When we purchased our new 2023 Fleetwood Discovery 44B diesel pusher at Motor Home Specialist in Alvarado, Texas, an added charge was added to our contract, stated simply as "VIT". Had it been for $2.50 or something like that, we would not have questioned it, but since it was for $988.49, and we have never encountered it in any other purchase, we had to question it, and we did. The Finance and Insurance (F&I) Manager, Billy Fussell at Motor Home Specialist, explained that it is a new "tax" that the State of Texas imposes on ALL motor vehicles being sold in the State of Texas, which has to be paid by the Buyers, and that it is based on a percentage of the sales price, which the computer calculates automatically.
It sounded 'fishy' but since we were buying an RV with a specially low price, as long as it closed by the end of the year, with only a few days to go, and because we had no way by then to go to another state to make our purchase, we accepted it. However, 4 days later, during the closing, and with a different F&I manager, Matt Killam, we again questioned the "VIT tax" and were told AGAIN that it is a new sales tax on ALL vehicle sales imposed by the State of Texas, so it is required to be paid.
We were surprised by this added charge for several reasons:
1. This dealership prides itself on the fact that it has no dealer-added fees to the sale price,
2. If this is a sales tax, WHY is it added separately from the "Sales Tax",
3. Why is the entry just titled "VIT" and not with an explanation of what it is,
4. IF it is something new and on the up and up, why was it not disclosed until we questioned it?
After closing on the new RV, and after the New Year holidays, we started to research the so-called VIT tax and found out from the Office of the Attorney General of Texas and the Office of the Comptroller of Texas, that the VIT, which stands for Vehicle Inventory Tax (as in Publication 96-254) is:
1. Considered a Property Tax, and
2. Imposed against the Dealer(s), NOT against the Buyers.
For your reference, here it is as listed on the Comptroller's website:
TEXAS MOTOR VEHICLE TAX GUIDE
Vehicle Inventory Tax (VIT)
For local property tax purposes, Texas law requires a motor vehicle dealer’s inventory to be appraised based on the total sales of motor vehicles in the prior year. A dealer must file an annual declaration of total sales from the prior year with their county appraisal district. A dealer must also file a monthly form with the county tax assessor-collector to report motor vehicles sold during the prior month and prepay, to an escrow account, a vehicle inventory tax (VIT) for those sold vehicles.
Property Tax and Not Sales Tax
The VIT is a property tax assessed on the dealer, not the purchaser, and is a negotiable item on the sales agreement. Moreover, the VIT is not, by statute, a part of "total consideration." Dealers may, however, separately list a reimbursement of the VIT on the sales agreement.
For more VIT information, see Publication 96-545, Motor Vehicle Dealer’s Special Inventory (PDF).
Sales Price
If the dealer and seller agree to include a reimbursement of the VIT in the transaction, the VIT reimbursement must be listed separately because it cannot be included in the sales price. Motor vehicle sales tax is not assessed against the separately stated VIT.
The VIT is based on the sales price on Form 130-U, Application for Texas Title and/or Registration (PDF), Box 38, after deducting any rebate, including factory and dealer rebates passed on to the customer. The net sales price in Box 38 is the sales price used for the VIT. For example, if the initial sales price is $20,000 and a $1,000 rebate is available, Box 38 should reflect the $19,000 net figure.
Publication 96-254
(09/2021)
Following all our investigation, it became evident that MOTOR HOME SPECIALIST had committed FRAUD, in misrepresenting the VIT charge as a mandatory tax on the Buyer, not disclosing the truth about the tax, and because there was a finance document (loan) involved had violated Truth in Lending laws..
Bill, not one to leave money on the table, and someone who will not let anyone cheat us, set out to address the issue with Motor Home Specialist and prepare a Complaint Form with the Office of the Attorney General, if they refused to correct their offensive actions.
On 01/13/2023 we wrote an email to the Sales Manager and the President/CEO of Motor Home Specialist, referencing the lies by the F&I Managers, and the unlawful charges by Motor Home Specialist.
Five days later, on 01/18/2023 we receive a reply from a Giff Akins of Blue Compass RV in Alvarado, stating that the Sales Manager we addressed in our email forwarded the email to him because he and the President/CEO were both away from the office, but assured us that they would respond upon their return in a few days.
By 02/07/2023, having given them 20 more days to respond, without their having done so, we wrote them one last time, advising them that given their non-response, we were continuing with the consumer complaint at the Attorney General's Office.
On 02/09/2023, Giff Akins again wrote, stating that as he is in charge of dealing with consumer relations for all their stores (of which MHS is 1 of 107) and of all the legal matters, he had taken point on this and that having reviewed the case finds with us that certain procedural errors were made, and offered to refund us our $988.49, and wanted to know to whom the check is to be made and to what address it is to be sent. We said with BOTH names (as on the Buyer's Order), but to let us know when the check is ready and we will drive to Alvarado to pick it up, so we can put this matter behind us as quickly as possible.
During the week that followed 01/30/2023 the area of Dallas / Ft. Worth suffered an ice storm which has apparently created damage to phone lines and communication equipment, so we shall give them a few extra days and hopefully we can bring this matter to an end, with our refund of our $988.49.
However, we wanted to post this on our website to WARN our readers and followers of things to be wary of IF / WHEN doing business with vehicle purchases in the State of Texas. While this (our) problem may be resolved, we would not put it past Motor Home Specialist (or any other dealer) to continue to misrepresent themselves as to the VIT tax and continue to try to saddle the Consumer with that burden, which was designed to falls on their shoulders, NOT on their consumers.
The problem is derived because the law states that:
1. It is a 'property tax', NOT a 'sales tax', and as such has no place to be part of a sales contract.
2. While it can be 'negotiable' to be paid in whole or in part by the Consumer, we can't see why a consumer would want to volunteer to pay for something he/she has no legal requirement to do so.
3. It should not state that "dealers MAY separately list a reimbursement of the VIT on the Sales Agreement", as that alone can further confuse the issue. IF ANYTHING, it should say that that dealers MAY separately list a reimbursement of the VIT on the Sales Agreement... IF and ONLY IF the Consumer has signed a written statement to the fact that he is willing to pay to reimburse the dealer for their taxation, and to what amount.. Otherwise it cannot be charged against the Consumer."
Therefore, BUYERS IN TEXAS... BEWARE.
IF a Texas dealer tries to burden you with a charge for VIT on your sales contract, read and advise them of the law, and refer them to:
https://comptroller.texas.gov/taxes/publications/96-254/vit.php
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