us-tx/regs
34 Tex. Admin. Code § 3.741 — Imposition and Collection of Tax
(a)
Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Accessories--Nonessential tangible personal property attached to or sold with a vessel for the convenience or comfort of the operator or passengers. The term "accessories" includes, but is not limited to, radios, mirrors, transom-mounted ladders, electric trolling motors, water skis, tow ropes, and depth finders. The term does not include a boat trailer.
(2) Agent of the Department--A dealer who is authorized by the Department under Parks and Wildlife Code, §31.006 (Appointment of Authorized Agent), to collect taxes and fees and issue certificates of number for taxable boats and outboard motors sold by that dealer in Texas.
(3) Application for Certificate of Title and/or Registration--Form PWD 143 (boats) or PWD 144 (outboard motors), an electronic equivalent, or a successor form used to apply for a certificate of title and/or registration for a taxable boat or outboard motor and/or to pay any sales or use tax due on the sale or use of a taxable boat or outboard motor in Texas. The Applications for Certificate of Title and/or Registration are available at https://tpwd.texas.gov/fishboat/boat/forms/.
(4) Dealer--A person who holds a license issued by the Department to engage in the business of buying, selling, selling on consignment, displaying for sale, or exchanging at least five taxable boats or outboard motors in Texas during a calendar year at an established or permanent place of business in Texas.
(5) Department--The Texas Parks and Wildlife Department.
(6) Distributor--A person who holds a license issued by the Department to engage in the business of selling, offering for sale, or processing for distribution new taxable boats or outboard motors to dealers in Texas.
(7) Federally documented vessel--A vessel of five net tons or more, operated on United States navigable waters that has been issued a valid marine certificate of documentation on file with the United States Coast Guard National Vessel Documentation Center.
(8) Manufacturer--A person who holds a license issued by the Department to engage in the business of manufacturing new and unused taxable boats and outboard motors for the purpose of sale or trade.
(9) Participating county tax assessor-collector--A county tax assessor-collector in Texas that has an agreement with the Department to title and/or register taxable boats or outboard motors in Texas.
(10) Registered repair facility--A person engaged in the business of repairing, remodeling, maintaining, or restoring taxable boats or outboard motors that holds a current Texas sales and use tax permit issued under Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax).
(11) Retail sale--An installment or credit sale of a taxable boat or outboard motor, an exchange of a taxable boat or outboard motor for property or money, or an exchange in which a taxable boat or outboard motor is transferred but the seller retains title as security for payment of the purchase price. The term does not include a sale in which the dealer, distributor, or manufacturer acquires the taxable boat or outboard motor for the exclusive purpose of resale. Dealers, distributors, and manufacturers are the only persons who may acquire a taxable boat or outboard motor for resale.
(12) Taxable boat--A vessel not more than 115 feet in length, measured from the tip of the bow in a straight line to the stern, other than a canoe, kayak, rowboat, raft, punt, or other watercraft designed to be propelled only by paddle, oar, or pole. The term includes federally documented vessels, sailboats, personal watercraft, and boats designed to accommodate an outboard motor. The term does not include seaplanes. Seaplanes, and canoes, kayaks, rowboats, rafts, punts, or other watercraft designed to be propelled only by paddle, oar, or pole, are not "taxable boats" under Tax Code, Chapter 160 (Taxes On Sales And Use Of Boats And Boat Motors), but are subject to tax under Tax Code, Chapter 151. (Limited Sales, Excise and Use Tax).
(13) Outboard motor--Any self-contained internal combustion propulsion system of any horsepower, excluding fuel supply, used to propel a vessel that is detachable as a unit from the vessel. The term does not include electric boat motors.
