Licensed Used Dealer Excise Tax Exemptions
The Oklahoma Tax Commission offers the following guidance concerning used dealer excise tax exemptions.
Any used motor vehicle, travel trailer or commercial trailer owned and being offered for sale by a person licensed as a used dealer or salvage dealer to sell the same, is exempt from excise tax, except on the latest manufactured model (see below).
· Any dealer who obtains a vehicle type other than the type for which he/she is a licensed dealer (i.e. a used motor vehicle dealer obtaining travel trailer), is subject to all applicable excise taxes, registration fees, etc., and must title the vehicle in the dealership’s name.
· Licensed salvage dealers are exempt from excise tax when titling any used motor vehicle, including non-salvage. However, salvage dealers are not exempt from registration on non-salvage vehicles in their possession.
Dealer exemptions applicable to special mobilized machinery:
· A licensed Oklahoma used motor vehicle dealer may accept in trade, and reassign title to, any truck or trailer mounted special mobilized machinery (SMM) unit.
· A licensed Oklahoma commercial trailer dealer may accept in trade, and reassign title to, any trailer-mounted (only) SMM unit.
In the above allowed dealer scenarios, no excise tax or registration fee is to be assessed the dealer – except in situations where the dealer accepted a unit with expired Oklahoma registration. Dealer title reassignment privileges – both Oklahoma and out of state titles – apply.
Should an Oklahoma dealer acquire a SMM unit from such a non-titling state, the dealer must obtain an Oklahoma title in the dealership’s name before assigning ownership to a subsequent purchaser.
Latest Manufacturers Model to Used Dealer
If the motor vehicle travel trailer or commercial trailer assigned to the used dealer is the latest manufactured model or is being titled from an MSO, excise tax is due and the new vehicle rate should be charged, unless the motor vehicle, travel trailer or commercial trailer has been previously titled and excise tax paid in Oklahoma.
Latest Manufacturer’s Model Determination
For the purpose of determining an excise tax exemption for licensed dealers, the latest manufactured model motor vehicle, travel trailer or commercial trailer is the newest model year currently available for retail sale. July 1 is the established date that new (next year’s) models become available for retail sale. Absent evidence to the contrary, that date is used in establishing the latest model.
If a certain model becomes available before July 1, that model becomes the latest manufactured model for that specific line, only. Dealers attempting to claim an exemption for a 2014 model prior to July 1 should be prepared to provide written proof of the 2015 model’s availability, for instance written confirmation from the manufacturer or a local newspaper ad reflecting availability of the model.
Transfers from Dealership to Dealership Owner
Excise tax is not exempt when transferring from a dealership to the owner(s) of the dealership, except in the following limited situation:
· Ownership transferring from an individually owned (not partnership or corporation) dealership to the individual owner, provided Oklahoma excise tax was paid by the dealership when the Oklahoma title in the dealership’s name was issued.
In no other dealership to dealership-owner transfer situation is excise tax exempt, including transfers involving dealerships with “DBA” as part of the licensed dealership name. For example:
· Transferring from “John Doe DBA John Doe Motors to “John Doe” – Excise tax would be due, unless the above outlined exemption scenario applied.
Used Dealers Leasing Vehicle
Excise tax is to be assessed the licensed used dealership on any vehicle they lease. The statutory excise tax exemption is applicable only to vehicles being offered for sale. If the vehicle was held by the used dealer for sale for a period of time, then leased, excise tax is to be assessed as of initiation of the lease, with no delinquent penalty applied.
Please note, the above applies only to licensed used dealers and has no impact on new vehicles leased by licensed Oklahoma new dealers, as the relevant statutory excise tax exemption language differs for new dealers.
Dealer License Expiration / Revocation
When a dealer license expires (i.e. not renewed before 12/31 expiration), or when the dealership’s license is revoked by their licensing authority, that dealership loses the statutory authority to reassign ownership, or even possess vehicles without titling and paying the applicable taxes and fees. Therefore:
It is the dealer’s responsibility to properly dispose of all inventory, by either assigning to a purchaser or titling in the dealership’s name, prior to the expiration or revocation of their license.
Should they fail to do so, they become subject to assessment of all normal excise tax and registration fees as of the date their license expires or is revoked. Titles must be issued on all assigned titles remaining in their possession.
There is no time “grace period” allowance (i.e. 10 days, 30 days, etc.) following license expiration/revocation for a dealer to dispose of his/her inventory.