Special Inventory Tax (VIT) Reminder
TIADA recently received several calls regarding penalties for late or missing special inventory tax payments. As government budgets continue to face funding pressure, many local county tax assessor collectors are being courted by third party law firms to outsource their special inventory tax penalty collections. The result of outside collection firms may limit a dealer's ability to seek waived or reduced fines, penalties, and interest. Remember, monthly reports for special inventory tax payments are due EVERY month….even if a dealer doesn't sell any vehicles.
A quick reminder about special inventory tax a/k/a vehicle inventory tax. Texas law provides for the special appraisal of dealers' motor vehicle inventory. Special inventory appraisal is generally based on sales. Your local tax assessor collector will provide you with the local tax rate each calendar year. Dealers must file inventory declaration forms with the county tax appraisal district each year listing the total sales, leases or rentals, as applicable, in the preceding year and an inventory tax statement with the tax office must be filed each month.
A dealer must use the Comptroller's Dealer's Motor Vehicle Inventory Tax Statement must include:
1. description of each motor vehicle sold;
2. sales price of the motor vehicle;
3. unit property tax of the motor vehicle if any; and
4. the reason no unit property tax is assigned if no unit property tax is assigned.
Penalties and interest can add up. A dealer who does not file the monthly tax statement by the 10th day of the following month commits a misdemeanor offense punishable by a fine up to $100 per day until filed. In addition to any other penalty provided by law, a dealer forfeits a penalty of $500 for each month or portion of month that it is not filed. A tax lien can be attached to the dealer's business personal property to secure payment of the penalty. A dealer who fails to remit the taxes due pays a 5 percent late penalty, with another 5 percent due if not paid within 10 days.
The Comptroller's office reminds dealers "Tax Code Section 23.121 requires that a motor vehicle dealer's inventory is appraised based on the total sales of motor vehicles in the prior year. Dealers must file with the county appraisal district Form 50-244, Dealer's Motor Vehicle Inventory Declaration (PDF), listing the total annual sales from the inventory in the prior year. Also, the dealer must file with the tax office the monthly Form 50-246, Dealer's Motor Vehicle Inventory Tax Statement (PDF), listing the motor vehicles sold and prepay property taxes for each vehicle."
The Comptroller's office publishes the Motor Vehicle Dealer's Special Inventory Manual (PDF) to assist dealers in filing Form 50-244, Dealer's Motor Vehicle Inventory Declaration (PDF), and Form 50-246, Dealer's Motor Vehicle Inventory Tax Statement (PDF), and prepaying property taxes each month.