Motor vehicle tax is due on the total consideration paid or to be paid for a motor vehicle, including all accessories or equipment attachments affixed at the time of sale.
Accessories refers to nonessential tangible personal property attached to a motor vehicle for the convenience or comfort of the operator or passengers, or to assist or aid in the transportation, loading, or unloading of tangible personal property. Examples include a car radio, air conditioner, refrigerator on a meat van, or a concrete mixer.
Equipment attachment refers to a part attached to a motor vehicle which is neither a component, nor an accessory, but which may be cargo that the vehicle transports, such as a welder, crane, compressor, or other type of equipment.
Accessories or equipment attachments affixed to a motor vehicle at the time of purchase are subject to motor vehicle tax. A person may also purchase a motor vehicle separate from any accessories or equipment attachments.
Accessories or equipment attachments purchased separately from the motor vehicle are subject to limited sales and use tax. The owner of the vehicle can then install or affix these items after the purchase of the vehicle, but before the vehicle is titled and/or registered. Since these accessories or equipment attachments were installed or affixed after the purchase of the vehicle, they are not subject to motor vehicle sales tax and should not be part of the motor vehicle tax base.
Three situations can occur with the purchase of a motor vehicle and accessories/equipment attachments:
The following sections address each of these situations and the resulting tax consequences.
Motor vehicle tax is due on the total consideration or selling price of a motor vehicle with affixed accessories or equipment attachments.
A customer orders a truck with a tool box and grill guard attached from a dealer. The customer pays motor vehicle tax on the truck, the toolbox and the grill guard.
|Motor Vehicle Sales Tax 6.25 percent||$4, 018.75|
When a buyer purchases a motor vehicle in Texas; and then separately purchases unattached accessories or equipment attachments, motor vehicle tax is due on the motor vehicle’s selling price. Limited sales tax is due on the selling price of the unattached accessories or equipment attachments.
The buyer may purchase the motor vehicle and the accessories or equipment attachments from different sellers or from the same seller at different times. Generally, if the buyer purchases the accessory or equipment attachment and the motor vehicle at the same time from the same seller, it is considered the sale of a motor vehicle with an accessory/equipment attachment, regardless of how the seller prepares the invoices.
When a buyer purchases a motor vehicle with accessories or equipment attachments affixed from out of state, and then brings the completed motor vehicle into Texas for use, motor vehicle tax is due on the selling price paid for both the motor vehicle and accessories or equipment attachments affixed to the motor vehicle. Issuing separate invoices for the truck cab and chassis and the accessories or equipment attachments does not change the taxability of the transaction.
Customer purchases accessories to add to a completed truck on which the customer has already paid motor vehicle tax. Customer pays limited sales tax on the purchase of the accessories and any labor to install them by a third party.
|Limited Sales Tax 8.25 percent||90.75|
Customer purchases a truck cab and chassis (see Invoice [A]) and a truck body (see Invoice [B]) from separate sellers and assembles the truck themselves. Customer pays motor vehicle tax on the truck cab and chassis to the selling dealer and pays limited sales tax on the truck body to the seller of the body.
|Motor Vehicle Sales Tax 6.25 percent||3,750|
|Total (before taxes)||8,800|
|Limited Sales Tax 8.25 percent||726|
Customer purchases a truck cab and chassis (motor vehicle) from an out-of-state dealership, and purchases accessories/equipment attachments separately. Customer has accessories and equipment attachments affixed to the motor vehicle and subsequently brings the vehicle into Texas for use in this state. Customer pays motor vehicle tax on the total amount of the motor vehicle and all affixed accessories and equipment attachments at the time of titling and registering the vehicle.
|Motor Vehicle Sales Tax 6.25 percent||$5,156.25|
When a buyer purchases parts and accessories to be combined into a motor vehicle, and no single part or accessory meets the definition of a motor vehicle, no motor vehicle tax is due when the builder initially titles the vehicle. The purchaser pays limited sales and use tax on all the parts and accessories to the seller.
The only time motor vehicle tax is not due on a homemade or shop-made motor vehicle is when the person who actually built the motor vehicle initially titles it. Once the person who built the motor vehicle has titled or registered it, motor vehicle tax is due on any subsequent sales.
Motor vehicle tax is also due from the person who custom orders a motor vehicle because someone else is the actual builder.