taxes

Motor Vehicle Tax Guide

Business Entities – Sole Owners

A transfer of a motor vehicle between an unincorporated company and its sole owner is not subject to motor vehicle tax. Since the individual and the business are the same entity, there is no sale or change in ownership when a motor vehicle is transferred between the two.

A transfer between a corporation and an individual or between a corporation and a sole stockholder results in a change of ownership and is taxable. Standard presumptive value (SPV) procedures may apply.

Lien Assumption

Any motor vehicle transfer involving the assumption of a lien is subject to motor vehicle tax. SPV procedures may apply.

Incorporation of a Sole Ownership

When a sole owner incorporates and transfers a motor vehicle from the individual name to the corporate name in connection with that incorporation, the following guidelines apply:

• If the corporation pays no consideration (other than stock) to the individual, no motor vehicle tax is due. The owner of the business has simply adopted a different form of doing business. The transfer of a motor vehicle to the newly formed corporation is not a change in ownership and is not a taxable sale.
• If the corporation pays consideration to the individual, it is a private-party sale, and motor vehicle tax is due since the corporation purchased the vehicle from the individual. SPV procedures may apply.

96-254
(09/2021)