Did a Texas service member owe use tax on an out-of-state vehicle purchase, and could tax paid elsewhere be credited?

Plain-English summary

A Texas resident stationed elsewhere by the military owed historical use tax when returning and registering an out-of-state purchased vehicle.

The letter applied the same rule to service members as other Texas residents. Tax was computed from original purchase price after subtracting trade-in value.

Texas allowed credit for legally imposed sales or use tax the resident paid to another state. The taxpayer had to prove the amount with a receipt, invoice, or other document.

If Texas motor vehicle sales and use tax had already been paid when the vehicle was originally purchased, the same vehicle was exempt from further payment at Texas registration.

What this means for you

Military stationing outside Texas did not remove the resident from the historical rule. Credit depended on both legal imposition and documentation of the other state's tax.

Common questions

Q: Did military status create an exemption?
A: No.

Q: Could another state's tax reduce the Texas amount?
A: Yes, if it was legally imposed and documented.

Q: Was tax due twice if Texas tax had already been paid on the same vehicle?
A: No.

Citations and references

• Article 6.01(2), Vernon's Annotated Civil Statutes (1969)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7808L2019A02

Original ruling text

ALERT: The tax rates cited in this article are no longer the current motor vehicle sales tax
or motor vehicle rental tax rates.

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

August 1, 1978

Dear ***:

In response to the inquiry of your letter of July 25, a Texas resident who is in the military is subject to the same tax as any other Texas resident. If he purchases a motor vehicle in another state while stationed out of Texas by the military, he will be subject to the 4% Use Tax imposed by Article 6.01(2), Vernon's Ann. Civ. St. (1969), when he returns to Texas and registers the motor vehicle. The tax is computed on the original purchase price minus the value of any trade-in vehicle. If he pays the Texas Motor Vehicle Sales and Use Tax when he originally purchases the vehicle, he will be exempt from any further payment on the same vehicle upon registering Texas.

The State of Texas allows a tax credit in the amount of any legally-imposed sales or use tax on the motor vehicle paid by the Texas resident to another state, providing he can demonstrate the amount of such payment by a receipt, invoice, or other document.

I hope this response will assist you in advising Texas service members stationed at the Naval Air Station. If I can be of any further assistance to you, please let me know.

Yours very truly,

Richard Montgomery, Director

Motor Vehicle Sales Tax Division