Special Inventory Tax

Body:

Special Inventory Tax (also referred to as SIT or Vehicle Inventory Tax) is one of the more unique taxes collected by the county tax office. Dealerships that are licensed to sell motor vehicles, heavy equipment, vessels and outboard motors, and manufactured housing are required to make escrow payments with the county tax office, to pay their annual SIT tax bill. Understanding the SIT process, including when and how to file, is important to avoid costly penalties.

Dealers are required to file an Annual Declaration form with their county’s appraisal district, no later than February 1^st of each year. They are also required to file a copy of the form with their county tax office. Dealerships that were not in business on January 1^st are required to submit the Annual Declaration within 30 days of opening.

The Dealer’s Motor Vehicle Inventory Declaration, form 50-244 is available from the Comptroller’s website (www.comptroller.texas.gov). Dealers are required to provide information regarding their sales from the previous calendar year, which will be used to determine their taxable value for the current tax year.

All Dealers (except Heavy Equipment Dealers) are required to submit a Monthly Statement no later than the 10^th of each month, to the county tax office and appraisal district. This statement includes information regarding each sale that took place for the prior month, such as a description of each unit sold, the sales price of each unit, and the unit property tax due for each unit, if any. Monthly Statements must be submitted each month, even if no units are sold. Heavy Equipment dealers are required to submit a Quarterly Statement to the county tax office no later than the 20^th day of the month at the end of each quarter.

When submitting the copy of the Monthly/Quarterly Statement to the county tax office, the dealer will also make an escrow payment for the total unit property tax due for all sales reflected on the Monthly/Quarterly Statement. Dallas County offers an online portal payment system for SIT, which allows users to submit statements and payments electronically. Effective October 1, 2026, dealers will be required to submit monthly/quarterly statements via the portal.

New dealers that were not in business on January 1^st of the current year must file a completed statements as required by the Texas Property Tax Code. However, new dealers are not required to make monthly escrow payments during their first year of business.

The Dealer’s Motor Vehicle Inventory Tax Statement, form 50-246 is available from the Comptroller’s website (www.comptroller.texas.gov).

As with other types of taxes, failure to submit forms and applicable escrow payments by the established due dates can result in penalties that can quickly add up. A penalty of $1,000.00 for each month or partial month can be added for Annual Declarations submitted past the due date of February 1^st. For example, if a dealer submits the Annual Declaration on March 2^nd, a penalty of $2,000.00 can be added ($1,000.00 for the full month of February and $1,000.00 for the partial month of March). For each month or partial month that a Monthly/Quarterly Statement is not filed timely, a penalty of $500.00 can be added. In addition to the $500.00 per month penalty for not submitting the Monthly Statement on time, an additional penalty of up to 10% of the escrow amount due can be charged for failure to make the full escrow payment (if applicable) by the 10^th. 

The money paid into the escrow account is money that is due based on the dealer’s monthly sales. The tax office is required to disburse those funds to the applicable taxing entities each year. If the escrowed amount is not sufficient to cover the levy due, the tax office will notify the dealer of the remaining balance so a shortage payment can be submitted. If the escrow amount is greater than the levy due, the excess funds are distributed as overage payments to each taxing entity listed for the account. Excess funds are not carried over to hold in escrow for the next year, and, per the Tax Code Sec 23.122, no withdrawals are allowed from the escrow account.

SIT taxes are due annually for any dealership that was in business on January 1^st. Closing a dealership mid-year does not remove the tax liability. The dealer should expect to receive a tax statement at the mailing address that is on file with the appraisal district. These taxes are due upon receipt and must be paid no later than January 31^st, to avoid penalties and interest. Any money that was escrowed prior to closing the dealership will be applied to the levy due, and any shortage will be the responsibility of the dealer. If your dealership closed mid-year, you may consider calling the county tax office to determine what needs to happen to cover any shortages so you are prepared to settle the account before the balance goes delinquent and penalties and interest are added.

Filing statements and declarations electronically and paying Special Inventory Taxes online requires access to the SIT Portal. Please contact our office for more information regarding the SIT portal at 214-653-4451. Online payments can be made with Master Card, Visa, Discover, American Express, Credit/Debit cards or by eChecks (convenience fees may apply). 

Special Inventory FAQs

Is special inventory taxable in the county where the vehicle is purchased or registered?

The special inventory is taxable in the county where purchased. Dealers who sell vehicles that are later registered in another county must still report the sales on their special inventory monthly tax statement.

If a dealer both leases and sells motor vehicles, how does the dealer report the leased vehicles?

If the dealer leases a car, it is not special vehicle inventory. If during the year, the dealer sells a lease car (for example, the lease expired and an individual purchased the car), the car is special vehicle inventory. If a dealer sells a car to a company (being it finance, another dealer) that does not have a GDN or fleet identification number, the car is special inventory and needs to be reported on the monthly tax statement.

Are all trailers or semi-trailers considered special inventory?

The type of trailer sold will determine if it qualifies as special inventory. Texas Property Tax code Section 23.121 Dealer’s Motor Vehicle Inventory (a) (8) states “ ‘Motor vehicle’ means a towable recreational vehicle or a fully self-propelled vehicle with at least two wheels which has as its primary purpose the transport of a person or persons, or property, whether or not intended for use on a public street, road, or highway.” If you have a question on whether your trailer inventory qualifies as special inventory, please contact the appraisal district for the county in which you do business.

Can a dealer protest the value or inclusion of special vehicle inventory on the appraisal roll to the appraisal review board?

Yes. The dealer would follow the normal protest procedures - by May 15th or within 30 days of the delivery of the notice of the appraised value. The dealer has the right to protest any action of the appraisal district that applies to and adversely affects the dealer.

Are the special inventory Declaration or monthly Tax Statement confidential?

Yes. The filed forms are confidential.

What does the county collector do with fines collected?

The collector must use all fines collected to defray the cost of collecting the special inventory taxes. The collector also uses the earned interest from the special inventory escrow account to offset county administrative costs.

What happens if there is an even trade between the dealer and a company or individual without a GDN?

If a dealer does an even trade on vehicles with a company or individual without a GDN the vehicle is subject to the special vehicle inventory tax and the sale price of such vehicle should be that of wholesale.