How did Texas tax a vehicle bought for export and accessories installed before or after the vehicle purchase?

Plain-English summary

The Texas Tax Policy Division said a vehicle purchased in Texas for overseas use qualified for the motor vehicle tax export exemption when its use was limited to removing it from Texas. The dealer would obtain an out-of-state use exemption certificate instead of collecting the motor vehicle tax.

Accessories added before the vehicle purchase were treated as part of the vehicle and qualified with it for the exemption.

Accessories installed in Texas after the vehicle purchase were subject to sales tax. The stated exception was electronic audio equipment that was exported, provided the buyer gave the accessory seller proof of export.

The letter did not decide vehicle registration or insurance requirements; it forwarded those questions to the Texas Department of Transportation.

What this means for you

Vehicle exporters and motor vehicle dealers

The historical exemption depended on limiting vehicle use to removal from Texas and documenting the transaction with the exemption certificate.

Accessory sellers

Timing mattered: pre-purchase accessories followed the vehicle's exemption, while post-purchase Texas installations generally did not.

Common questions

Q: Could the vehicle be used in Texas before export?

A: The letter said its use had to be limited to removing it from the state.

Q: Did accessories installed before purchase qualify?

A: Yes. They were taxed as part of the vehicle and followed its exemption.

Q: What post-purchase accessory exception did the letter state?

A: Exported electronic audio equipment, with proof of export given to the seller.

Citations and references

• The letter cited the Texas Tax Code's export exemption without identifying a section number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9704386L

Original ruling text

April 14, 1997

Thank you for your inquiry concerning the taxability of motor vehicles
purchased in this state for use overseas.

The Texas Tax Code exempts a motor vehicle purchase from motor vehicle sales
tax when that vehicle is to be removed from the state. The vehicles use must
be limited to removing the unit from the state.

The motor vehicle dealer will ask you to sign an out-of-state use exemption
certificate in lieu of collecting motor vehicle sales tax.

Accessories added to the motor vehicle prior to the vehicle purchase are taxed
as part of the motor vehicle and will qualify for the motor vehicle exemption.
However, accessories added to the vehicle in Texas after the purchase of the
vehicle are subject to limited sales tax with one exception. Electronic audio
equipment is exempt from the tax if exported. Proof of export would have to be
provided to the accessory seller.

I have forwarded a copy of your inquiry to the Texas Department of
Transportation, Vehicle Titles and Registration Divion for their comment of
registration and registration insurance requirements.

If you have any questions please do not hesitate to contact this office.

Curt Swenson
[email protected]