Motor Vehicle Tax Guide

A person elected or appointed a CTAC must give bonds to the state and to the county, conditioned on the faithful performance of duties.

The CTAC is bound to account for and remit the state monies collected, minus commissions, or the bond surety must pay it for the CTAC. See Boggs v. State, 46 Tex. 10 (1876). Either the CTAC or the bonded surety must replace all missing state funds.

For the state taxes, the bond must be written for the CTAC’s term of office and payable to the Texas Governor (and successors in office).

To be effective, the county commissioner’s court and the Comptroller’s office must approve the bond. The Comptroller’s office may require a new bond for state taxes at any time.

Amounts

The bond amount must be equal to 5 percent of the net state collections from motor vehicle taxes and motor vehicle registration fees in the county during the year ending Aug. 31 preceding the date the bond is given. The bond may not be less than $2,500 or more than $100,000.

Record

The CTAC must file an official oath and required bonds for state and county taxes in the county clerk’s office. The county judge is required to submit the original or certified bond for state taxes to the Comptroller’s office, who will retain possession of the bond.

Contact

For New Bonds, Copies of Bonds, or to Update Bonds

Revenue Accounting – Miscellaneous Taxes Section

The following are collection due dates for motor vehicle sales and use tax:

• Purchasers and dealers are required to remit motor vehicle sales tax within 30 calendar days of purchase.
• Use tax is due within 30 calendar days from the date a motor vehicle purchased out of state is brought into Texas for use in Texas.
• Active-duty military personnel have 60 calendar days from the date of the Texas purchase date or first use in Texas to pay motor vehicle tax on a used motor vehicle.
• The $90 new resident tax, $5 even exchange tax and $10 gift tax are due at the time of title transfer.

Failure by Dealer to Submit Motor Vehicle Tax

The state will not hold a purchaser who properly paid the motor vehicle tax to a selling dealer liable for any motor vehicle tax due if the dealer fails to transfer title and submit the motor vehicle tax. The purchaser must provide acceptable documentation that the purchaser paid the motor vehicle tax to the dealer. Acceptable documentation includes a dealer’s invoice or sales contract that itemizes the motor vehicle tax paid to the dealer. The county tax assessor-collector (CTAC) must email the Comptroller’s office a copy of the title packet and proof of motor vehicle tax paid to [email protected].

Payment of Motor Vehicle Tax Before Transfer of Title

A CTAC may collect a motor vehicle tax payment before a motor vehicle is transferred. In rare cases when a motor vehicle transfer is delayed, a person may request to pay the motor vehicle tax to avoid the late payment penalty. If the CTAC agrees, the person may pay the motor vehicle tax and the CTAC will issue a receipt, since the transfer is not yet entered into the Texas Department of Motor Vehicles (TxDMV) Registration and Titling System (RTS).

Dishonored Checks

A CTAC may accept personal checks as payment of motor vehicle tax, but the motor vehicle tax is not paid until the bank on which the check was drawn honors the payment. A CTAC will not be held liable for the amount of motor vehicle tax due on a dishonored check only if the CTAC requires, at a minimum, the following:

• personal data including name, home address, home telephone number, name and location of employer and telephone number of employer;
• the driver’s license number of the person signing the check; and
• the license plate number of motor vehicle(s) owned by the person signing the check.

The CTAC will take credit for the dishonored check on the monthly report, Form 14-115, Texas Motor Vehicle Sales/Use Tax and Surcharge Report (PDF), on Item 6, “Claim for dishonored payment.” Additionally, the CTAC must also report dishonored checks on Form 00-224, Detailed Report of Dishonored Checks (PDF).

When a personal check is not honored, the CTAC may request assistance from the Comptroller’s office in collecting the money due if the CTAC certifies the following information:

• the required identification information;
• two dates upon which the CTAC sent the check to the appropriate bank;
• the date upon which the sheriff attempted to seize the license plates, if the fees for the plates were included in the check; and
• the date(s) the CTAC took other collection action, such as filing a complaint with the county attorney or hiring a collection agency.

