Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB3389 by Longoria (Relating to a refund of motor vehicle sales taxes paid on certain bad debt.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3389, As Introduced : a negative impact of ($6,050,000) through the biennium ending August 31, 2025.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024
($4,600,000)
2025
($1,450,000)
2026
($1,480,000)
2027
($1,510,000)
2028
($1,540,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue (Loss) from State Highway Fund 6
2024
($4,600,000)
($2,480,000)
2025
($1,450,000)
($780,000)
2026
($1,480,000)
($800,000)
2027
($1,510,000)
($810,000)
2028
($1,540,000)
($830,000)
Fiscal Analysis
The bill would add new Section 152.049 to Subchapter C, Chapter 152 of the Tax Code (collection of taxes on sales, rental, and use of motor vehicles) to entitle a seller who is required by Chapter 152 to collect the retail sales tax to file a claim with the Comptroller and receive from the Comptroller a refund of sales taxes paid on the seller's bad debt under certain circumstances.
The bill stipulates how the refund amount would be computed.
If the seller assigns the retail installment contract to a lender in a retail installment transaction, the lender could file a claim with the Comptroller for a refund of sales taxes paid on the seller's bad debt under certain circumstances.
If after receiving a refund of sales taxes paid on the seller's bad debt a seller or lender collects all or part of the principal amount of the bad debt for which the seller or lender claimed the refund, the seller or lender would make a deduction from the next claim for a refund the seller or lender files. The bill's provisions stipulate how the deduction would be computed.
The bill's provisions would not apply to a seller-financed sale.
The bill would take effect September 1, 2023.
Methodology
The estimate is based on reported average amounts of motor vehicle sales prices financed by other than the sellers, and estimated bad debt ratio. It is assumed that refunds would be available for taxes paid in prior years that were financed from amounts subsequently determined to be bad debt.
Local Government Impact
No fiscal implication to units of local government is anticipated.