(14) Temporary use permit--A non-renewable, non-transferable permit issued by the Department, an agent of the Department, or a participating county tax assessor-collector authorizing the temporary tax-free use of a taxable boat or outboard motor within the territorial boundaries of Texas for not more than 90 consecutive days from the date of issue. Only two temporary use permits may be issued for the same taxable boat or outboard motor within a calendar year. The second temporary use permit cannot be issued until 30 days after the date the first permit expires. The nonrefundable fee for the permit is $150 per taxable boat or outboard motor.
(15) Territorial boundaries of Texas--All territory within the exterior borders of Texas. The offshore border of Texas extends nine nautical miles from the coastline of Texas.
(16) Total consideration--The amount paid or to be paid for a taxable boat or outboard motor, including all accessories attached thereto at the time of the sale. The amount includes payments by the purchaser for the costs of material, labor or service, interest paid, loss, or any other expense, transportation before the sale, any manufacturer's or importer's excise tax imposed by the United States government, and any dealer's vessel and outboard motor inventory property tax imposed on the dealer and passed through to the purchaser. The amount also includes anything of monetary value received by the seller, such as cash or the equivalent; a book entry reflecting cash received or paid; the forgiveness or assumption of debt; book entries reflecting accounts receivable or accounts payable for an item; the performance of a service; or real or tangible personal property. The amount does not include any separately stated discount, finance or interest charges, documentary charges, transportation charges after the sale, or the value of another taxable boat or outboard motor taken by the seller as all or part of the consideration for the sale of the taxable boat or outboard motor.
(17) Use--Any storage or other exercise of rights of ownership in Texas by any person excluding:
(A) the storage, display, or holding of a taxable boat or outboard motor exclusively for sale by a dealer, distributor, or manufacturer; or
(B) troubleshooting or testing of a taxable boat or outboard motor being repaired, remodeled, maintained, or restored by a registered repair facility under subsection (g)(1) of this section.
(18) Vessel--Any watercraft, other than a seaplane on water, used or capable of being used for transportation on water. The definition includes a ship, barge, taxable boat, yacht, or any watercraft designed to be propelled by paddle, oar or pole.
(b)
General principles of taxation.
(1) The purchase of a taxable boat or outboard motor and all accessories attached thereto at the time of sale in Texas is subject to Tax Code, Chapter 160, including the purchase of a taxable boat or outboard motor for purposes of lease or rental.
(2) The lease or rental of a taxable boat or outboard motor in Texas is subject to Tax Code, Chapter 151, and cannot be purchased tax-free for resale.
(3) The purchase of accessories for a taxable boat or outboard motor attached after the time of sale of the taxable boat or outboard motor is subject to Tax Code, Chapter 151.
(4) The purchase of tangible personal property that cannot be identified as a taxable boat or outboard motor at the time of sale is subject to Tax Code, Chapter 151, even if the combination of items of tangible personal property later becomes a taxable boat or outboard motor. If items of tangible personal property are combined to create a taxable boat or outboard motor, the initial titling or registration of the taxable boat or outboard motor in the name of the person who created the taxable boat or outboard motor is not subject to Tax Code, Chapter 160. If the taxable boat or outboard motor is titled or registered in any other person's name, the taxable boat or outboard motor is considered transferred to that person and is subject to Tax Code, Chapter 160.
(5) The purchase of safety equipment required by Parks and Wildlife Code, §§31.064-31.071, including life preservers and fire extinguishers, purchased with a taxable boat or outboard motor are considered to be attached to the taxable boat or outboard motor at the time of sale and subject to Tax Code, Chapter 160.
(6) A taxable boat or outboard motor and all accessories attached thereto purchased outside of Texas and brought into Texas for use in Texas is subject to use tax under Tax Code, §160.022 (Use Tax), or in lieu of the use tax, a new resident use tax is due under Tax Code, §160.023 (New Resident), if the taxable boat or outboard motor and all accessories attached thereto are brought into Texas by a new resident of Texas.
