                                      December    3,   1973


The Honorable     Robert S. Calvert                      Opinion     No.     H-   173
Comptroller    of Public Accounts
State Finance Building                                   Re:      Various questions con-
Austin,  Texas                                                    cerning the application
                                                                  and interpretation   of
                                                                  Articles  6. 01, et seq.,
                                                                  Vernon’s   Texas Civil
                                                                  Statutes,  Taxation-
                                                                ’ General,   the Motor
Dear Mr.     Calvert:                                             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 Mar-
keting 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 con-
tract 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 pur-
chaser.

    On June 14, 1972, Marketing Corporation      applied for a title to a new auto-
mobile,  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 , Taxation-
General,   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 sub-
       stitute 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 Mar-
keting 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 ref-
        erence 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 “demon-
strators” 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. , Taxation-
        General,  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




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