What did Texas's 1978 bulletin say about retitling a vehicle bought through another person's name?

Plain-English summary

Texas's 1978 bulletin announced Rule .009 on vehicles purchased through another person's name.

Historically, if the buyer paid tax but titled the vehicle in another name, a later transfer to the original buyer generally triggered a new sales, use, or gift tax because the title transfer reflected a closed transaction and ownership change.

The bulletin ended the older affidavit procedure for future transactions but honored properly executed affidavits dated before the bulletin. It preserved a historical exception for a person under 21 who titled a purchase in a parent or guardian's name and later transferred it after reaching 21.

It also allowed a tax-free correction when a vehicle was titled in the wrong name by mistake and the actual buyer filed an affidavit explaining the error.

STAR marks the gift-tax issue partially superseded and warns that the historical tax rates are obsolete.

What this means for you

Vehicle buyers and title professionals

Do not use this bulletin as a current retitling procedure. Its exceptions, age threshold, forms, and tax amounts are historical.

County tax assessor-collectors

The bulletin was general administrative guidance and has been partially superseded.

Common questions

Q: Did later retitling generally trigger tax in the bulletin?

A: Yes.

Q: Did it allow limited corrections?

A: Yes, for the historical parent-to-former-minor situation and genuine titling errors.

Q: Is the gift-tax treatment current?

A: No. STAR marks it partially superseded.

Citations and references

• Motor Vehicle Rule 026.02.06.009 — attached rule on vehicles purchased through another name.
• TEX. TAX.-GEN. ANN. art. 6.02 — historical rulemaking authority.
• Texas Attorney General Opinion O-4128 — cited in the attached rule.
• Texas House Bill 2654, 81st Legislature, and Rule 3.80 — identified by STAR's superseded-information notice.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/7809L2019A12

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.

STAR SUPERSEDED INFORMATION

Accession No. -

Supersede type - PARTIAL

Document superseded on - 2/21/2013

Issue(s) that caused the document to be superseded -gift tax

Reason(s): House Bill 2654, 81st Regular Legislative Session amended Texas Tax Code Section 152

to limit the motor vehicle gift tax to a limited group of individuals or entities. (Effective Sept. 1, 2009.)

See Rule 3.80 (Motor Vehicles Transferred as a Gift or For No Consideration).

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

September 21, 1978

Motor Vehicle Sales and Use Tax Bulletin No. 1978-E

All Tax Assessor-Collectors

Ladies and Gentlemen:

Attached is a copy of Motor Vehicle Rule .009, "Motor Vehicles Purchased Through Another Name." This rule became effective September 13, 1978, and supersedes Motor Vehicle Sales tax Bulletin 1974-D dated August 15, 1974, and Motor Vehicle Ruling 40-0.01 effective October 2, 1969.

When a motor vehicle is purchased and tax is paid, but the vehicle is titled in an name other than the buyer's name, a 4% sales or use tax, or a $10.00 gift tax, is due if the vehicle is later transferred to the original buyer. The transfer of title to the original buyer reflects a closed transaction and a change of ownership. An example of this situation occurs when a subsidiary company purchases and pays tax on a motor vehicle, but titles it in the parent company's name for business reasons. If the vehicle is later titled in the name of the subsidiary company, either the 4% sales or use tax, or $10.00 gift tax, is due.

Motor Vehicle Rule 40-0.01 states that a vehicle registered in the name of a person other than the true owner could be re-registered within 30 days in the name of the true owner without further tax being due, provided tax was paid and an affidavit of fact setting out the facts of the transaction was filed at the time of first registration. In addition, Bulletin 1974-D described a procedure under Ruling 40-0.01 whereby an affidavit could be filed in those lease arrangements which required the lessee to purchase and take title to the leased vehicle at the expiration of the lease. Tax was paid at the time of original purchase. The affidavit then served as a certificate of exemption from tax upon the transfer of the vehicle to the lessee.

Rule .009 prohibits the tax exempt transfer of a motor vehicle to the original buyer, whether or not an affidavit of fact has been previously filed. However, any affidavit properly executed in accordance with Motor Vehicle Ruling 40-0.01, or Bulletin 1974-D, and dated prior to the date of this bulletin, will be honored. You should refuse to accept any affidavit of fact filed under Ruling 40-0.01 or Bulletin 1974-D from this date

forward.

The one exception allowed under Rule .009 is a "parent to former minor" transfer. A person who has not reached age 21 may purchase a motor vehicle, pay the tax, and title the vehicle in the name of his parents or guardians, and then later transfer the vehicle into his name when he reaches age 21 without any further tax due. This is no different from the way "parent to former minor" transactions have been handled in the past. A person claiming this exemption from tax should complete Section 5, Affidavit of Facts, on the Seller, Donor, or Trader's Affidavit, stating that he had not reached age 21 at the time of purchase and that the vehicle is being transferred to him from his parents or guardians. A sample Seller, Donor or Trader's Affidavit and Form 31 tax receipt is attached. No additional affidavit is required. Although 18 years of age is recognized as the legal age of an adult in Texas, age 21 is used in administering the "parent to former minor" transfer.

Whenever a motor vehicle is titled in the wrong name in error, the vehicle may be re-titled in the correct name with no additional tax due. The person who is actually buying the vehicle should complete Section 5, Affidavit of Facts, on a Seller, Donor, or Trader's Affidavit, explaining the error in titling.

If you have any questions, you may write the Motor Vehicle Sales Tax Division or call toll free 1-800-252-5555.

Yours very truly,

Richard Montgomery, Director

Motor Vehicle Sales Tax Division

Motor Vehicle Sales and Use Tax Division Motor Vehicles Purchased Through Another Name 026.02.06.009

Under the authority of TEX. TAX.-GEN. ANN. art. 6.02 (1969) the Comptroller of Public Accounts has adopted Rule 026.02.06.009 to read as follows:

.009 Motor Vehicles Purchased Through Another Name.

When a motor vehicle is titled in a name other than the buyer's name, a four percent motor vehicle sales and use tax or a $10 gift tax will be due if the vehicle is later transferred to the original buyer. The passing of title reflects a closed transaction and a change of ownership. (See Attorney General Opinion 0-4128.) When a motor vehicle is titled in the name of the buyer's parents or guardians and the buyer has not reached age 21 at the time of purchase of the motor vehicle, no motor vehicle sales or use tax will be due if the vehicle is later transferred into the buyer's name after he reaches age 21.

Adopted 9/13/78