December 3, 1973 

The Honorable Robert S. Calvert 

Comptroller of Public Accounts 

State Finance Building 

Austin, Texas 

Dear Mr. Calvert: 

Opinion No. H- 173 

Re: Various questions concerning the application 

and interpretation of 

Articles 6. 01, et seq., 

Vernon’s Texas Civil 

Statutes, Taxation- 

’ General, the Motor 

Vehicle Sales and Use Tax 

Your opinion request raises several questions relative to the Motor Vehicle 

Retail Sales and Use Tax (Articles 6.01, et seq., Vernon’s Texas Civil Statutes, 

Taxation-General). 

You advise us that on November 16, 1971, an entity we shall call the Marketing Corporation took title to a 1972 automobile which it had acquired from 

the manufacturer. The principal, if not the only, business of the Marketing 

Corporation was to transfer possession of automobiles to licensed dealers for 

leasing and rental to the general public. Marketing Corporation had a contract covering such transactions with another company which we shall call Sales, 

Inc., No. 1. 

From November 16, 1971, to June 13, 1972,. title to the 1972 automobile 

remained in Marketing Corporation, although Sales, Inc. , No. 1, had possession 

and was leasing and renting the automobile to the general public. 

On June 13, 1972, Marketing Corporation assigned title to the automobile 

to Sales Inc., No. 1, which, on the same date, assigned it to a third company 

we shall call Sales, Inc., No. 2. 

Sales, Inc., No. 2, in turn sold the automobile at retail to a bona fide purchaser. 

On June 14, 1972, Marketing Corporation applied for a title to a new automobile, listing the 1972 automobile as a trade-in and seeking to deduct its value 

from the value of the new automobile in determining the sales tax, if any, tha 

was due under the provisions of $ D(3) of Article 6. 03, V. T. C. S , TaxationGeneral, which provides: 

p. 795 
The Honorable Robert S. Calvert, page 2 (H-173) 

“Any person purchasing motor vehicles for 

resale at retail who has obtained a certificate of 

title to a motor vehicle which he uses for personal 

or business purposes may deduct the fair market 

value of such vehicle from the ‘total consideration’ 

when such person purchases another motor vehicle 

upon which he obtains a certificate of title as a substitute vehicle for personal or business use and the 

original vehicle is offered for sale at retail. ” 

Your first question asks whether the Assessor-Collector has authority to 

take a sales affidavit without the signature of an appropriate officer of Marketing Corporation. 

Article 6. 05 requires that each transaction involving the sale or exchange 

of a motor vehicle be accompanied by an affidavit from the purchaser and the 

seller outlining the terms of the transaction. The statute provides: 

“Where any party to a sale, exchange, even 

exchange or gift is a corporation, the president, 

vice president, secretary, manager or other 

authorized officer of the corporation shall make 

the affidavit for the corporation. ” 

Since the Marketing Corporation is a party to two of the transactions described 

in your letter, we believe that, in connection with these two transactions, the 

affidavit must be signed by “the president, vice president, secretary, manager 

or other authorized officer of the” Marketing Corporation, in conformance with 

the ewct wording of the statute and that the Assessor-Collector may not accept 

it without such signatures. 

Your second question inquires: 

“2. Where title is taken in the name of [the 

Marketing Corporation], does Article 6. 03, Section 

D( 3) apply on a replacement value? ” 

We assume that when you refer to title being taken in the name of the Marketing 

Corporation, you had in mind the second vehicle that the Marketing Corporation 

acquired. 

p. 196 
The Honorable Robert S. Calvert, page 3 (H-173) 

Section D( 3) of Article 6. 03 which we have quoted above, provides for a 

deduction from the total consideration used to compute the sales or use tax, 

It was enacted in 1971 by the 62nd Legislature and has not been the subject of 

judicial interpretation. 

Your letter indicates that the Marketing Corporation did not purchase the 

vehicle for resale at retail ; that it did not use the vehicle for personal or business 

purposes; that the second vehicle was not acquired as a substitute vehicle for 

personal or business use; and that the original vehicle was not offered for sale 

at retaii. Assuming these facts to be true, the deduction provided in the, statute 

would not be applicable. 

Your third question, completely separate from the factual situation outlined 

in your letter, asks: 

“3. 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. ” 

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 

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. 

p* 797 
The Honorable Robert S. Calvert, page 4 (H-173) 

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 5 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. ‘I 

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. , Taxation-General. 

SUMMARY 

1. When a corporation sells or exchanges a motor 

vehicle, the sales affidavit required by Article 6. 05, V, T. C. S., 

Taxation-General, must be executed by an authorized officer of 

the corporation. 

2. A corporation that does not purchase motor vehicles 

for resale at retail but is engaged in wholesale leasing and 

sales of automobiles is not entitled to deduct the value of such 

automobiles as provided in Article 6. 03 D(3), V. T. C. S. , TaxationGeneral, when it sells a leased automobile and acquires another 

for the same purpose. 

3. An automobile devoted wholly or partially to the personal 

use of a dealer, a dealer’s employees or their respective families, 

p. 798 
. . . 

The Honorable Robert S. Calvert, page 5 (H-t73) 

or to someone other than the dealer is subject to the 

Motor Vehicle Sales and Use Tax, 

Very truly yours, 

* 

JOHN L. HILL 

Attorney General of Texas 

APPRQVED: 

DAVID M. KENDALL, Chairman 

Opinion Committee 

. . . , I 1