taxes

Motor Vehicle Tax Guide

Seller-Financed Sales

A seller-financed sale is a retail sale of a motor vehicle by a dealer in which the selling dealer collects all or part of the total consideration in periodic payments and retains a lien on the motor vehicle until all payments have been received.

Motor Vehicle Tax Collection Responsibilities

A dealer who makes a seller-financed sale must apply to the appropriate county tax assessor-collector (CTAC) to title and register the motor vehicle by filing Form 130-U, Application for Texas Title and/or Registration (PDF) no later than the 45th day after the date the motor vehicle is delivered to the purchaser.

A dealer making a seller-financed sale must either

• collect and remit motor vehicle tax on the total consideration for the motor vehicle when they present Form 130-U (PDF) to the CTAC; or
• collect and remit the motor vehicle tax to the Comptroller’s officer as the payments are received. A dealer making a seller-financed sale must include its 11-digit Seller-Financed Sales Tax Permit Number on Form 130-U (PDF) if the dealer intends to remit the motor vehicle tax on a report to the Comptroller’s office instead of remitting the motor vehicle tax at the time they present Form 130-U to the CTAC.

Seller-Financed Sales Tax Permit

A dealer making seller-financed sales must apply to the Comptroller’s office for a Seller-Financed Sales Tax Permit.

Each dealer making seller-financed sales who collects motor vehicle tax as the payments are received from the purchaser must remit the motor vehicle tax collected to the Comptroller’s office on or before the 20th day of the month following each reporting period. The dealer making seller-financed sales must allocate the motor vehicle tax collected on a motor vehicle to the county in which the dealer submitted Form 130-U (PDF).

The CTAC can verify the 11-digit Seller-Financed Sales Tax Permit Number on our Sales Taxpayer Search webpage.

The seller may also be required to file for a license from the Office of the Consumer Credit Commissioner (OCCC). Having an OCCC license alone does not determine how the motor vehicle tax is remitted at the time of registration.

Title and Registration

When a CTAC titles and registers a seller-financed motor vehicle without collecting motor vehicle tax, the selling dealer must provide their 11-digit Seller-Financed Sales Tax Permit Number on the exemption line in Box 38 ("Exemption claimed under the Motor Vehicle Sales and Use Tax law because…") on Form 130-U (PDF).

The lienholder listed on Form 130-U (PDF) for the motor vehicle must be either the selling dealer or a qualifying related finance company (RFC). A dealer may grant a security interest in the seller-financed motor vehicle to a third party who may be shown as lienholder.

A qualifying RFC is one in which at least 80 percent of the ownership is identical to the ownership of the dealer who sells the note. The RFC must have applied for and received an RFC registration number from the Comptroller’s office.

For more information about a qualifying RFC, see Publication 98-820, Related Finance Companies and Seller-Financed Sales.

96-254
(09/2021)