taxes

Motor Vehicle Tax Guide

Liens – Storage or Mechanic

When a motor vehicle owner fails to pay for storage or mechanic service costs, the service provider, as a lienholder, may attempt to recover costs by foreclosing on the lien. The lienholder may then recover costs by holding a public sale of the motor vehicle.

Purchase of a Foreclosed Motor Vehicle

The purchaser of a foreclosed motor vehicle owes motor vehicle tax on the fees incurred, such as repair costs and storage fees. The fees are part of the sales price; therefore, they should be considered part of the total amount paid for the motor vehicle. The purchaser may be the storage or mechanic lienholder or a third party. The purchaser is able to take title to the motor vehicle through a public sale.

If the purchaser is a dealer, they may apply for title without remitting motor vehicle tax if the motor vehicle is held for resale purposes only.

Standard presumptive value (SPV) does not apply to a motor vehicle acquired through a storage or mechanic’s lien. Any charges, and the sales price (i.e., total amount paid), should be documented on the foreclosure form.

Lienholder Purchase

If the storage or mechanic’s lienholder takes title to the motor vehicle, motor vehicle tax is due on the amount of debt extinguished by the lienholder retaining the motor vehicle, unless the sale price is higher. The lienholder’s books and records should reflect the debt, which is generally the amount of the lien.

Documentation

Texas Department of Motor Vehicles (TxDMV) Form 130-U, Application for Texas Title and/or Registration (PDF), documents the purchase of a motor vehicle. When a public sale is held, an auction sales receipt from a governmental entity may be accepted in lieu of the seller’s signature on the Form 130-U (PDF).

For a sale conducted by the federal government, the federal government does not provide the purchaser with Form 130-U (PDF). The federal Form 97, United States Government – Certificate to Obtain Title to a Motor Vehicle, contains information sufficient for the registration and titling of the vehicle.

96-254
(09/2021)