1-1 By: Brown S.B. No. 1445
1-2 (In the Senate - Filed March 13, 1995; March 20, 1995, read
1-3 first time and referred to Committee on Finance; April 7, 1995,
1-4 reported adversely, with favorable Committee Substitute by the
1-5 following vote: Yeas 11, Nays 0; April 7, 1995, sent to printer.)
1-6 COMMITTEE SUBSTITUTE FOR S.B. No. 1445 By: Brown
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to transfer of title to a motor vehicle, the collection
1-10 and administration of the motor vehicle sales tax, and certain
1-11 disclosures that must be made to the purchaser of a motor vehicle.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 152.001, Tax Code, is amended to read as
1-14 follows:
1-15 Sec. 152.001. Definitions. In this chapter:
1-16 (1) "Sale" includes:
1-17 (A) an installment and credit sale;
1-18 (B) an exchange of property for property or
1-19 money;
1-20 (C) an exchange in which property is transferred
1-21 but the seller retains title as security for payment of the
1-22 purchase price; and
1-23 (D) any other closed transaction that
1-24 constitutes a sale.
1-25 (2) "Retail sale" means a sale of a motor vehicle
1-26 except:
1-27 (A) a sale in which the purchaser is a dealer
1-28 who holds a general distinguishing number issued pursuant to the
1-29 terms of Article 6686, Revised Statutes, who acquires a vehicle for
1-30 the exclusive purpose of resale; or
1-31 (B) a sale of a vehicle that is operated under
1-32 and in accordance with Article 6686, Revised Civil Statutes of
1-33 Texas, 1925, as amended.
1-34 (3) "Motor Vehicle" includes:
1-35 (A) a self-propelled vehicle designed to
1-36 transport persons or property on a public highway;
1-37 (B) a trailer and semitrailer, including a van,
1-38 flatbed, tank, dumpster, dolly, jeep, stinger, auxiliary axle, or
1-39 converter gear; and
1-40 (C) a house trailer as defined by the
1-41 Certificate of Title Act (Article 6687-1, Vernon's Texas Civil
1-42 Statutes).
1-43 (4) "Motor Vehicle" does not include:
1-44 (A) a device moved only by human power;
1-45 (B) a device used exclusively on stationary
1-46 rails or tracks;
1-47 (C) road-building machinery; <or>
1-48 (D) a mobile office; or
1-49 (E) a vehicle with respect to which the
1-50 certificate of title has been surrendered in exchange for a salvage
1-51 certificate in the manner provided by law.
1-52 (5) "Rental" means:
1-53 (A) an agreement by the owner of a motor vehicle
1-54 to give for not longer than 180 days the exclusive use of that
1-55 vehicle to another for consideration;
1-56 (B) an agreement by the original manufacturer of
1-57 a motor vehicle to give exclusive use of the motor vehicle to
1-58 another for consideration; or
1-59 (C) an agreement to give exclusive use of a
1-60 motor vehicle to another for re-rental purposes.
1-61 (6) "Lease" means an agreement, other than a rental,
1-62 by an owner of a motor vehicle to give for longer than 180 days
1-63 exclusive use of the vehicle to another for consideration.
1-64 (7) "Public agency" means:
1-65 (A) a department, commission, board, office,
1-66 institution, or other agency of this state or of a county, city,
1-67 town, school district, hospital district, water district, or other
1-68 special district or authority or political subdivision created by
2-1 or under the constitution or the statutes of this state; or
2-2 (B) an unincorporated agency or instrumentality
2-3 of the United States.
2-4 (8) "Gross rental receipts" means value received or
2-5 promised as consideration to the owner of a motor vehicle for
2-6 rental of the vehicle, but does not include:
2-7 (A) separately stated charges for insurance;
2-8 (B) charges for damages to the motor vehicle
2-9 occurring during the rental agreement period;
2-10 (C) separately stated charges for motor fuel
2-11 sold by the owner of the motor vehicle; or
2-12 (D) discounts.
2-13 (9) "Owner of a motor vehicle" means:
2-14 (A) a person named in the certificate of title
2-15 as the owner of the vehicle; or
2-16 (B) a person who has the exclusive use of a
2-17 motor vehicle by reason of a rental and holds the vehicle for
2-18 re-rental.
2-19 (10) "Orthopedically handicapped person" means a
2-20 person who because of a physical impairment is unable to operate or
2-21 reasonably be transported in a motor vehicle that has not been
2-22 specially modified.
2-23 (11) "Volunteer fire department" means a company,
2-24 department, or association whose members receive no or nominal
2-25 compensation and which is organized for the purpose of answering
2-26 fire alarms and extinguishing fires or answering fire alarms,
2-27 extinguishing fires, and providing emergency medical services.
