1 

R-894 

THE A’ITORNEY GENERAL. 

‘09~ TEXAS 

November 24, 1947 

Ron. George H. Sheppard 

Comptroller of Public Accounts 

Austin, Texas Opinion No. V-4 j$i 

Re: The appllcablllty of the 

1% motor vehicle use tax 

when automobiles are exchanged outside Texas by 

Texas residents for use 

In ~the State . 

Dear Sir : 

You have requested the opinion of this Department 

in answer to the following questions: 

“You will please edvise this departTent 

whether or not the 1% Motor Vehicle Use ,x should 

be paid by e resident of Texas who goes outside the 

State and purohases a motor vehicle, and brings It 

back Into Texas for use upon our public highvays, 

in the following cases: 

“1. In regard to the 1% Motor Vehicle Use 

Tax to be charged on motor vehicles that are purchased outside of this State by a resident of the 

State and brought Into Texas for use upon our public hlghvags, a motor vehicle having a value of 

$1,500.00 is evenly traded for another motor vehFcle having a value of $1,500.00, and the resident 

of Texas brings the motor vehicle, for which he 

traded in another State, back Into Texas for use 

upon our highways. Should the tax be paid? 

“2. A resident of Texas trades a motor vehlcle having a value of l,OOO.OO for a motor ve: ~” 

hlcle havin 

8 

a value of t 1,500.00, paying the&fference of 500.00 in cash, and brings the $1,500.00 

motor vehicle back into Texas for use upon our highvags. Must the tax be paid on the $1,500.00 motor 

vehlc le? 
Hon. Geo. H. Sheppard, Page 

“3. The resident 

vehicle having a velue 

___ _ _ 

2 (no. v-439) 

, 

vehicle mvmg a value 

of Texas trades a motor 

of l,OOO.OO for a motor 

of sOO.00 and receives 

_ _ t _ __. ._ 

a difference of $200.00 in casn, and brings the 

$800.00 vehiole back into Texas for use upon our 

;gps * Must a tax be paid on the $800.00 veThe answers to your questions must be governed by 

the provisions of Article VI, Chapter 184, Acts of the 48th 

Legislature, Regular 3esslon, 1941, page 269, known as the 

“Omnibus Tax Bill” and codified as Artlole 7047k, V. C. 3. 

The pertinent ,~seatlons OS the above Article are as follovs: 

“Sectlon 1. (a) There Is hereby levied a tax 

upon every retail sale of every motor vehicle sold 

in this State, such tax to be equal to one (1) per 

cent OS the total consideration paid or to be paid 

to the seller by the buyer, which consideration shall 

include the amount paid or to be paid SrcPsaid motor 

vehicle and all accessories attached thereto at the 

time OS the sale, whether such consideration be in 

the nature of cash, credit, or exchange of other property, or a combination OS these. In the event the 

consideration received b7 the seller Includes any 

tax imposed by the Federal Government, then such 

Federal tax shall be deducted from such conslderatlon for the purpose of computing the amount of tax 

levied by this Article upon suah retail sale. 

“(b) In all cases OS retail sales Involvingthe 

exchange of motor vehicles, the party transferring 

the title to the motor vehicle having the greater 

value shall be considered the seller, and no tax is . 

imposed upon the transfer of a motor vehicle traded 

In upon the purchase price OS some other sotor vehlcle. 

“Sec. 2.. There fs hereby levied a use tax upon. ‘. 

every motor vehicle purchased at retail mts.$de ~‘, 

of this State and brought into this State for use upon 

the public highways thenof by a resident OS this State 

or by Sims OF c 

In this State. 

cent of the tota 

said vehicle et said retail sale. The tax shall be the 

obligation of and be paid by the persod, firm, or Oorporation operating said motor vehicle upon the public hlghways of this State. 

. 
Hon. Gee., Ii. Sheppard - Page 3 (Ho. V-439) 

‘Sea. 3. (a) The term ‘aale’ or ‘saleaf as 

herein used shall Include lnstalment and credit 

sales, and the exohange OS property, as well as the 

sale thereof for money, every closed transaction 

constituting .a sale. The transaotlon whereby the 

possession OS property Is transferred but the seller 

retains title as security for the payment OS the 

price shall be deemed .a sale. 

“(b) The term ‘retail sale’ or ‘retail aales’ 

aa herein used shall Include all sales of motor vehicles except those whereby the purchaser acquires 

a motor vehiole for the exclusive purpose of resale 

and not for use. 

“(0) The term ‘mOtOr vehicle’ as herein used 

shall mean every self-propelled vehicle In, or by 

which, any person or property Is or may be transported 

upon a public highway, except devices moved only by 

human power or used exclusively upon stationary rails 

or tracks; but this definition shall not Include traotors used exclusively to pull farm machinery or rosdbulldlng mschinery. 

“Sec. 4. The license fees and taxes imposed by 

or under this Article shall be in addition to any and 

all license fees and taxes imposed by or under any other 

law of this State. 

