Motor Vehicle Seller-Financed Sales Tax Refunds

A seller who is due a tax refund can:

take a credit in the amount of the refund or credit on a future tax return,
amend the return to take a credit in the amount of the refund or a credit for the period in which the tax was paid, or
request a refund from the Comptroller.

Taking a Credit on a Future Return or Amending a Return

You must file Form 14-117, Texas Motor Vehicle Seller-Financed Sales Tax Report (PDF), to take a credit on a return. Reduce the amount of total receipts subject to tax and/or surcharge in row 2 by the total receipts of the items on which tax was paid in error.

EXAMPLE: You owe $100,000 in motor vehicle seller-financed sales tax on your next return, but you are due a $20,000 refund because you overpaid tax on a prior return. You can report tax due of $80,000 on this return. Total receipts subject to tax for all locations (line 2a) would be $1,280,000 ($80,000/.0625). Be sure to keep good records to show why and how the reduction was made.

You can also amend an original return you filed. Follow the instructions on the form used to file the original return. You cannot electronically file an amended return that reduces the tax due after the due date for the period being amended.

It is not necessary to file amended returns for separate periods in separate envelopes. For efficient processing, the Comptroller's office will review all the amended returns filed at the same time.

While waiting for a response about the approval or denial of your credit, keep filing motor vehicle seller-financed sales tax reports and paying the tax due. If you fail to report and pay motor vehicle seller-financed sales tax liabilities on time, you will be assessed penalties and interest on the unreported or unpaid amounts.

Assignees of and Successors to Permitted Sellers

A permitted seller can assign a right to refund to a third party such as a creditor, settlement trustee, or successor entity. The Comptroller's office will treat the refund claim as if the original seller had submitted it. The assignee must comply with the same requirements as the seller when filing any refund claim, including the requirement to refund or credit tax paid in error to any purchasers.

You also need to ensure the refund you are requesting is within the statute of limitations. See Statute of Limitations section on this page.

Note: If the Comptroller is currently auditing you for motor vehicle seller finance tax, ask the auditor about including any refund in the audit. This may decrease the penalty and interest assessed in the audit and increase your refund.

Refund Claim Requirements

To request a refund from the Comptroller's office, you must:

submit a claim in writing that states fully and in detail each reason or ground on which the claim is founded;
identify the period during which the claimed overpayment was made; and
submit the claim within the applicable limitations period, generally within four years from the date the tax was due and payable.

You may also need to provide the following:

If anyone other than the person or entity to whom the refund is due (such as an accountant or attorney) files a refund claim, submit Form 01-137, Limited Power of Attorney (PDF).
If the person seeking a refund of tax they paid is not the person who remitted the tax to the Comptroller's office, submit Form 00-985, Assignment of Right to Refund (PDF). A separate form is required for each vendor to whom the tax was paid in error, and each form must be signed by authorized personnel.

Statute of Limitations

Generally, a person or business has four years from the date on which the tax was due and payable to make a refund claim. However, the statute of limitations (the amount of time a person has to request a refund) may be extended if:

An Agreement to Extend Period of Limitation is executed. This extends the time to file a refund request and is generally signed during an audit of your books and records.
Indicated by a completed audit or examination of your books and records. This is described in our publication Contesting Disagreed Audits, Examinations and Refund Denials (PDF) under "Your Options After Receiving A Texas Notification of Audit Results or Texas Notification of Exam Results."

The statute of limitations keeps running unless a tolling event occurs. The statute of limitations is tolled (the clock stops running) when all refund claim requirements are met. See Refund Claim Requirements section on this page.

Submitting a Refund Claim

To file your claim electronically, email your request to refund.request@cpa.texas.gov or mail it to:

Texas Comptroller of Public Accounts
Attn: Sales and Motor Vehicle Tax Refunds
111 E. 17th Street
Austin, TX 78774-0100

If you have questions about filing a refund claim or about a claim you have already submitted, call the Comptroller's office at 800-531-5441, ext. 34545.

Refund Claim Review and Supporting Documentation

The Comptroller's office uses supporting documentation to verify refund claims and can request additional information for each transaction during the verification process. The items can include, but are not limited to:

purchaser or seller's name;
copy of invoice, if applicable;
date of transaction;
description of the item(s) purchased or sold;
specific reason for the refund, such as statutory authority;
purchase or sale amount;
sales journal;
general ledger;
resale or exemption certificates;
total amount of tax refund requested;
proof of payment;
identification of the county jurisdictions to which tax was remitted; and
canceled checks or credit memo acceptance forms as proof that tax a seller collected in error was refunded to the customer(s).

If the Comptroller's office requests that you submit invoices and you have more than 10, please provide these in a schedule format. Use the sample schedule (PDF) as a guide.

Refund Claim Outcomes

There are three possible outcomes to a refund claim: approved, incomplete or denied/partially denied.

Approved Claims

After the Comptroller's office has approved a refund claim, we will mail a refund check to the person or entity entitled to the refund. Factors such as the timely filing discount, penalties, credit interest or an existing liability can affect the refund amount.

We will send a refund check unless the claimant is set up to receive refunds by direct deposit. If you have not already been set up for direct deposit, contact the Revenue Accounting Division at 512-463-4561 to obtain Form 74-221, Tax Refund Direct Deposit Authorization to initiate the process to receive payments electronically.

Incomplete Claims

The statute of limitations will not be tolled (does not end) until a refund claim includes all of the required elements. The Comptroller's office will notify the claimant of the additional information needed.

Denied or Partially Denied Claims

The Comptroller's office will notify the claimant if the refund cannot be granted in full or in part and will identify the reason(s) for the denial. The claimant can contest the denial by requesting a refund hearing within 60 days of the denial.

If a refund hearing is requested timely, the Comptroller's office can issue a written demand notice for all documentation needed to verify the claim. This documentation must be submitted within 180 days of the date of the demand notice. Documents not timely submitted as requested by the demand notice cannot be introduced as evidence in a refund hearing.

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