Who remained liable when a vehicle seller collected tax from the buyer but failed to remit it to the county?

Plain-English summary

The Comptroller could pursue a seller that collected vehicle tax and failed to remit it, but the buyer's historical tax liability still remained.

Former article 6.05 required a joint seller-purchaser affidavit stating total consideration and four years of complete sale records. A seller that properly complied ordinarily was relieved of tax liability.

An exception arose when the seller accepted tax money as an informal intermediary and did not pay the county collector. The Comptroller then asserted a claim against the seller. The innocent buyer was not discharged because the seller was not a legal agent of Texas.

The letter also reviewed a dealer audit, but the report did not clearly establish nonremittance; the author said that fact was assumed.

What this means for you

The internal position separated the State's claim against a nonremitting seller from the purchaser's underlying liability. One did not cancel the other.

Common questions

Q: Was the seller normally liable after proper affidavit and records?
A: No.

Q: What changed if the seller collected and kept the tax?
A: The Comptroller asserted a claim against the seller.

Q: Was the purchaser discharged?
A: No.

Citations and references

• Article 6.05

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7406L2010D12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

June 17, 1974

Mr. Jack Grace
Regional Manager
State Comptroller's Department
One Main Plaza - Room 998
1 Main Street
Houston, Texas 77002

Dear Sir:

With further reference to our several discussions on the subject, I here-
with state my position with regard to the Motor Vehicle Sales Tax respon-
sibility of the seller of the vehicle.

Article 6.05 requires that the seller make a joint affidavit with the
purchaser, listing the total consideration paid for the vehicle and that
the seller shall, for a period of four (4) years, keep a complete record
of each sale. Having properly complied with these requirements, the
seller
is relieved of any and all tax liability.

Although the seller is not authorized by the statutes to act as a
go-between
for the purchaser and the County Tax Assessor-Collector, it is common
practice.
Therefore, an exception to my above statement develops if the seller does
accept the tax from the purchaser and does not remit same to the County
Tax
Assessor-Collector, the Comptroller will then set-up a claim against the
seller. However, this omission on the part of the seller does not
relieve
the innocent purchaser of his tax liability, inasmuch as the seller was
not
a legal agent of the State of Texas.

I have reviewed Audit No. *** of ***** dba XYZ USED
CARS.
Although the audit report does not clearly make the statement, it was
assumed
that this was a case of the dealer accepting the money for the tax and
fail-
ing to pay the tax to the County Tax Assessor-Collector as mentioned in
the
previous paragraph.

I appreciate the interest you have shown in this matter and urge that you
again contact me if further information may be required.

With kind regards, I am

Yours very truly,
J. B. Craig, Director
AD VALOREM-INTANGIBLE TAX DIVISION