TX HB5250

Allows sellers of passenger cars (vehicles accommodating 10 or fewer passengers) to claim refunds from the comptroller for motor vehicle sales taxes paid on bad debt from retail installment transactions when the debt is determined worthless and charged off for federal tax purposes

Permits lenders who purchased retail installment contracts directly from sellers to claim the bad debt tax refund instead of the seller, provided the seller has not already received a refund for the same debt

Calculates refund amounts by proportionally allocating bad debt between taxable and nontaxable charges based on the original retail installment agreement, then multiplying the taxable portion by the applicable tax rate

Requires sellers or lenders who later collect on bad debt for which they received a refund to deduct the corresponding tax amount from their next refund claim

Mandates that claimants maintain documentation including seller information, transaction amounts, registration/title applications, and title receipts for comptroller verification; excludes seller-financed sales from these provisions

Takes effect September 1, 2025, applying only to tax liability accruing on or after that date