If the customer makes good on the payment, the CTAC needs to communicate with the Comptroller’s Revenue Accounting – Miscellaneous Taxes Section regarding the payment and stop the collection effort. The CTAC must account for, and report, the collected funds on the monthly report in which the paid funds are collected. This reporting is made on Form 14-115 (PDF) within the amount reported on Item 2, “Gross Motor Vehicle Sales and Use Tax Collected.”

The CTAC has no authority to void a motor vehicle tax receipt and not report a tax payment when the check given in payment is returned unpaid. See Texas Attorney General Opinion GM-4745 (1942) (PDF).

Title Application Receipt

The CTAC issues a numbered Title Application Receipt that serves as a tax receipt and as a receipt for title application. The receipt is immediately issued once the information on Form 130-U, Application for Texas Title and/or Registration (PDF), is entered into RTS.

On occasion, such as when the Registration and Title System (RTS) system is down, the CTAC will issue a handwritten receipt. Once the system is back online, the CTAC enters the information into the system, prints a computer-generated receipt and mails the receipt to the purchaser.

Reporting Due Dates

The CTAC uses Form 14-115 (PDF) monthly to report collected taxes by the 10th day of the month following the end of each calendar month. Reports must be filed for every period even if there is no tax due.

While the county’s motor vehicle monthly reports are due on or before the 10th of the following month, CTACs send the motor vehicle tax collections to the Comptroller’s office daily, weekly or monthly, based on their yearly tax reported amounts:

• up to $2 million per year – monthly
• $2 to $10 million per year – weekly
• more than $10 million per year – daily

Earned Interest

The CTAC may deposit motor vehicle tax collections into an interest-bearing account.

Interest earned on both the motor vehicle tax and Texas Emissions Reduction Plan (TERP) surcharge collections, but not yet remitted, belongs to the state. The CTAC must remit the earned interest on the state’s portion to the Comptroller’s office. See Texas Attorney General Opinion No. MW-47 (1979) (PDF).

The CTAC, however, can retain interest earned on the commission retained from the motor vehicle tax and TERP surcharge.

The CTAC reports the state’s portion of the earned interest each month on Form 14-115 (PDF).

When comingled accounts are used, the CTAC may determine the interest by retaining a daily balance of state motor vehicle tax funds waiting to be remitted to the Comptroller’s office and then applying the daily interest rate to compute the interest earned and due the state.

An alternative method available for use by CTACs is to use the ratio of state tax motor vehicle deposits to other county fund deposits (such as state and local registration fees) in the interest-bearing account to determine the ratio percentage of interest earned on the state funds. The formula, based on the bank statement period, is motor vehicle tax deposits divided by total deposits, multiplied by amount of interest paid. This alternative method, however, may result in the county not retaining its proper share of the interest, since the float allowance for state registration fees due to TxDMV is 34 days compared to a shorter period for state motor vehicle tax.

County tax assessor-collectors (CTACs) receive an annual commission from the state for their efforts in collecting motor vehicle tax. The commission is equal to 5 percent of the tax and penalties collected for motor vehicles sales, seller-financed sales and Texas Emissions Reduction Plan (TERP) surcharges for the county during the preceding calendar year.

Annual Notification

Once motor vehicle sales tax returns for the preceding calendar year are processed, the Comptroller’s office will notify each CTAC by letter of the exact amount of commission and the amounts to be retained from motor vehicles sales and use tax collections and TERP surcharges. This notification cannot be made until all counties have filed reports for the preceding calendar year and the reports have been processed.

Reporting Guidelines

CTACs must report the amount of commission retained on Form 14-115, Texas Motor Vehicle Sales/Use Tax and Surcharge Report (PDF). Item 8A on the report should reflect the commission amount retained from motor vehicle tax collections, and Item 8B should reflect the commission amount retained from TERP surcharges.

CTACs can retain the total commission due for the year on one month’s report if there are sufficient collections to report for that month. Otherwise, a CTAC should retain the commission over several months until the total commission due is retained.

Depositing the Commission

County judges, commissioners and auditors should note that the county credits the amount of the commission retained from motor vehicle tax collections to the county’s general fund, as required by Tax Code Section 152.123(c), Tax Sent to Comptroller.