(7) The purchase of a boat trailer is subject to motor vehicle sales and use tax under Tax Code, Chapter 152 (Taxes on Sale, Rental, and Use of Motor Vehicles). The total consideration paid or to be paid for a boat trailer must be separately stated from the total consideration paid or to be paid for a taxable boat and/or outboard motor at the time the boat trailer is registered in Texas. For more information on the taxation of boat trailers, see §3.74 of this title (relating to Seller Responsibility) and §3.72 of this title (relating to Trailers, Farm Machines, and Timber Machines).
(c)
Imposition of the tax.
(1) A sales tax is imposed on each retail sale of a taxable boat or outboard motor transferred for consideration within the territorial boundaries of Texas.
(A) The sales tax rate is 6.25% of the total consideration paid or to be paid for each taxable boat or outboard motor sold. The total consideration paid or to be paid for a taxable boat must be separately stated from the total consideration paid or to be paid for an outboard motor. The total amount of sales tax due may not exceed $18,750 for each taxable boat or outboard motor sold in Texas. The total amount of sales tax allowed applies separately to the taxable boat and outboard motor.
(B) The sales tax is the obligation of and shall be paid by the purchaser of the taxable boat or outboard motor. A dealer who collects sales tax from the purchaser of a taxable boat or outboard motor and does not remit the sales tax collected to either the Department an agent of the Department, or a participating county tax assessor-collector is liable for the sales tax collected and any penalties that may apply.
(2) Use tax is imposed on the use in Texas of each taxable boat or outboard motor purchased outside of Texas and brought into Texas for use in Texas.
(A) The use tax rate is 6.25% of the total consideration paid or to be paid for the taxable boat or outboard motor, regardless of any use or depreciation of the taxable boat or outboard motor before the entry of the taxable boat or outboard motor into Texas. The total consideration paid or to be paid for a taxable boat must be separately stated from the total consideration paid or to be paid for each outboard motor.
(B) The use tax is an obligation of, and shall be paid by, the person who brings the taxable boat or outboard motor into Texas. The person obligated to pay Texas use tax may claim a credit against the use tax due at the time the taxable boat or outboard motor is titled and/or registered in Texas only for legally imposed state and local sales or use tax paid on the purchase of the taxable boat or outboard motor to another state, Puerto Rico, or a possession or territory of the United States by the purchaser of the taxable boat or outboard motor before entry into Texas. Acceptable proof of tax paid includes an out-of-state tax receipt, a seller's bill of sale, sales invoice, or sales contract identifying the amount of sales or use tax paid to another state on the sale of the taxable boat or outboard motor.
(C) A new resident use tax of $15 is due in lieu of the use tax for each taxable boat or outboard motor owned by a new resident in any other state or foreign country and brought into Texas by the new resident if the taxable boat or outboard motor is brought into Texas by the new resident within 45 working days after becoming a new resident. The tax is an obligation of, and shall be paid by, the new resident who brings the taxable boat or outboard motor into Texas. A new resident cannot claim a credit against the new resident use tax due at the time the taxable boat or outboard motor is titled and/or registered in Texas for any legally imposed state and local sales or use tax due and paid to another state on the purchase of the taxable boat or outboard motor.
(D) The use tax is not due on the use of a taxable boat or outboard motor brought into Texas for use in Texas if the taxable boat or outboard motor:
(i) is a federally documented vessel or has a current certificate of number or registration issued by a United States Coast Guard approved numbering system of another state;
(ii) is issued a temporary use permit that must be present on board the boat at all times while the taxable boat or outboard motor is located within the territorial boundaries of Texas; and
(iii) the boat or outboard motor is removed from the territorial boundaries of Texas on or before the expiration date of the temporary use permit.
(E) Subparagraphs (A) and (B) of this paragraph apply to the use of a taxable boat or outboard motor brought into Texas that remains within the territorial boundaries of Texas after the expiration date of the temporary use permit. Credit is not allowed for the $150 temporary use permit fee against any Texas use tax that may be due.
(d)
Payment of the tax.
