Did Texas merchants collect ordinary sales tax on mopeds, tent trailers, boat trailers, and motorcycles?

Plain-English summary

Mopeds, tent trailers, boat trailers, and motorcycles were taxed as motor vehicles, not under the ordinary limited sales tax.

The purchaser paid historical motor vehicle tax to the county tax assessor-collector at registration. The seller provided a fully completed Seller, Donor, or Trader's Affidavit with notarized buyer and seller signatures.

No Texas title was issued for a moped, tent trailer, or boat trailer, but each required registration. Motorcycles were titled and registered except motorcycles built for off-road use.

If a merchant had collected limited sales tax, city tax, or applicable transit tax, the customer was entitled to a refund. The merchant could claim the refund as a deduction on its next sales-tax return with supporting records; the mistaken payment could not be credited against motor vehicle tax.

What this means for you

The letter separated title requirements from tax classification and required the merchant to correct ordinary sales tax collected under the wrong tax law.

Common questions

Q: Did a moped receive a Texas title?
A: No, but it required registration.

Q: Could mistakenly paid limited sales tax offset motor vehicle tax?
A: No.

Q: Who refunded the mistakenly collected sales tax?
A: The merchant.

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/7807L2022E03

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, TEXAS 78774

July 18, 1978

Gentlemen:

It has come to our attention that there is some confusion among the merchants who sell motor-assisted bicycles (Mopeds), tent trailers, boat trailers and motorcycles as to how these units should be taxed.

The units mentioned are motor vehicles and subject to the Motor Vehicle Sales and Use Tax. The tax is 4% of the purchase price and is paid by the purchaser to the County Tax Assessor-Collector at the time of registration. The seller is required to furnish the purchaser a completed Seller, Donor, or Trader's Affidavit (Form 2C00-2.09). The affidavit must be completed in detail including the notarized signature of both the buyer and seller. The affidavit and tax must be presented to the Tax Assessor-Collector before the vehicle can be titled and/or registered.

A Texas Certificate of Title is not issued on a motor-assisted bicycle, tent trailer, or boat trailer, but is issued on a motorcycle. However, registration is required on each vehicle except a motorcycle that is built for off-road use.

The Seller, Donor, or Trader's Affidavit and Application for Texas Certificate of Title (Form 30) may be obtained from the County Tax Assessor-Collector. A copy of each along with an example of a sale of a moped is attached for your review.

The 4% Limited Sales, Excise and Use Tax plus the 1% City Sales Tax and Mass Transit Authority Tax (where applicable) should not be collected on the vehicles described above. If a customer has paid the Limited Sales Tax, plus City Tax and applicable Mass Transit Tax, he is entitled to a refund. Unfortunately, credit cannot be allowed for tax paid under the Limited Sales Tax Law on a motor vehicle subject to the Motor Vehicle Sales and Use Tax. Any refunds made by your company in this matter may be claimed as a deduction in the deductions column on your next Sales Tax return. Your records should be documented to explain the deduction.

I am sending this information to you and requesting that it be circulated among your Texas outlets. Your assistance is greatly appreciated.

If you have any questions, please feel free to contact the Motor Vehicle Sales Tax Division or call toll-free 1-800-252-5555 from anywhere in Texas or 512/475-6897 for out-of-state calls.

Yours very truly,

Richard Montgomery, Director

Motor Vehicles Sales Tax Division