Motor Vehicle Dealer Special Inventory Frequently Asked Questions

1. Where are the Dealer's Inventory Declaration and Monthly Statements to be mailed?

Attn: Dealer Special Inventory

PO Box 149012

Austin TX 78714-9012

Austin TX 78714-9328

SIT@traviscountytx.gov

2. What is Special Inventory?

The Senate Bill 878, effective January 1st, 1994, was enacted by the 73rd Texas Legislature changing how a county

appraisal district (CAD) appraises motor vehicle inventory for property tax purposes and how dealers pay their

property taxes on this inventory.

The Inventory Tax Statement is a report of your prior month's sales with the calculation of the Unit Property Tax on

those sales. The Statement is due by the 10th of each month for the prior month's sales. For example, the Statement

for the sales made in January 2022 is due by February 10th, 2022.

5. If I file an Inventory Tax Statement each month, am I still required to file the annual Declaration?

Yes, a Declaration is due each year until the dealer's license is canceled or expires.

6. Are the special inventory Declaration or monthly Tax Statement confidential?

Yes. The filed forms are confidential.

7. I have been issued a dealer number but didn't own any vehicles on January 1. Am I required to file the

Declaration and Statements?

Yes. You are considered in business beginning on the date the dealer number is issued and continuing until it is

Yes. See Instructions for filing Declarations and Statements

10. Am I required to file a rendition?

All dealers must render their parts, accessories, supplies, and fixed assets used in the business. The assets required by the

rendition will have a separate account number. The rendition deadline is April 1. Do not include your vehicle inventory on

the rendition.

11. Can I send in a computer listing of sales or substitute a report from my dealer software system?

Yes. You may complete Steps 1, 2, 4 and 5 of the Statement form and attach a listing of sales if the listing

includes all of the information required in Step 3. A report from your dealer software system may be

substituted for the Statement form if it includes all information required on the Statement form.

monthly statement and yearly declaration. Vehicles sold with a salvage title sold as salvage or parts are not considered

January 1 market value. However, if you have an active dealer license, you must still file Statements and Declarations.

15. Are all trailers or semi-trailers considered special inventory?

The type of trailer sold will determine if it qualifies as special inventory. Texas Property Tax code Section 23.121 Dealer’s

Motor Vehicle Inventory (a) (8) states “ ‘Motor vehicle’ means a towable recreational vehicle or a fully self-propelled vehicle

with at least two wheels which has as its primary purpose the transport of a person or persons, or property, whether or not

intended for use on a public street, road, or highway.” If you have a question on whether your trailer inventory qualifies as

special inventory, please contact the appraisal district for the county in which you do business.

16. If a dealer both leases and sells motor vehicles, how does the dealer report the leased vehicles?

If the dealer leases a car, it is not special vehicle inventory. If during the year, the dealer sells a lease car (for example, the

statement.

18. What is a Police auction certificate and how do I report a vehicle sold with this certificate?

Police auction certificates are issued to storage lot owners when the police store a vehicle on their lot that is not claimed by

the registered owner. This certificate allows them to sell the vehicle for storage charges. The certificate is treated as a title

until the vehicle is sold. At the time of the sale, the certificate is exchanged for a new title. The dealer must report this sale

on their statement and declaration.

19. If I take an even trade, how is the transaction reported?

Sales price means the total amount of money paid or to be paid for the purchase of a motor vehicle. It is the same amount

as the "sales price" on line 21 of the form entitled "Application for Texas Certificate of Title." In a transaction that does not

involve the use of that form, the term means an amount of money that is equivalent or substantially equivalent to the

23.121(b) and (a)(4). What this means is that any vehicle held for sale by a dealer, regardless of ownership or consignment

status, is counted as inventory for tax purposes.

22. Do I have to report consignment sales?

Yes. All consignment sales must be reported on the Monthly Inventory Tax Statement and the Annual Declaration.

23. Do I have to pay inventory tax on consignment sales?

Yes. The dealer would pay the inventory tax on the consignment sale based on the full amount of the sale and not on the

amount the dealer would have received from the sale. The tax is due on the whole sales price as mandated by the statute.

24. How is Dealer Inventory appraised?

Although dealers are required to report and pay inventory tax on sales into an escrow account with the tax assessor-

The market value will be shown on the annual Notice of Appraised Value and should match or closely approximate the

value shown in Step 5 of the annual declaration.

25. Can a dealer protest the value or inclusion of special vehicle inventory on the appraisal roll to the appraisal review

board?

Yes. The dealer would follow the normal protest procedures - by May 15th or within 30 days of the delivery of the notice of

the appraised value. The dealer has the right to protest any action of the appraisal district that applies to and adversely

affects the dealer.

26. Why does the tax factor change?

Your factor is based on the taxing jurisdictions where your business is located on January 1. At the end of

each year, the taxing jurisdictions set the tax rates. If a jurisdiction changes its tax rate your factor will change the following

will be included in the packet.

28. Is special inventory taxable in the county where the vehicle is purchased or registered?

The special inventory is taxable in the county where purchased. Dealers who sell vehicles that are later registered in

another county must still report the sales on their special inventory monthly tax statement.

29. If I move during the year, will my factor change?

No. The factor is based on the January 1 location of the business. You will use the same factor for the

entire year. You will have a new factor for the new location starting January 1.

30. I paid into escrow on each sale during the year. Why do I owe more taxes?

The payment you send in each month is considered a prepayment of your tax bill and is held in an escrow account. Your

escrow payments are based on the sales in the current year, but your tax is based on the prior year sales. If the current

Yes. Send a letter to the appropriate licensing authority (Texas Department of Motor Vehicles, Texas Parks and Wildlife, or

Texas Department of Housing and Community Affairs) with your identification number, the date of the move, the new

location and the new mailing address

32. If I close my business, do I need to let anyone know?

Yes. You must cancel the dealer number with TXDMV. You are required to file reports until the dealer number is canceled.

Taxes are not prorated so a closure after January 1 of the tax year will not affect your market value or tax liability for that tax

year.