If a purchaser defaults on a lien, a lienholder may repossess a motor vehicle held under a valid lien without paying motor vehicle tax. The act of repossession is not a retail sale.
When a lienholder repossesses a motor vehicle and completes the required repossession documents with the Texas Department of Motor Vehicles (TxDMV), a taxable transaction occurs if the previous owner then purchases the motor vehicle back from the lender. If the lender is not a licensed motor vehicle dealer, standard presumptive value (SPV) procedures may apply.
Generally, there is no need for the lienholder to take title to the vehicle. If the lienholder does take title, however, then the lienholder may do so without paying motor vehicle tax to the county tax assessor-collector’s office.