                                    AUSTINJI~.TEXAS
PRICE  IDANIEL
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        .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 Man-
                                                     ufacturers’ Teat when com-
                                                     puting State motor vehicle
                                                     retail sales tax on automo-
                                                     biles 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 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 Fed-
                eral tax loses its identity,’ for example: A dealer re-
                ceives 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’Com-
                pany without paying the Motor Vehicle Retail Sales T.~JK,
                levied by Article, 7047k, fi1ing.a.n affidavit with-the Coun-
                ty Tax Assessor-Collector      stating that he had purchased
                the motor vehicle for ,re-sale only and not for use,..sur-
                rendering at, the same time the manufacturer’scertifi-
                cate 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-Cal-
                lector 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 affi-
      davit 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 con-
      sideration 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 6675a-
1 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 regis-
tration.

             The provisions of the motor vehicle retail sales’tax act
proper, Article 7047k, V.C.S., and of the temporary additional mo-
tor 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~nightAugust
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 con-
      sideration shall include the amount paid or to be paid
      for said motor vehicle and all accessories attached
      thereto at the time of thensale, whether such consider-
      ation 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 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~rt S. Calvert,   Rage 3 (V-1183)



                 Section 3(b) of Article   7047k reads as follows:

                 ‘The term ‘retail sale’ or ‘retail sales’ as here-
          in 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 mo-
          tor 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 prop-
    erly deducted from the total consideration received by the seller.,

                 .Our conclusion is consistent with the obvious legisla-
    tive 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. automo-
    bile would be included in the consideration paid. by the first buyer
    to purchase the car for his own use. The Legislaturr avoided im-
    posing 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 depart-
    mental construction that the rigbt to deduct the amount of the Fed-
    eral 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 Feder-
      al 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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