Section 23.12 through 23.128 of the Texas Property Tax Code describes how a county appraisal district appraises special inventory for property tax purposes and how dealers pay their property taxes on this inventory. The four types of dealers include:
- Motor Vehicle
- Vessel, Trailer and Outboard
- Heavy Equipment
- Manufactured Housing Retailers
Texas law requires that a dealer’s inventory is appraised based on the total sales of vehicles in the prior year. Dealers must file with the county appraisal district a Dealer’s Inventory Declaration form listing the total value of the inventory sold in the prior year. Also, the dealer must file with the county tax assessor/collector a monthly form called the Dealer’s Inventory Tax Statement listing the vehicles sold, and to prepay their property taxes for each vehicle.
File, Report & Pay Dealer’S Special Inventory Taxes
Step 1 - File a Dealer Inventory Declaration Form
- File one declaration per year
- File each January, between January 1 and 31
- File with the county appraisal district and send a copy to the county tax office
- If you are a new dealer, file a declaration form within 30 days of the issuance of the Dealer’s general distinguishing number (GDN)
Dealer’s Inventory Declaration Form
Complete the following items on the Dealer’s Inventory Declaration form:
- Breakdown of sales for the prior year (January through December);
- Breakdown of sales amounts for prior year (January through December);
- Other general information about the retail business - business:
- Mailing address
Calculate Current Year’s Market Value
Calculate by dividing sales amounts for inventory sales by 12 for the current year’s market value:
- The current year’s tax bills received in October will be based on this market value and the current year’s tax rates.
- The inventory’s market value is not the value of the dealer’s vehicles on January 1 but an average of the regular monthly inventory sales from the preceding year.
Step 2 - Report Sales by Filing the Dealer Inventory Tax Statement
- File 12 statements per year.
- File each month by the 10th of the following month. For example, file January inventory tax statement by February 10th.
- File with the county tax office, including a check for prepayment of taxes. Send a copy of the form to the county appraisal district. If you do not sell a vehicle during the month, you must file a tax statement indicating no sales.
- If new dealer, file each month, but do not send a prepayment of taxes.
Calculate the Unit Property Tax Factor
- Find the aggregate tax rate by adding the preceding year’s tax rates for each taxing unit that taxes the retail business. Look either at the preceding year’s tax bills or call the county tax collector. Each property is taxed by a county and by a school district. It also may be taxed by a city and special districts (such as a junior college and/or hospital district, depending on where the business is located).
Example of tax rates:
- Aggregate rate = $2.45 per $100 of value
- City tax rate = $0.60
- County tax rate = $0.40
- School tax rate = $1.40
- Special district rate = $0.05
- Divide the aggregate tax rate by 12 for a tax rate per month.
Example: $2.45 ÷ 12 = $0.20417 per $100 of value.
- Divide the aggregate tax rate per month by $100 for a tax rate per $1 of sales price.
Example: $0.20417 ÷ $100 = $0.0020417 rate per $1 (unit property tax factor).
- Change the unit property tax factor each January to use the preceding year’s tax rates.
Example: Use the 2008 adopted rates to determine the unit property tax factor for January through December 2009.
Unit Property Tax Payment
Report and pay the unit property tax payment.
- Multiply the sales price of the vehicle by the unit property tax factor.
Example: $20,000 × $0.0020417 = $40.83 in tax prepayment.
- Apply unit property tax factor to each vehicle sold in a month and report to the county tax office, along with the tax prepayment. Send a copy of the monthly tax statement to the county appraisal district. Remember, it is considered a sale, even if the vehicle is taken out of Texas.
Dealer’s Motor Vehicle Inventory Tax Statement
Report the following on the Dealer’s Motor Vehicle Inventory Tax Statement:
- Date of sale
- Make of vehicle
- Model year of vehicle
- Purchaser’s name
- Sales price
- Total sales - number of vehicles for each type of sale and by total sales amounts
- Total unit property tax value for each page and for the total report
- Type of sale
- Unit property tax value
- Vehicle identification number
A dealer who does not file the monthly tax statement by the 10th day of the following month shall pay a penalty of 5% of the amount due. If the amount is not paid within 10 days after the due date, the owner shall pay an additional penalty of 5% of the amount due for a total of 10%.