# 1 R-506



### OFFICE OF 

# THEATTORNEY GENERASL

June 5, 1947

Honorable George Ii.Sheppard Comptroller of PublicAccounts Austin, Texas Opinion No. V-236
Re: The effect to be accorded the l$ sales tax on transfer of motor vehicles under Dear Sir: the submitted facts.

You have requested the opinion of this Department upon the following factual situation:

"9 car owner trades a SecondHand Automobile valued at $3,043.00 to a dealer for a new unregisteredautomobile valued at $2,471.00. The dealer pays the difference of $572.00 to the originalcar owner in cash. 'The' Tax Aas~essor-Collector upon &he application~for registration of these two automobiles demanded the 1% Sales Tax on the $3,043.00 automobile as authorized by subsection b of Section I of Article 7047-X. The oar dealer refused the payment of this tax relying on subsectionb of Section II of Article 7047X. The Tax Assessor-Collectorhas written this Department as to whether he Is required to oollect the taxes from the above mentioned. hue shall, therefore,.thankyou to advise us whether the dealer 1s required to pay the taxes. "Thedealer alleges that the SecondHand car was puzyzhased by him for re-sale only, and the tirlginal

-ownerof the Second Hand car alleges~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 ofHonorable GeorgeH. Sheppard - Page 2

the new car was lees than the value of the oar that was traded to the deeler for it.”
Your query ivwhether or not the l$ motor vehicle retail sales tax Is due on the sale of the automobile valued at $3,043.00 or on the sale of the automobile valued at $2471.00.

The pertinentparts of House BLll Ho. 8,'lots of the 47th Legislature,Regular Session, 1941, Chapter 184, ArticleVI, p. 

### 269 (Codlfledas Article 7047-X, Vernon’s Civil Statutes),are as follows:

“Section 1. (a) There Is hereby levied a tax upon every retail sale of every 

### motor vehicle sold In thl Stat to be equal to one (1)pe: such tax -enteA*the total considerationpaid or to be paid to the seller by thebuyer, which 

### conalderetlon shell include the amount paid or to be paid 

### for said motor 

### vehicleend 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 lavolvint$ the exohange OT motor vehloleu, the partz transre~rlngthe title to the motor vehlole NV- &g the greetervs1ue 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 herein used shall lnolude lnstalmentand oredit mle#, and the exahenge of propetir, (16 well ea the sale thsrsoS Tar money, evet~ olosed trars9otion **aonotltuting a**  

### mle. The tremaction whereby the possesrlon of propezrtg18 

### transferred but 

### the seller retain8 title II 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~rrlrrHonorable George B. ~Sheppard+Page 3

**I** ’ofCotor vehicles exckpt thoaa..rhsreby’t~s “;..’ 

### purchasere’cqu%tia a.~ motor vehicle fOI? the, exclusivepurpose of resale and not for use.” @mphaala added] The 

### q otok:vdhltil$~

retail sales tax composes ArticleVI of House aill No. 8, known as the “Omnibus Tax Bill”, thb,pimsry object of whlah was the raising of general ,revenuefor the State. The general rule of law, in the.construotionof tax statutes

### when the leglslative intent Is ambiguous or obscure, of strict constructionagainst the State and liberal construction In favor of the taxpayer,must be applied. Jur. Par. 45,~~. 

### 69). (See 40 Tex.

In thatpert of the transaction lnvolvlng the automobilevalued at $3043.00, the.owner transferrl “5 its .tltle$ecamd the “seller”as defined In Section 1 (b aslpre, allicealich,motor

vehicle had the greater value’ln the exchange of vehicles. The dealer became the “purchaser” of 

### suchvehicleand having acquired It for the “exc1ua.lve

purpose of resale” is exempt from the payment bf the tax thereonby the provisions of Section 3 (b) 

### a upra.* As to that part of the transa,ctlon when the oar dealer transfers the title to the new unregisteredautomobile valued ~3%$2471.00,as’a part of the “retailsale lnrolvlng the exchange.of. motor vdhicleti”,

since this autom6biU wee 'tredbd ln,up& the purchas&prlce of some other moto%.‘~ehial&“, vhioh was of.leaser‘valuethan the other motor vehicle ltivolved in the “exchange,”the car dealer Is not the.“seller”as defined in Section 1 (b) supra, and no tax is imposed upon Its transfer. Therefore, such motor vehicle wg be registeredwithout the payment of the 1% sales tax by eitherpsrtg.



### SUMMARY
Wh6re an .exchangeIs made by the :ownerof a used motor vehiclewith a ca~r dealer for a new unregisteredmotor vehicle togetherwith an additionalcash considerationpaid by the oar dealer to the owner, the used vehicle being acquired by the car dealer for the eizzlualvepurpose of resale, each of the motor vehicles may be registeredwithout the payment of the 1%Honorsble George H..Sheppard -pa:ge4~



### motor.~vehiale

rate13asleatax,the~~on.Article 7047-K, Vernonb 

### C$vU Ste$utea.- -.

CKR/lh C. I.~Riabarda Assistant

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