(1) The seller and purchaser must complete an Application for Certificate of Title and/or Registration for each sale of a taxable boat or outboard motor in Texas, and:
(A) if the seller collects the sales tax from the purchaser, the seller must remit the tax and the Application for Certificate of Title and/or Registration to either the Department, an agent of the Department, or a participating county tax assessor-collector within 45 working days from the date the taxable boat or outboard motor is delivered to the purchaser in Texas; or
(B) if the seller gives the Application for Certificate of Title and/or Registration to the purchaser, the purchaser is then required to remit the sales tax and the Application for Certificate of Title and/or Registration to either the Department, an agent of the Department, or a participating county tax assessor-collector within 45 working days from the date the taxable boat or outboard motor is delivered to the purchaser in Texas.
(2) Persons who owe use tax must complete an Application for Certificate of Title and/or Registration and remit the use tax and the Application for Certificate of Title and/or Registration to either the Department, an agent of the Department, or a participating county tax assessor-collector within 45 working days after the date the taxable boat or outboard motor is brought into Texas.
(3) Persons transferring ownership of a taxable boat or outboard motor in Texas when no sales or use tax is due as a result of a tax exemption, even exchange, or gift of a taxable boat or outboard motor, must complete an Application for Certificate of Title and/or Registration indicating why no sales or use tax is due and file the Application for Certificate of Title and/or Registration with either the Department, an agent of the Department, or a participating county tax assessor-collector within 45 working days after the date the taxable boat or outboard motor is transferred in Texas.
(e)
Failure of tax remittance by the selling dealer.
(1) If a purchaser paid sales tax imposed by Tax Code, §160.021 (Retail Sales Tax), to a selling dealer, and the dealer failed to remit the sales tax within 45 working days from the date of sale, the Department, agent of the Department, or participating county tax assessor-collector shall accept an application for Certificate of Title and/or Registration for a taxable boat or outboard motor from the purchaser without payment of additional sales tax by the purchaser. The purchaser must provide proof that the sales tax was paid to the dealer. Acceptable proof includes an invoice, bill of sale, or a receipt signed by the dealer or its representative showing that the sales tax was paid to the dealer.
(2) The Department, agent of the Department, or participating county tax assessor-collector shall notify the comptroller in writing of the dealer's failure to remit the tax. The notice must:
(A) be made before the 31st day after the date the application for Certificate of Title and/or Registration is accepted;
(B) contain the name and address of the dealer; and
(C) include copies of documentation provided by the purchaser showing sales tax was paid to the dealer.
(f)
Purchase of tangible personal property or accessories for resale.
(1) A properly completed resale certificate as provided under Tax Code, Chapter 151, may be used to purchase tangible personal property tax-free to be combined into a taxable boat or outboard motor held for sale in the purchaser's regular course of business.
(2) A properly completed resale certificate as provided under Tax Code, Chapter 151, may be used to purchase accessories tax-free that are included in a lump-sum price for the accessory and taxable boat or outboard motor. The lump-sum sales price is subject to the boat and boat motor sales and use tax.
(3) Accessories purchased to be attached to a vessel not subject to Tax Code, Chapter 160 (vessels over 115 feet in length), are subject to Tax Code, Chapter 151. See also §3.285 of this title (relating to Resale Certificate; Sales for Resale), §3.294 of this title (relating to Rental and Lease of Tangible Personal Property), and §3.297 of this title (relating to Carriers, Commercial Vessels, Locomotives and Rolling Stock, and Motor Vehicles).
(g)
Exemptions and non-taxable transactions.