The county should continue to deposit the commission amounts retained from registration fees to the county’s road and bridge fund, as required by Transportation Code Section 502.401, Optional County Fee for Road and Bridge Fund. For additional information, contact the Texas Department of Motor Vehicles (TxDMV).

The Texas State Library and Archives Commission (TSLAC) established Local Schedule TX (Third Edition, Effective April 3, 2011) as the mandatory minimum retention periods for local records. Government Code Section 441.158, Local Government Records Retention Schedules, provides that the TSLAC shall issue records retention schedules for each type of local government, including a schedule for records common to all types of local government. Visit the TSLAC website at www.tsl.texas.gov.

Motor Vehicle Tax Records

TSLAC’s Motor Vehicle and Boat Licensing and Registration Records sets the mandatory minimum records retention for motor vehicle registration and tax records retained in the county tax assessor-collector (CTAC) office.

The county tax assessor-collector (CTAC) is responsible for collecting and reporting the motor vehicle tax to the Comptroller’s office. Some CTACs may also collect and report the Texas boat and boat motor tax.

Motor Vehicle Assessment – Young Farmer Program

When a person registers a commercial motor vehicle under Transportation Code Section 502.433, Fee: Commercial Farm Motor Vehicle, they should pay a voluntary assessment of $5 (as a “voluntary” assessment fee, it may be refunded).

Transportation Code Section 502.404, Voluntary Assessment for Texas Agricultural Finance Authority, provides for the CTAC to collect a voluntary $5 Texas Agricultural Fund Assessment Fee for the Texas Agricultural Finance Authority (TAFA) when a person registers a commercial motor vehicle.

The TAFA program was designed to provide financial assistance for the expansion, development and diversification of production, processing, marketing and exporting of Texas agricultural products.

Once collected, this fee is sent to the Comptroller’s office for deposit into the Texas agricultural fund as prescribed by TAFA for use in financial assistance to eligible applicants who wish to establish or enhance their farm or ranch operations or establish agriculture-related businesses. For more information about TAFA and their programs please visit their website.

If the person opts for a refund of the voluntary assessment fee, the CTAC is in charge of implementing the refund procedure and providing notice of the refund procedure to persons paying the assessment when the assessment is paid. The Texas Department of Agriculture (TDA) makes the assessment fee refund claim form (PDF) available to the CTAC. All questions regarding the assessment or the refund of the assessment should be directed to TDA. The CTAC gives the TDA refund form to the customer for the customer to complete and mail to TDA. The mailing address is:

Veterans’ Assistance Fund (Voluntary Donation Collected by CTAC)

Transportation Code Section 502.1746, Voluntary Contribution to Veterans’ Assistance Fund, provides that persons registering a motor vehicle in Texas may make a voluntary donation in any amount to the fund for veterans’ assistance at the time of registration.

Contributions collected by the CTAC shall be sent to the Comptroller’s office for deposit into the state treasury to the credit of the fund for veteran’s assistance before the 31st day after the date the contribution is made. A contribution made to the veterans’ assistance fund may be used only for the purposes of the veterans’ assistance fund.

Motor Vehicle Taxes

The CTAC collects the motor vehicle tax at the time of registration of the motor vehicle. The registration and payment of the tax is the obligation of the purchaser of a motor vehicle. A licensed motor vehicle dealer must collect the tax from the purchaser and remit it to the CTAC for vehicles with a gross weight of 11,000 pounds or less.

The Comptroller’s office administers the motor vehicle tax and is responsible for furnishing rules and regulations to the CTAC to assure the tax can be consistently applied.

CTAC Leaving Office

When a CTAC is leaving office, and there is an incoming CTAC, both should contact the Comptroller’s office. The Comptroller’s office no longer requires a close-out audit; however, if a CTAC leaving office would like to request a close-out audit, contact us and one may be scheduled.

Audit

The Comptroller’s office periodically reviews the records of each CTAC to determine that tax due to the state was properly remitted. A CTAC may be held liable for unpaid tax.