**PRICE** 

### IDANIEL AUSTINJI~.TEXAS

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June 5, 1951

Hon. Robert ‘S. Calvert Opinion No. V-1183. Comptroller of Public Accounts Austin, Texas Re: Legality of dedacting amount of Federal Automobile Manufacturers’ Teatwhen computing State motor vehicle retail sales tax on automobiles previously registered Dear Sir:. tax free.

‘

. We quote the following excerpt from your letter of Feb**ruary** 16. 1951, requesting the opinion of this office on the above captioned matter.

“Article 7?47k and 7047k-1. Section l(a) read in part~as follows:

”’ * * * In the event the consideration received. by the seller includes any taximposed by the Federal Government,..then suCh+F*dpraLti shall be deducted from such consideration for the purpose ofcom&ing **th&iiunt** of tax levied by this Article uponsuch re; taii s.ale.’

.._ “We have been r’equested to.advise’when ;he Federal tax loses its identity,’ for example: A dealer receives a car from **the manufacturer**  is charged kicf with the Federal tax, however, this particular dmr registers ,this;newautomobile in the name of the’Companywithout paying the Motor Vehicle Retail Sales T.~JK, levied byArticle, 7047k, fi1ing.a.naffidavit with-the County Tax Assessor-Collector stating thathe had purchased the motor vehicle for ,re-sale only and not for use,..surrendering at,the same time the manufacturer’scertificate to the Tax Assessor-Collector. Aftqrwards the dT&ex. sells this same, ,put,o~~bila~.toaa individual or company for use, assigning the title to the purchaser. This purchq+e.r makes applicatibq to theAsseseor-Callector for transfer of the title, and files his affidavits for payment of the Motor Vehicle i2etaiI3ales:Tw; and in this application deducts theamount of theFederal tax from the total purchase price.

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Hon. Robert S. Calvert, Page 2 (V-1183)

“Is theTax Assessor-Collector a,uthorized to accept this application for transfer of title, and affidavit for the payment ofthe Motor Vehicle Retail Sales Tax, with the Federal tax deducted; or was the Federal tax,extinguished on thefirst registration of this car?

“In other cases a used car dealer acquires new cars from various sources, regis,ters them inhis name without paying the sales tax, filing anaffidavit that each. motor vehicle has been purchased **for** re-sale only and notfor use. IIponthe sale of such a motor vehicle to a person or company for use an affidavit is filled out for the purchaser’s signature tobe filed with theAssessor: Collector and tobe used by theAssessor-Collector in **calculating** the taxes due on the sale. Ineach instance the Federal tax is deducted from the total consideration. Should the Federal taxbe deducted from the total consideration paid to the used car dealer before the tax is calculated by theAssessor-Collector? “~ Neither the certificate of title act (Article 1436-1, V. P.G.) nor the provisions of our tegistratjon statutes .(Articles 6675a1et seq, ,V.C.S.) can be ‘considered in construing this specific tax **statute.** We are here considering **a** specific **statute** dealing with a specific **subject** which is,not related tocertificates of title or registration.
The provisions of the motor vehicle retail sales’tax act proper, **Article** 7047k, V.C.S., and of the temporary additional motor vehicle retail sales tax act, Article 7047k-1, are identical except that the amount of the temporary additional tax, which is tobe levied only uponthe sale or use of motor vehicles prior tomid~nightAugust 31, 1951, is less thanthe amount of the tax levied byArticIe 7047k.

Section l(a) ofArtWe 7047k reads as follows:
“There is hereby levied a tax uponevery retail sale of every motor vehicle sold in this State, such tax tobe equal to one (1) per cent of the total consideration paid or to be paid to the seller by the buyer, which consideration shall include the amount paid or tobe paid for said motor vehicle andall **accessories** attached thereto at the time of then sale, whether such consideration be in the nature of cash, credit, or exchange of other property, or a combination of these. Inthe **event** the consideration received by the seller includes any tax imposed by the Federal Government, then such Fed**eral** tax shall be deducted from such consideration for the purpose of computing the amount of tax levied by this Article upon such retail sale.”J

Hon. Robe~rtS. Calvert, Rage 3 (V-1183)

Section 3(b) ofArticle 7047k reads as follows:

‘The term ‘retail sale’ or ‘retail sales’ as herein used shall include all sales of motor vthicles except those whereby the purchaser acquires a motor vehicle for the exclusive purpose of resale and notfor use.”

Section 5 ofArticle 7047k reads, in part, as follows:’

“The taxes levied in this Article shall be collected by theAssessor.and Collector of Taxes of the county in which any such motor vehicle is first registered orfirst transferred after such a sale; the Tax Collectors shall refuse to accept for registration or for transfer any motor vehicle until the tax thereon is paid,”

It is clear from the above quoted statutory provisions thatin both of the submitted fact situations no “retail sale,” within the meaning of Section 3(b), was made until after the first registra-, ‘

. tion of the cars. The tax levied by Section’ l(a) was levied.uR,op.jhe second sale of each car since the second sale was a “r.etail sale” within the meaning of Section 3(b). This being so; we are oftthe opinion that in computing the tax due on these “retail sales” the amount of the Federal Automobile Manufactur,ers Tax, which tax
was included in the consideration. received by the seller, as evi.t, dented tiythebuyer’s affidavits (Article 7047k, Sec. 5a). was properly deducted from the total consideration received by the seller.,

.Our conclusion is consistent with the obvious legislative purpose in providing for a deduction of Federal taxes. The Legislature ,was undoubtedly aware of the fact.thatthe amount of ,theFederal excise tax ona sale by the manufacturer of an.automobile would be included in the consideration paid.by the first buyer to purchase the car for his own use. The Legislaturr avoided imposing a tax upona tax by allowing a deduction of the amount of the ,Federal tax before computing the amount of the State 

### salestax. The preceding. sales which occurred in the submitted fact situations do not affect the incidence of the tax on the first “retail sales” or the right to deduct the amount of the Federal tax in the process of its computation.

We understand that it has been your consistent departmental construction that the rigbt to deduct the amount of the Federal tax from the total consideration paid is accorded only to the first buyer of a motor vehicle for **use.** The continued acquiescence of the Legislature inyour administrative interpretation supports this view, and it is our opinion the statute is properly so interpreted.Hon. Robert S. Calvert,‘Page 4 (V-1183)



### SUMMARY~

In computing the retail sales tax imposed by Articles 7047k and 7047k-1, the amount ofthe Federal Automobile Manufacturer’s Tax which was included in the consideration paid the seller by thefirst buyer ofan automobile for his ownuse may be deducted from the total consideration paid, despite the fact that the automobile had been previously registered tax free by the seller who,had purchased it for purposes of resale only.

**Yours very**  **truly,**
PRICE DANIEL

APPROVED:
~Jess,e**P.** Luton, Jr. Reviewing Assistant
Charles D. Mathews First Assistant

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