, before the reference to Article 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 of the conclusions in Attorney 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) of Article 6686 

allows unregistered vehicles to be used as demonstrators. 

However, with specific reference to your question, the 

last paragraph of $4 of Article 6686 provides in part: “Such 

tags shall not be used to operate vehicles for the personal 

use of a dealer or his employees.” 

Of course, as pointed out in Attorney General Opinion 

M-141, whether a vehicle is being used personally is a 

question, of fact. However, it is plain that a vehicle employed 

for the personal use of the dealer, his employees, his or 

their families, or of someone other than the dealer is subject 

to the tax, Such use with dealers’ licenses is prohibited by the 

above - quoted provisions of Article 6686. This would be true 

even though the same automobile is also being used for proper 

purposes specified in Article 6686 for unregistered vehicles. 

Again, as in Attorney General Opinion M-141, we suggest 

that you clarify these matters by rules and regulations promulgated under the authority of Article 6.02, V. T. C. S., TaxationGeneral. 

ps 1788 
The Honorable Robert S. Calvert page 3 (H-381) 

The Summary of our opinion was in part: 

(3) An automobile devoted wholly or partially to the 

personal use of a 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 

on whether your original answer applies to both the use 

of motor 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). If the limitation 

contained in Article 6686 (a)(4) does not apply to Article 6686 

(4 (I), may a dealer, his employees, and members of his 

family use such vehicle without paying Chapter 6 tax. 

In 1967 you submitted substantially the same basic question to this 

office and it was answered in Attorney General Opinion M-141 which concluded: 

The Motor Vehicle Sales Tax applies to all 

sales of motor vehicles to a dealer where the 

vehicle is extensively utilized for the personal 

or business purposes of the dealer, his family 

or employees, including use of the vehicle as a 

demonstrator to effect the sale of other vehicles. 

The tax does not apply where the vehicle is driven 

in connection with an attempted sale to a prospective 

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 to Article 6686, V. T. C. S. We are of the opinion that 

Attorney General Opinion M-141 was correct when it was decided and the only 

question here ia the extent to which the added reference in Art. 6.03(B), 

ps 1789 
The Honorable Robert S. Calvert page 4 (H-381) 

Taxation-General to Article 6686, requires a different answer. 

Article 6686, V. T. C. S., is lengthy. Omitting portions which are 

not relevant to the 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 to prospective 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 of demonstration. 

[b] to convey or cause to be conveyed his unregistered 

vehicles from the dealer’s place of business in one part 

p. 1790 
The Honorable Robert S. Calvert page 5 (H-381) 

of the State to his place of business in another part 

of the State, or from his place of business to a place 

to be repaired, reconditioned, or serviced, or from 

the point in this State where such vehicles are unloaded 

to his place of business, including the moving of such 

vehicles from the State line to his place of business, and 

such vehicles displaying such tags while being so conveyed 

shall be exempt from the mechanical inspection requirements of Sections 140 and 141 of the Uniform Act Regulating 

I Traffic on Highways. 

Such tags shall not be used to operate vehicles for the 

personal use of a 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 a load; provided, however, that a boat trailer 

carrying a boat will not be coneidered to be a commercial 

vehicle carrying a load, and a’dealer complying with the 

provisions of this Act may affix to the rear of a boat 

trailer he owns or to the rear of a boat trailer he sells’ 

such dealer’s distinguishing number or cardboard facsimiles 

thereof pursuant to the provisions of Subsections (l), (3) and 

(4) of this Act. . . . 

./ 

(11) Rules and Regulations. The Department is hereby 

authorized to promulgate reasonable rules and regulations 

for the orderly administration of this Act. 

. . . 

Your question suggests that the taxation of automobiles operated with 

metal tags differs from the taxation of those operated with temporary cardboard 

p. 1791 
. . 

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

tags. This theory, apparently is based on the words “to be operated 

for any reason” in Art. 6686 (a) (1) whereas Art. 6686 (a) (4) restricts 

the uses of vehicles with temporary tags. We disagree. 

The dealers’ temporary cardboard tag is in reality a replica of the 

metal identification number. Were we to ascribe different consequences 

to this use, we would have the anomalous result of a dealer being able to 

vary the allowable use of a vehicle by exchanging cardboard tags for metal 

ones, or vice versa. Unless there is no alternative, a statute will not be 

interpreted so as to lead to a foolish or absurd result. McKinney v. 

Blankenship, 282 S. W. 2d 691 (Tex. 1955). 

Furthermore, were we to adopt 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 of the 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 of the dealers, without paying the sale or use tax at the time 

of acquisition of said automobiles, the legislature would, in effect, exempt 

this class of person,sfrom the tax, while taxing identical uses by all other 

citizens of the 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 Si W. 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 of Article 6686 (a) (11). They 

describe as a violation: 

p. 1792 
- . . 

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

Using or permitting the use of a metal Dealers Plate 

or a Dealer’s Temporary Cardboard Tag on any 

vehi.cle which the Dealer does not own or control, or 

on a vehicle which is not ‘in stock and for sale. ’ 

It is our opinion, therefore, that an automobile used for the personal 

use of a dealer, his employees, or their families is subject to the tax of 

Article 6.01, Taxation-General, V. T. C. S., regardless of whether it is 

operated with metal or cardboard tags. 

SUMMARY 

An automobile owned by a dealer and used 

for the personal purposes of the 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 

p. 1793