2-28 (12) "Motor vehicle used for religious purposes" means
2-29 a motor vehicle that is:
2-30 (A) designed to carry more than six passengers;
2-31 (B) sold to, rented to, or used by a church or
2-32 religious society;
2-33 (C) used primarily for the purpose of providing
2-34 transportation to and from a church or religious service or
2-35 meeting; and
2-36 (D) not registered as a passenger vehicle and
2-37 not used primarily for the personal or official needs or duties of
2-38 a minister.
2-39 (13) "Farm machine" means a self-propelled motor
2-40 vehicle specially adapted for use in the production of crops or
2-41 rearing of livestock, including poultry, and use in feedlots and
2-42 includes a self-propelled motor vehicle specially adapted for
2-43 applying plant food materials, agricultural chemicals, or feed for
2-44 livestock. "Farm machine" does not include any self-propelled
2-45 motor vehicle specifically designed or specially adapted for the
2-46 sole purpose of transporting agricultural products, plant food
2-47 materials, agricultural chemicals, or feed for livestock.
2-48 (14) <(15)> "Nonprofit" means:
2-49 (A) organized as a nonprofit corporation under
2-50 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
2-51 Vernon's Texas Civil Statutes); or
2-52 (B) organized and operated in a way that does
2-53 not result in accrual of distributable profits, realization of
2-54 private gain resulting from payment of compensation other than
2-55 reasonable compensation for services rendered by persons who are
2-56 not members of the organization, or realization of any other form
2-57 of private gain.
2-58 (15) <(16)> "Seller-financed sale" means a retail sale
2-59 of a motor vehicle by a dealer licensed under Article 6686, Revised
2-60 Statutes, in which the seller collects all or part of the total
2-61 consideration in periodic payments and retains a lien on the motor
2-62 vehicle until all payments have been received. The term does not
2-63 include a:
2-64 (A) retail sale of a motor vehicle in which a
2-65 person other than the seller provides the consideration for the
2-66 sale and retains a lien on the motor vehicle as collateral;
2-67 (B) lease; or
2-68 (C) rental.
2-69 (16) "Mobile office" means a trailer designed to be
2-70 used as an office, sales outlet, or other workplace.
3-1 SECTION 2. Subsection (a), Section 152.021, Tax Code, is
3-2 amended to read as follows:
3-3 (a) A tax is imposed on every retail sale of every motor
3-4 vehicle sold in this state. Except as provided by this chapter
3-5 <Section 152.047>, the tax is an obligation of and shall be paid by
3-6 the purchaser of the motor vehicle.
3-7 SECTION 3. Chapter 152, Tax Code, is amended by adding
3-8 Section 152.0411 to read as follows:
3-9 Sec. 152.0411. COLLECTION BY SELLERS. (a) A seller who
3-10 makes a sale subject to the sales tax imposed by Section 152.021
3-11 shall add the amount of the tax to the sales price, and when the
3-12 amount of the tax is added:
3-13 (1) it is a debt of the purchaser to the seller until
3-14 paid; and
3-15 (2) if unpaid, it is recoverable at law in the same
3-16 manner as the original sales price.
3-17 (b) The seller shall collect the tax from the purchaser and
3-18 remit it to the tax assessor-collector in the time and manner
3-19 provided by law.
3-20 (c) This section applies only to the sale of a vehicle that
3-21 is to be titled and registered in Texas. If a purchaser intends to
3-22 register a vehicle outside Texas, the purchaser shall comply with
3-23 the terms of Section 152.092.
3-24 (d) This section does not apply to a seller-financed sale.
3-25 SECTION 4. Section 152.044, Tax Code, is amended to read as
3-26 follows:
3-27 Sec. 152.044. Payment by Seller. (a) If the comptroller on
3-28 an audit of the records of a seller finds that the amount of tax
3-29 due was incorrectly reported on a joint statement and that the
3-30 amount of tax paid was less than the amount due <or that the seller
3-31 failed to execute and deliver to the purchaser a joint statement
3-32 and any other documents necessary to register the vehicle>, the
3-33 seller and purchaser are jointly and severally liable for the
3-34 amount of the tax determined to be due.
3-35 (b) The comptroller shall ascertain compliance with the
3-36 terms of the this section. If the comptroller on an audit of the
3-37 records of any person finds that the documents necessary to title
3-38 and register a vehicle in the name of the purchaser of the vehicle
3-39 have not been executed and delivered to the tax assessor-collector,
3-40 together with tax due, if any, the seller is liable for the amount
3-41 of the tax due, plus penalty and interest, if any.
