Dates To Remember: Special Inventory Tax (VIT)
TIADA recently received several calls to the Compliance Consultation Service regarding penalties for late or missing special inventory tax payments. Few dealer compliance issues in Texas raise more questions than how to handle collecting and paying special inventory tax. This week, we review key dates and corresponding forms that need to be submitted to help dealers stay compliant and avoid significant fines.
Dates to FileThe special inventory tax (SIT), also known as vehicle inventory tax (VIT), is a method of placing a value on a dealer's inventory for the purpose of calculating the amount of tax (also referred to as ad valorem tax) owed. Dealers who make retail sales are required to comply with the state's special motor vehicle inventory appraisal procedures.
- By February 1 of each year:
Dealers are required to file a Dealer's Motor Vehicle Inventory Declaration (Form 50-244) with the county's chief appraiser and file a copy with the county tax collector. The declaration form is issued by the state comptroller and should be available from the comptroller's property tax division or the county appraiser's office.
- By the 10th of every month:
Additionally, dealers must file the Dealer's Motor Vehicle Inventory Tax Statement (Form 50-246) on a monthly basis with the county tax collector listing all sales for the prior month. Property taxes based on the amount of retail sales prices must be paid with the statement. These reports must be filed even if no sales occurred in the month. Dealers should be prepared to include:
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 UpA 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.
What Dealers Are AskingDealer Question: What if I don't sell any vehicles during one of the months?
Answer: The Dealer's Motor Vehicle Inventory Tax Statement must be filed even if no sales occurred in the month.
Dealer Question: Do salvage vehicles need to appear in the SIT?
Answer: No. A salvage vehicle does not need to be reported on a dealer's vehicle inventory tax declaration. The Texas Tax Code definition of “motor vehicle” says “The term does not include: (A) a vehicle with respect to which the certificate of title has been surrendered in exchange for a salvage certificate in the manner provided by law…” Texas Tax Code Section 23.121(8)(A).
Dealer Question: What about rebuilt titles?
Answer: Yes, if you retail a rebuilt-salvage vehicle, it should be included in your SIT.