Did returning an unsatisfactory car qualify for a Texas tax refund when the dealer kept about $400 for two months of use?

Plain-English summary

The buyer did not receive a historical tax refund because the dealer did not return the full purchase price.

For a nonconsummated sale, the letter required the seller to take back the vehicle and return the entire purchase price.

Here, the dealer allowed credit less about $400 for the buyer's two months of use. That difference made the transaction a repurchase agreement rather than a void original sale, so no tax-refund provision applied.

What this means for you

Returning the vehicle was not enough. Full restoration of the purchase price was the historical condition distinguishing a failed sale from a taxable sale followed by repurchase.

Common questions

Q: Did the dealer take the car back?
A: Yes.

Q: Was the entire purchase price returned?
A: No, about $400 was retained for use.

Q: Was the original sale treated as void?
A: No.

Citations and references

• No statute or rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7707L2015A06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

July 14, 1977

Dear ***:

To qualify for tax refund on a nonconsummated sale of a motor vehicle,
the entire amount of the purchase price must be returned to the pur-
chaser. The seller in turn receives the motor vehicle.

Since there is a difference of $400.00 on the settlement mentioned
in your letter of July 8, 1977, the original sale is not considered
void, but rather a repurchase agreement.

In this case, there is no provision for refund.

Any correspondence in this matter should be directed to the attention
of the Motor Vehicle Sales Tax Division or call toll free 1-800-252-
5555.

Yours very truly,
Richard Montgomery
Director

July 8, 1977

Comptroller of Public Accounts
Austin, Texas 78774

Attention: Mr. Bob Bullock

Dear Mr. Bullock:

I am representing a client who recently purchased a new auto-
mobile from a dealer in Fort Worth, Texas. The car provided
to be unsatisfactory and the car was returned to the dealer
after numerous attempts to correct the complaints of my client.

The dealer allowed full credit for the return of the car, less
approximately $400 for use of the car for the 2 months that my
client has possession of the car.

My question is can my client receive reimbursement either direct-
ly or through the dealer for the sales tax which was paid when
the car was originally purchased. The sale was never actually
completed since my client revoked his acceptance of receipt of
the car when it became clear that it would not perform satisfac-
torily.

Thank you for your assistance in this matter.

Sincerely,