(1) Sales tax is not due on the sale of a taxable boat or outboard motor to a purchaser in Texas for use in another state or nation before any use in Texas, if:
(A) the purchaser gives the seller a written statement signed by the purchaser stating that the purchaser intends to remove the taxable boat or outboard motor from Texas to a designated state or nation, and either;
(B) removes the taxable boat or outboard motor from the territorial boundaries of Texas within 10 days of the date of sale;
(C) places the taxable boat or outboard motor in a registered repair facility for repair, remodeling, maintenance, or restoration within 10 days of the date of sale and then removes the taxable boat or outboard motor from the territorial boundaries of Texas within 20 days from the date the repair, remodeling, maintenance, or restoration is completed; or
(D) obtains a temporary use permit within the time limits described in this paragraph. The permit must be present on board the boat at all times while the taxable boat or outboard motor is located within the territorial boundaries of Texas.
(E) Noncompliance with the requirements in this paragraph will result in the loss of the exemption and sales tax is due on the sale of the taxable boat or outboard motor. Credit is not allowed for the $150 temporary use permit fee against any sales tax that may be due.
(2) Sales or use tax is not due on the purchase or use of a taxable boat or outboard motor in Texas by:
(A) the State of Texas; its unincorporated agencies and instrumentalities; any county, city, special district or other political subdivision of the State of Texas; and any college or university created or authorized by the State of Texas;
(B) the United States; its unincorporated agencies and instrumentalities, including all independent boards, commissions, agencies, or instrumentalities chartered by the United States congress (e.g., the American Red Cross, Boy Scouts of America, Girl Scouts of America, etc.); and any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States; or
(C) any volunteer fire department or other department, company, or association organized for the purpose of answering fire alarms, extinguishing fires, and providing emergency medical services by members who receive no compensation or only nominal compensation for their services rendered, if the volunteer fire department or other department, company, or association uses the taxable boat or outboard motor exclusively for exempt purposes.
(3) Sales or use tax is not due on a taxable boat or outboard motor when:
(A) an insurer takes title to the taxable boat or outboard motor as a result of a total loss settlement or adjustment of an insurance claim for a damaged or stolen taxable boat or outboard motor; or
(B) a seller or lienholder takes possession of a taxable boat or outboard motor repossessed under a retail installment sales agreement, a chattel mortgage, or a security agreement.
(h)
Refunds.
(1) Any person, or the person's attorney, assignee, or other successor may request from the comptroller a refund of any boat or boat motor sales and use tax paid in error.
(2) The request for a refund must:
(A) be in writing on Form 57-200, Texas Claim for Refund of Boat and Boat Motor Tax, available at comptroller.texas.gov, its electronic equivalent, or a successor form, promulgated by the comptroller;
(B) state fully and in detail the specific grounds upon which the claim is founded; and
(C) be filed within four years from the date on which the tax was due and payable and within the provisions of Tax Code, Chapter 111, Subchapter D (Limitations).
(D) The comptroller will require a person to submit additional information to verify the refund claim, including a copy of the title and tax receipt issued by the Department, agent of the Department, or participating county tax assessor-collector.
(3) The comptroller will notify the claimant if the comptroller determines that a refund claim cannot be granted in part or in full and will also notify the claimant which requirements were not met. The claimant may then request a refund hearing in accordance with Tax Code, §111.105 (Tax Refund: Hearing). A person may not refile a claim for the same transaction and for the same ground or reason as a refund claim previously denied by the comptroller.
(4) A person who intends to file suit under Tax Code, Chapter 112, Subchapter B (Suit After Protest Payment), must submit to the Department, agent of the Department, or participating county tax assessor-collector a letter of protest with the payment of the tax. The letter of protest must state fully and in detail the reason that the person contends that the assessment is unlawful or unauthorized. Upon receipt of the protest letter, the Department, agent of the Department, or participating county tax assessor-collector must immediately send the comptroller a copy of the protest letter and a copy of the tax receipt showing tax paid to the comptroller.
Source Note: The provisions of this §3.741 adopted to be effective December 5, 1996, 21 TexReg 11518; amended to be effective August 4, 1998, 23 TexReg 7840; amended to be effective June 20, 2000, 25 TexReg 5916; amended to be effective July 4, 2023, 48 TexReg 3518.
Source: official text