ATLANTA – Legislation in Texas that goes into effect Sept. 1 will remove consigned vehicles parked at licensed wholesale auto auctions from ad valorem tax rolls (a type of property tax), welcome news for national consignors, dealers, and auctions alike.

Previously, local governments in Texas have assessed taxes against the owners of all vehicles parked on auction lots on Jan. 1 of any given year. This had a major impact on the remarketing industry in Texas, with national consignors sending fewer vehicles to the state late in the year and giving buying dealers less inventory to choose from as they prepared for the strong spring market.

As a result of the efforts of the Texas Wholesale Auto Auction Association (TWAAA), which includes all of Manheim’s Texas facilities as well as other wholesale auto auctions in the state, Senate Bill 1652 has removed this barrier to business in Texas.

“We argued that vehicles temporarily parked on auction lots awaiting sale are not attached to any local jurisdiction, much like a train passing through or an airplane flying overhead is not subject to taxation,” said Michael W. Dunagan, general counsel to TWAAA. “For all the consignors who have diverted their vehicles away from Texas in the past, this change is important news.”

The legislation addresses three related issues:

  • Vehicles marshaled at an auction for less than 60 days as of January 1 (the date upon which the right to assess taxes normally attaches) are not subject to ad valorem tax.

  • Lien holders of repossessed vehicles awaiting sale are not subject to ad valorem tax.

  • Texas dealers consigning vehicles at Texas auctions are not subject to ad valorem tax on vehicles located at auction, if they are already subject to vehicle inventory tax.

    Dunagan said the legislation stands to benefit a variety of stakeholders.“Local communities benefit when the auctions are able to retain jobs and when folks fly into town to attend full, vibrant facilities. Dealers benefit when they have access to more inventory, and in turn consumers benefit with more choice on the retail lots,” he said. “This is not just good news for national accounts doing business in Texas, but really a win-win situation for everybody.”

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