taxes

Motor Vehicle Tax Guide

Refunds and the Lemon Law

Refunds of motor vehicle tax paid in error, except on seller-financed sales, must be recovered directly from the Comptroller’s office. County tax assessor-collectors (CTACs) or dealers may give taxpayers Form 14-202, Texas Claim for Refund of Motor Vehicle Tax, Diesel Motor Vehicle Surcharge, and/or Commercial Motor Vehicle Registration Surcharge (PDF). Page 2 of the form provides instructions for filing the refund claim. The taxpayer will need a tax receipt or purchase invoice to submit with their refund claim. For more information, visit the Comptroller’s Motor Vehicle Sales Tax Refunds webpage.

Motor vehicle tax paid in error on seller-financed sales must be recovered from the dealer who collected the tax.

Sometimes manufacturers and distributors will purchase a defective motor vehicle from the initial retail purchaser through independent negotiations. This is not a taxable transaction. A similar transaction may occur under the Texas Lemon Law.

Texas Lemon Law

The Comptroller’s office determined that an initial retail sale is refundable to the extent of the monies returned by the manufacturer or distributor. The Lemon Law provides that tax paid by the initial retail purchaser is part of the purchase price that is required to be refunded by the manufacturer or distributor. The Lemon Law also provides for a deduction of a reasonable allowance for use, determined by a time/use formula.

Similar procedures apply to situations where the refund computation is done in a manner similar to the Lemon Law, such as arbitration through the Better Business Bureau.

The following are the Comptroller’s policies concerning tax refunds:

• If the defective motor vehicle is returned to a dealer who is selling a replacement motor vehicle, the dealer may indicate the returned vehicle as a trade-in and thus, no refund application is necessary. Otherwise, the purchaser should recover the tax from the Comptroller’s office.
• When a refund is due from the Comptroller’s office, a written request should be filed by the purchaser using Form 14-202.

96-254
(09/2021)