3-42 SECTION 5. Section 27, Certificate of Title Act (Article
3-43 6687-1, Vernon's Texas Civil Statutes), is amended to read as
3-44 follows:
3-45 Sec. 27. (a) Before selling or disposing of any motor
3-46 vehicle required to be registered or licensed in this State on any
3-47 highway or public place within this State, except with dealer's
3-48 metal or cardboard license number thereto attached as now provided
3-49 by law, the owner shall make application to the designated agent in
3-50 the county of his domicile or the county in which the vehicle is
3-51 purchased or encumbered upon a form to be prescribed by the
3-52 Department for a certificate of title for such motor vehicle.
3-53 (b) The seller of a motor vehicle shall apply for the
3-54 registration of and Texas certificate of title in the name of the
3-55 purchaser of the motor vehicle that is the subject of the sale.
3-56 The seller shall file with the appropriate designated agent all
3-57 documents necessary to transfer title to the vehicle and register
3-58 the vehicle in the name of the purchaser and at the same time shall
3-59 remit motor vehicle sales tax, if any. The duty placed on the
3-60 seller by this section is solely that of the seller and applies
3-61 both to a first sale and a subsequent sale.
3-62 (c) The seller shall complete the transfer of title and
3-63 registration requirements placed on the seller by Subsection (b) of
3-64 this section in the time and manner provided by law.
3-65 SECTION 6. Section (b), Article 6.10, Title 79, Revised
3-66 Statutes (Article 5069-6.10, Vernon's Texas Civil Statutes), is
3-67 amended to read as follows:
3-68 (b) Preliminary worksheets that are shown to the buyer in
3-69 which a sale price is computed, an order from the buyer, and the
3-70 retail installment contract must include, in reasonable proximity
4-1 to the place in the worksheet, order, or contract where the
4-2 documentary fee is disclosed, the amount of the fee and the
4-3 following notice in bold-faced type:
4-4 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE AND IS NOT
4-5 REQUIRED BY LAW, BUT MAY BE CHARGED TO A BUYER FOR THE
4-6 HANDLING OF DOCUMENTS AND THE PERFORMING OF SERVICES
4-7 RELATED TO THE CLOSING OF A SALE. <A BUYER MAY AVOID
4-8 PAYMENT OF THE FEE BY HANDLING THESE DOCUMENTS AND
4-9 PERFORMING THESE SERVICES.> A DOCUMENTARY FEE MAY NOT
4-10 EXCEED $50. THIS NOTICE IS REQUIRED BY LAW."
4-11 SECTION 7. Section (h-1), Article 7.01, Title 79, Revised
4-12 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
4-13 amended to read as follows:
4-14 (h-1) In addition to the provisions of Section (h) of this
4-15 article, "principal balance" includes a motor vehicle inspection
4-16 fee and a documentary fee for services actually rendered to, for or
4-17 on behalf of the retail buyer in preparing, handling, and
4-18 processing documents relating to the motor vehicle and the closing
4-19 of the transaction evidenced by the retail installment contract.
4-20 If a documentary fee is charged:
4-21 (i) it must be charged to both cash and
4-22 credit buyers;
4-23 (ii) it may not exceed $50;
4-24 (iii) it shall be disclosed on the retail
4-25 installment contract as a separate itemized charge; and
4-26 (iv) the buyer's order and the retail
4-27 installment contract shall include in reasonable proximity to the
4-28 point in the buyer's order and retail installment contract where
4-29 the documentary fee is disclosed the amount of the documentary fee
4-30 to be charged and the following notice in type that is boldfaced,
4-31 capitalized, underlined, or otherwise set out from surrounding
4-32 written material so as to be conspicuous:
4-33 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
4-34 DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE
4-35 CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING
4-36 SERVICES RELATING TO THE CLOSING OF A SALE. <BUYERS
4-37 MAY AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING
4-38 THE DOCUMENTS AND PERFORMING THE SERVICES RELATING TO
4-39 THE CLOSING OF THE SALE.> A DOCUMENTARY FEE MAY NOT
4-40 EXCEED $50. THIS NOTICE IS REQUIRED BY LAW."
4-41 (v) If the language primarily used in the
4-42 oral sales presentation is not the same as that in which the retail
4-43 installment contract is written, the seller shall furnish to the
4-44 buyer a written statement containing the notice set out in
4-45 Subsection (iv) in the language primarily used in the oral sales
4-46 presentation.
4-47 SECTION 8. This Act takes effect January 1, 1996.
4-48 SECTION 9. The importance of this legislation and the
4-49 crowded condition of the calendars in both houses create an
4-50 emergency and an imperative public necessity that the
4-51 constitutional rule requiring bills to be read on three several
4-52 days in each house be suspended, and this rule is hereby suspended,
4-53 and that this Act take effect and be in force according to its
4-54 terms, and it is so enacted.
4-55 * * * * *