1 R-506 

OFFICE OF 

THE ATTORNEY GENERASL 

June 5, 1947 

Honorable George Ii. Sheppard 

Comptroller of Public Accounts 

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 Second Hand Automobile 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 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 subsection b of Section II of Article 7047X. 

The Tax Assessor-Collector has written this Department as to whether he Is required to oollect the taxes from the above mentioned. hue 

shall, therefore,.thank you to advise us whether 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 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 of 
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 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 pertinent parts of House BLll Ho. 8, 'lots 

of the 47th Legislature, Regular Session, 1941, Chapter 

184, Article VI, p. 269 (Codlfled as 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 

consideration paid or to be paid to the seller 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 lavolvint$ 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 herein 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 tremaction whereby the possesrlon of propezrtg 18 

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~rrlrr 
Honorable George B. ~Sheppard +Page 3 

I 

’ 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. 8, 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 leglslative intent Is ambiguous or obscure, of strict construction against the State and liberal construction In 

favor of the taxpayer, must be applied. 

Jur. Par. 45,~~. 69). 

(See 40 Tex. 

In that pert of the transaction lnvolvlng the 

automobile valued at $3043.00, the. owner transferrl 

“5 

its 

.tltle $ecamd the “seller” as defined In Section 1 (b 

aslpre, allice alich,motor vehicle had the greater value’ln 

the exchange of vehicles. The dealer became the “purchaser” 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 3 (b) 

a upra .* 

As to that part of the transa,ctlon when the oar 

dealer transfers the title to the new unregistered automobile valued ~3% $2471.00, as’ a part of the “retail sale 

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 ‘value than 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 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 acquired by the car dealer for the eizzlualve purpose of resale, each of the motor vehicles may 

be registered without the payment of the 1% 
Honorsble George H.. Sheppard - pa:ge 4~ 

motor.~vehiale rate13 aslea tax,the~~on. Article 7047-K, Vernonb C$vU Ste$utea.- -. 

CKR/lh 

C. I.~Riabarda 

Assistant 

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