PRICE IDANIEL 

AUSTINJI~.TEXAS 

*v¶w,*smY .r*nrrt..+ 

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’ Teat when computing State motor vehicle 

retail sales tax on automobiles previously registered 

Dear Sir:. tax free. 

‘. We quote the following excerpt from your letter of February 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 of com&ing 

th&iiunt of tax levied by this Article upon such 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 ;new automobile in the name of the’ Company without paying the Motor Vehicle Retail Sales T.~JK, 

levied by Article, 7047k, fi1ing.a.n affidavit with-the County Tax Assessor-Collector stating that he 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 the Asseseor-Callector for transfer of the title, and files his affidavits 

for payment of the Motor Vehicle i2etaiI3ales:Tw; and 

in this application deducts the amount of the Federal tax 

from the total purchase price. 
I 

-i 

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

“Is the Tax Assessor-Collector a,uthorized to 

accept this application for transfer of title, and affidavit for the payment of the Motor Vehicle Retail Sales 

Tax, with the Federal tax deducted; or was the Federal 

tax ,extinguished on the first registration of this car? 

“In other cases a used car dealer acquires new 

cars from various sources, regis,ters them in his name 

without paying the sales tax, filing an affidavit that each. 

motor vehicle has been purchased for re-sale only and 

not for use. IIpon the sale of such a motor vehicle to a 

person or company for use an affidavit is filled out for 

the purchaser’s signature to be filed with the Assessor: 

Collector and to be used by the Assessor-Collector in 

calculating the taxes due on the sale. In each instance 

the Federal tax is deducted from the total consideration. 

Should the Federal tax be deducted from the total consideration paid to the used car dealer before the tax is 

calculated by the Assessor-Collector? “~ 

Neither the certificate of title act (Article 1436-1, V. 

P.G.) nor the provisions of our tegistratjon statutes .(Articles 6675a1 et 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 to certificates 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 to be levied 

only upon the sale or use of motor vehicles prior to mid~night August 

31, 1951, is less than the amount of the tax levied by ArticIe 7047k. 

Section l(a) of ArtWe 7047k reads as follows: 

“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 of 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 

for said motor vehicle and all 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. In the event 

the consideration received by the seller includes any 

tax imposed by the Federal Government, then such Federal 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~rt S. Calvert, Rage 3 (V-1183) 

Section 3(b) of Article 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 not for use.” 

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

“The taxes levied in this Article shall be collected 

by the Assessor.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 

that in 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 oft the 

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 tiy the buyer’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. that the amount of 

,the Federal excise tax on a 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 upon a tax by allowing a deduction of the amount of the 

,Federal tax before computing the amount of the State sales tax. 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 in your 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 of the Federal Automobile Manufacturer’s Tax which was included 

in the consideration paid the seller by the first buyer 

of an automobile for his own use 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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MMC/mwb