               TEIIC ATI-ORNEY    GENERA&
                         OF TEXAS
                            AUSTIN.       TEXAS       WEWll




                                      A,ugust 26,    1974


The Honorable Robert       S. Calvert                  Opinion No.       H-   381
Comptroller   of Public    Accounts
State Finance Bldg.                                    Re: May an auto dealer,    his
Austin,  Texas                                         employees    and members    of
                                                       his family,   use an auto with-
                                                       out paying tax under Art.
                                                       6686 (a) (I), V. T. C. S.

Dear Mr.   Calvert:

        In our Opinion No. H-173 we considered               three questions        from
your office,  the last of them being:

                     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.

        Our discussion      of that question    in Opinion H-173        and our answer
to it was:



                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




                                           p0 1787
The Honorable   Robe,rt S.   Calve&?   page 2    (H-381)




                      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.

                     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 $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.”

                     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   promul-
                gated under the authority of Article 6.02, V. T. C. S., Taxation-
                General.




                                       ps 1788
The Honorable    Robert    S.   Calvert     page 3   (H-381)




          The Summary     of our opinion was in part:

                            (3) An automobile  devoted wholly or partially to the
                        personal use of a dealer,  a dealer’s employees   or their
                        respective  families, or to someone other than the dealer
                        is subject to the Motor Vehicle Sales and Use Tax.

          You now submit    the following    inquiries:

                      We would, therefore,   appreciate a clarification
                 on whether your original answer applies to both the use
                 of motor vehicles with dealers’ plates as provided in
                 Article 6686 (a)(l) and the use of motor vehicles with temporary
                 cardboard tags under Article 6686 (a)(4).     If the limitation
                 contained in Article  6686 (a)(4) does not apply to Article 6686
                 (4 (I), may a dealer,  his employees,   and members      of his
                 family use such vehicle without paying Chapter 6 tax.

          In 1967 you submitted substantially the same basic question to this
office   and it was answered in Attorney General Opinion M-141 which concluded:

                      The Motor Vehicle Sales Tax applies to all
                 sales of motor vehicles to a dealer where the
                 vehicle is extensively    utilized for the personal
                 or business   purposes of the dealer,     his family
                 or employees,    including use of the vehicle as a
                 demonstrator    to effect the sale of other vehicles.
                 The tax does not apply where the vehicle is driven
                 in connection with an attempted sale to a prospective
                 purchaser;   nor to other incidental use in connection
                 therewith.

        However,   as we noted in Opinion H-173,  the tax statutes, at that time,
contained no reference  to Article 6686, V. T. C. S. We are of the opinion that
Attorney General Opinion M-141 was correct when it was decided and the only
question here ia the extent to which the added reference   in Art. 6.03(B),




                                          ps 1789
The Honorable      Robert   S. Calvert       page 4       (H-381)




Taxation-General      to Article     6686,   requires     a different    answer.

        Article 6686, V. T. C. S., is lengthy. Omitting                 portions   which are
not relevant to the question before us ,: it provides:

                        (a) Dealer’s  and Manufacturer’s    License Plates               for
                   Unregistered     Motor Vehicles,  Motorcycles,   ,‘Bouse
                   Trailers,   Trailers,  and Semitrailers.

                       (1) Dealer’s   License.    Any dealer in motor vehicles,
                   motorcycles,     house trailers,  trailers, or semitrailers
                   doing business in this State may, instead of registering
                   each vehicle he operates or permits to be operated for
                   any reason upon the streets or public highways,      apply
                   for and secure    a general distinguishing  number which
                   may be attached to any such vehicle he owns and operates
                   or permits to be operated unregistered.

                       (2) Manufacturer’s         License    . . . .

                       (3) Buyer’s     Temporary         Cardboard      Tags   . . . .

                        (4) Dealer’s  Temporary     Cardboard Tags. Each dealer
                   holding a current distinguishing     number may issue temporary
                   cardboard numbers,       corresponding   to such dealer!s license
                   number, which may only be used by such dealer or his
                   employees    for the following purposes:

                       [a] to demonstrate   or cause to be demonstrated    his
                   unregi.stered vehicles to prospective   buyers only for the
                   purpose of sale; provided,    however,  that no provision of
                   this Act shall be construed to prohibit a dealer from
                   permitting a prospective    buyer to operate such vehicles
                   in the course of demonstration.

                       [b] to convey or cause         to be conveyed his unregistered
                   vehicles from the dealer’s          place of business in one part




                                             p.   1790
The Honorable     Robert   S.   Calvert   page 5      (H-381)




                  of the State to his place of business in another part
                  of the State, or from his place of business to a place
                  to be repaired,   reconditioned,    or serviced,    or from
                  the point in this State where such vehicles are unloaded
                  to his place of business,    including the moving of such
                  vehicles from the State line to his place of business,      and
                  such vehicles displaying such tags while being so conveyed
                  shall be exempt from the mechanical        inspection require-
                  ments of Sections 140 and 141 of the Uniform Act Regulating
                I Traffic on Highways.

