Totaled Vehicles- What Amount of Sales Tax is Due?

When a vehicle is involved in an accident and the insurance carrier declares the vehicle a total loss, a lien holder may consider herself fortunate. 

After all, the declaration means, at a minimum, that (a) the collateral was covered by insurance; (b) an insurance carrier actually adjusted the claim; and (c) payment may arrive at some point. Motor vehicle sales tax is due on all payments received pursuant to a retail installment contract.

The question is, on what amount does the lien holder remit tax, the amount of the insurance payment or the amount due on the retail installment contract?
According to the Office of the Comptroller, when a vehicle is financed by a seller-financed dealer, the seller-financed dealer collects and pays the tax to the comptroller as the seller receives the proceeds of the sale. If proceeds are not received, taxes are not paid.

This is deferred sales tax 101, for which all respect is due to the many TIADA board members and friends who worked tirelessly to pass legislation allowing BHPH dealers to pay sales tax solely on the payments received. If a vehicle becomes a total loss the payment received from the insurance company is taxed as proceeds. If following a total loss, an amount of the loan is forgiven, then the seller-financed dealer is relieved of the responsibility to collect motor vehicle sales tax on that forgiven portion. 


By: Jeff Buie
On: 08/17/2017 20:40:41
What is subject to sales tax when a customer gives their vehicle back and purchases another one, receiving no consideration for the given back vehicle?
By: Amber Hackett Crosby
On: 08/22/2017 11:49:40
The total consideration paid for the new vehicle is subject to the motor vehicle sales tax rate. Please see Section 152.002 of the Tax Code. If the seller is not making a seller-financed sale, then it remits the tax to the county tax assessor-collector within 30 calendar days after the motor vehicle is delivered to the purchaser. If the vehicle is financed by a seller-financed dealer, then the dealer will collect and pay the tax as the seller receives payments.
By: Billie Crawford
On: 05/23/2020 23:00:09
If the settlement is for more than what is owed on the vehicle, does the seller pay sales tax on the overage, that I would assume would be paid to the purchaser of the vehicle?
On: 07/19/2020 01:20:30
A BHPH dealer would only collect and remit taxes on what is outstanding. Any overage paid by the insurance company belongs to the vehicle purchaser.
On: 07/21/2020 16:29:25
The seller finance dealer could only receive what is owed on the vehicle and the tax on that amount would be remitted. Any payment from the insurance company above the amount owed on the vheicle would belong to the individual who owns the vehicle and insurance policy.

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