“Se0 . 5. The taxes levied la this Article shall 

be oollected by the Assessor and Collector of Taxes of 

the county in which any such motor vehicle is first 

registered or first transferred after such a sale; the 

Tax Collector shall refuse to accept for registration 

or for transfer any motor vehicle until the tax thereon is paid. 

‘@When a tax becomes due on a motor vehicle purchased outside of this State and brought into this 

State for use upon the highvays, the person, firm, or 

corporation operating said motor vehicle upon the public hlghvays of this State shall pay the tax Imposed 

by Section 2 to the Tax Collector of the county In 

which such motor vehicle is to be registered. The tax 

shall be paid at the time application Is q ade.Sor registration of said motor vehicle, and the Tax Collector 

shall refuse to issue the registration license until 

the tax Is paid. 

. 
Hon. Geo. If. Sheppard, Page 4 (Ho. V-439) 

%ec. 5rJ. At the time the tax herein 

levied is paid to said Tax Collector the 

pwchaser shall file with aald Tax Golleotor 

the affidavit OS such DurChrrSer (or if a 

corporation the atfldavlt of the President, 

Vice President, Secretrry, or Manager) setting forth the then value in dbllars of the 

total con&era fi 

oelved by such seller or his nominee. whether 

In money or other thing OS value.” (Emphas,ls 

added) 

It vi11 be noted that the situations referred to 

in your three questions all Involve the exchange of motor 

vehicles; and if these exchange8 had taken plrce within the 

State OS Texas, the tax would be based upon Section 1 of 

the Act, being a “sales” tax. However, the tax imposed by 

Section 2 1s.a “use” tax as is disclosed by the speolflc 

verbiage above emphasised and which Is based upon the “total 

consideration paid or to be paid for said vehicle at such 

retail sale.” 

,Ho provision is contained in Section 2 similar to 

Section l(b), although the term “retell sale” is used without 

any quallSlcatlon throughout the act except a8 qualified in 

Section 1. Sir&e Section 1 Imposes a “sales” tax and Section 

2 imposes a “use” tax, each must be viewed in the light of 

the intention of the:Leglslature at the time the law was enacted. I. 

.,. 

Both thb sa,les. tax and the use tax are revenue . 

measureg. HOWeW?rj .lt 18 a well-known principle of law thst 

the essential’ bases for-,these two taxes are entirely different. 

The sales tax is based upon the sale of the property within 

the state, the tax liability accruing at the time of the actual 

sale of the property. The use tax Is based upon the use within 

the state of the property, vhioh 3.s purchased outside of the 

state, and the tax liability accrues upon the first use of the 

property within the state. These principles of law are too 

well known to necessitate the citation of authorities. 

IS the Legislature had intended to apply the methods 

of l scertalnlng the bait3 of taxes due upon the retail sales 

InVolved In the exchs 

aotment of Section l(b 7 

e of property, as was done by the ento the use tax levied by Section 2, 

it could have easily edcted Section 2(b) In similar terms cr 

if the Legislature had desired to apply the same basis where 

the exchange of property Is Involved as to both the sale8 and 
Eon. Gee. Ii. Sheppard, Page 5 (lo. V-439) 

use taxes, It could have included it in the general definitions to Abe Sound in Section 3 OS the Act. However, 

it did neither of these things; therefore, the presumption must exist that the method OS oomputatlon of all retall sales involved the exchange of property prescribed 

In Section l(b) Is applicable only to retail sales OS 

motor vehicles sold In this State as provided In Sec. 1 

(6). 

Section 5a provides that when the tax herein 

levied, i.e., both under Sections 1 and 2, Is paid to the 

tax collector, the purchaser shall file with the tax collector an affidavit setting forth “the then value in dollars of the total consideration received or to be recelved by such seller or his nominee, either In money or 

other thing of value.” 

Based upon the foregoing construction OS the Act 

and psrtlcularlg the emphasized portion of Section 5a, 

supra, the answers to your questtons are as Sollovs: 

1. 

on the sum’of 

The 1% motor vehicle use tax should be paid 

$1,500.00, being the total consideration recelved by the seller In payment of the motor vehicle to be 

used upon the highways of Texas. 

2. 

on the sum of 

ceived by the 

used upon the 

The 1% motor vehicle use tax should be paid 

$1.500.00. being the total consideration reseiier In-paymekt of the motor vehicle 

highways of Texas. 

to be 

3. The 1% motor vehicle use tex should be 

on the sum of $800.00, being the total consideration 

celved by the seller in payment of the motor vehicle 

used upon the highva ys of Texas. 

paId 

reto be 

SUMMARY 

A resident of this State, who goes without 

the State and there trades his motor vehicle 

for another motor vehicle which he brings Into 

this State for use upon the public highways 

thereof, is required to pay the use tax Imposed 
. . 

Hon. Geo. Ii. Sheppard, page 6 (V-439) 

by Section 2, Art. 7047k V.C.S., upon such 

vehicle calculated on the total consldentlon, measured In dollars, received by the 

person from whom he acquired such vehicle. 

Yours very truly 

ATTORRHY GXVRRAL 9p, ‘PEXILS. 

C. K:. Richards 

AssLstant 

. 

ATTORNEY GENERAL 

. 

. .