                     Such tags shall not be used to operate        vehicles   for the
                 personal use of a dealer or his employees          . . . .

                      (5) Cancellation    of License    . . . .

                      (6) Limited Use of Dealer’s      Plates and Tags.        The use
                 of dealer’s   license or facsimiles    thereof is prohibited on
                 service or work vehicles or on commercial            vehicles
                 carrying a load; provided,       however,    that a boat trailer
                 carrying a boat will not be coneidered to be a commercial
                 vehicle carrying a load, and a’dealer         complying with the
                 provisions   of this Act may affix to the rear of a boat
                 trailer he owns or to the rear of a boat trailer he sells’
                 such dealer’s     distinguishing  number or cardboard facsimiles
                 thereof pursuant to the provisions        of Subsections    (l), (3) and
                 (4) of this Act.     . . .

                     (11) Rules and Regulations.    The Department is hereby
                 authorized to promulgate    reasonable    rules and regulations
                 for the orderly administration    of this Act.
   ./
                  . . .

         Your question suggests that the taxation of automobiles  operated with
metal   tags differs from the taxation of those operated with temporary   cardboard




                                          p.   1791
.        .



    The Honorable    Robert   S.   Calvert   page 6      (H-381)




    tags.  This theory, apparently is based on the words “to be operated
    for any reason” in Art. 6686 (a) (1) whereas Art. 6686 (a) (4) restricts
    the uses of vehicles with temporary   tags.  We disagree.

             The dealers’ temporary    cardboard tag is in reality a replica of the
    metal identification  number.    Were we to ascribe different consequences
    to this use, we would have the anomalous      result of a dealer being able to
    vary the allowable use of a vehicle by exchanging cardboard tags for metal
    ones, or vice versa.     Unless there is no alternative,   a statute will not be
    interpreted  so as to lead to a foolish or absurd result.    McKinney v.
    Blankenship,    282 S. W. 2d 691 (Tex. 1955).

             Furthermore,     were we to adopt the view that automobiles          operated
    with metal tags under 6686 (a)(l) could be operated for any purpose,             serious
    questions would arise as to the constitutionality        of the taxation rule adopting
    such a dichotomy between automobiles         owned by dealers and those not.
    Article 8 51. Texas Constitution,      requires    that “taxation shall be equal and
    uniform. ” By allowing dealers,       their family,    friends and employees      to use
    automobiles    for personal purposes,     totally unconnected with legitimate
    business needs of the dealers,      without paying the sale or use tax at the time
    of acquisition   of said automobiles,    the legislature    would, in effect,   exempt
    this class of person,sfrom     the tax, while taxing identical uses by all other
    citizens of the state.    This would be neither “equal” nor “uniform. ” See
    Greyhound Lines,      Inc. v. Board of lZqualization, 419 S. W. 2d 345 (Tex.
    1967); H. Rouw Co.v.      Texas Citrus Commission,          247 Si W. 2d 231 (Tex.
    1952).

             Where a statute is susceptible  to more than one reasonable  construc-
    tion, the Courts will not adopt that one which would render the statute
    unconstitutional.  State v. Shoppers World,    Inc., 380 S. W. 2d 107 (Tex.
    1964).   We, in our advisory function; ,should follow the same rules of
    construction.

             We are reinforced in this conclusion   by the Rules and Regulations
    Governing the Cancellation   of Dealer’s  Licenses,   promulgated by the Texas
    Highway Department under the authority of Article 6686 (a) (11). They
    describe  as a violation:




                                             p.   1792
- .     .




  The Honorable   Robert   S.   Calvert   page 7      (H-381)




                  Using or permitting the use of a metal Dealers Plate
                  or a Dealer’s  Temporary    Cardboard Tag on any
                  vehi.cle which the Dealer does not own or control,  or
                  on a vehicle which is not ‘in stock and for sale. ’

           It is our opinion, therefore,   that an automobile  used for the personal
  use  of a dealer,  his employees,    or their families is subject to the tax of
  Article 6.01, Taxation-General,      V. T. C. S., regardless  of whether it is
  operated with metal or cardboard tags.

                                    SUMMARY

                      An automobile   owned by a dealer and used
                  for the personal purposes of the dealer,     his
                  employees,   or their families,   is subject to the
                  Motor Vehicle Sales and Use Tax, Article 6.01,
                  Taxation-General,    V. T. C. S., regardless   of
                  whether it is operated with metal plates or
                  Temporary    Cardboard Tags.

                                                       Very     truly yours,




                                                       Attorney     General    of Texas




  DAVID M. KENDALL,         Chairman
  Opinion Committee


  lg




                                          p.   1793
