Texas Adopts New Rule Regarding Vehicle Purchases to Certain Manufacturers or Distributors

Texas Tax Code Annotated § 152.001(2) has been amended to include subsection (d) as an exception to what defines a “retail sale” of a motor vehicle. This amended rule now exempts the retail sale of motor vehicles to manufacturers, brokers, distributors, vehicle lessors and agents or other representatives that work on behalf of manufacturers, distributors or convertors. The definition now includes manufacturers of ambulances, chassis, fire-fighting vehicles, mobile and motor homes. 

Convertors who modify the previously manufactured vehicle (not motor homes, ambulances, or fire-fighting vehicles) are also exempt. Under Transportation Code § 503.064, these manufacturers or distributors can now be issued a manufacturer’s license plate for the purpose of testing the vehicle on a public street or highway or loaned to a consumer. The loaned vehicle is a temporary replacement for vehicles that are out of service for a total of 30 or more days in 24 months (or 24,000 miles) and at least 2 repair attempts were made in 12 months (or 12,000 miles) following the original delivery to the owner.

How Does This Affect My Business?

This new rule will benefit Texas taxpayers under Section 2301.002 involved in wholesale distribution of motor vehicles, vehicle customizers and manufacturers. This could mean additional vehicle inventory savings for taxpayers who would normally incur a motor vehicle sales tax registration fee. 

For more information on the amended rule and how it may apply to your clients, please contact us.