Untitled Texas Attorney General Opinion ( 1939 )

OFFICE OFTHEAnORNEY GENERALOFTEXAS AUSTIN -‘m c. MANN *-” .s*- Honorable PornL. Eaauahamp Gaoretary 0: State Austin, Texas Dear sir: Attwition: in whfoh ym reqneat the tw rquowing iaots and ona&h 10, 19s9, a dommtio oharter **o&d b;rthe rartgagor insWlments. Iour letter ressntlng the amendaeno te r, the atfldatlt~aooonpanr- amendmnt reolte~sthat tu .Twmrs fiotelOom@sny he8 title to the aroreaald propdty, wh.io3.1pro; pertp Is of the oash ~al.uaof @350,&30 over and above the flxet mmtgage loan or #SEA5(0.00. This affidavft further reoltie thst the $25O,OOQ valuationis iIonorable Tom L. Beauchamp,Pa*- 2 carried on the corporation'sbooks as ~150,000 to the capitol stq..ak a,ocount of 9100,000 credited to th'ii ln$etment account or ourplus of such oompany. This office required the paymente of a riling fee of $190 for filing the a- mendment to the charter, and in aadi- tion thereto required the payme t of rranohisetaxes oovering the peilad from May 4, 19259,through April Jo, 19&O, based upon the capitol st6ok of. 150,000 BL~ she rurther amount of 1525.000 eP. fhmoed by the note out- at&uU&+igalnat the corporate propsr- w- 'Theonly question whloh has arisen relates to our charge at this tlPurot thm addltlonal amount ot tran- oblae tax baaed upon mtetemant,oontalnad In t&~ iimendmontto th, oharter uhloh wan $hie.day tiled.* The iollowlng questionsdareeubmlttsd for oar de- termination: "1. Under the oimmwtanoei out- lined above Is the Ssorotary of State authorized to ~requlrathe oorporation to pay a supplemanta tranohlse tax ooverlna the rraotloaal wrtlen or the ~erfr~ May 4; 1939, t&rou~,Aprll . "2. In event the above question 1s answered in the afflrmatlve,upon what portion of the oar oration's oapl- to1 assets of $575,000 7repreaentsd by Its authorized and paid In oapltol stook of 8150,000, its eurplus as stated in its oharter amendment of $100,000, and the amount of $325,000 represented by the remaining value of the property subdeot to the note ereoutsd by Ollff Tower8 Corporationin said amount of $925,000) are we entitled to use as a basis for determiningthe amount of tax Xonorublu ToloL. Eesuchnmp, Page 3 tiueby it? “3. In the event question number one is answered in the negative, and assuming there is no further ohange in the Zinanoial status o? the corporation'saapitol stock, then upoo what portion o? said $375,000 should the tar due I&y 1, 1940, be based?" You lndlaate that the taxpayer has paid the tax under protest as provided in Artlole 7057-b and the loonayis being held in suspense awaiting the detsna%nationo? these questlone. Artiole 7084, Revised Civil Statutes, 1925, pro- vldea in part as hollows: “(A) Fzoept as herrin provided, every domastio and foreign oorporationhereto?Ore or hereaiter ahartsred or orccanl%odto do business ii l'e roii0ang . . Artlale 7086, Revised Cltll~Statutes,1925, pro- vldee as iollowei nNhenaver a private domsstio oorpora- tion is ohartered in this state, . . . suah oorporatlon shall be cequliredto.pay in advanoe to the Seoretary o? State, as it8 rranohlse tax rmpl that tIma down to and inoludlng the 50th day o? April next rollo~ing, only suoh proportionatepart or Its annual iranohlse tax, as hereinabove prescribed, as the period o? tlaxebetween the date or its riling of its artloles of lnoorporation . . . and on the first day of May iollowing, bears to a oalendar year," Artials 7089. Revised Civil Statutes, 1925, aon- tains the ?ollowlng provisionsi Honorable Tom LL Baauolmmp,Paga 4 "Exxceptas heraln prodded, all oor- porations now required to pay an annual franchise tax shall, between January 1 and ikroh $5 of each year, make a aworn report to the Seoreterp of State, on blanks furnishedby that oftloer, ehowlng the aozdltlon of such oorporatlonon the last day or its praoadingtiaoal year. The Seoretary Of State may iOr good oause shown by any oorporatlonsitend suoh tlzse to any date up to Mshp1 . . .* Artlole 7092 provides In part es follows: "The Seontary of State ahsll, durlag tha mnth 0r Uey or eaoh year, 00ti.ry eaoh, domastlo and ?oraIga aarporatlonwhloh smy be or baooma aubjaot to a ?ranOhlaa tax under any law of this stats, whloh has failed to pay auoh franohlsa tax an or ba- fore the rlrst day 0r my, that unleb~ suoh overdue tax tog&tharwith aaid penalty thera- O? shall be paid on or berora the first dq of July next followIng,'theright of atioh oorporatlonto do buslnaaa In this state will be torfaltadwithout judlolal aseer- talment~. :.-." The above atatutea olaarly establish that when Oli?? Towers Hotel Cornpangwas lnaorpomtod on Maroh lQ, 1939, lt- we8 then due a rranohfse tax for the period from Maroh lo., 1939, to April 30, 1939, on its oepitol atook and anoh tax was dua upon the filing of its ohm-tar- The ~rranohlaetax for the.yaar 1940 was due and payable on May 1st of 1939, based upon its outstandingoapitol atoolc,surplus, eta, prior to aEay1, 1939. The next franohiae tax due by tMs oorporatlonwill be based upon Is outstanding oapltol atook, surplus, eta., on the last day of Its risoal year next pra- oedlng Msy 1, 1940, ani till be payable in advanoa on the last me@loned date ror the franohiae tax year 194%; Although the oharter amendmentwas filed on Nay 4, 1939, during the franohlse tax year~l94.0, the rranohlw taxes for suah year were already due and payable based upon the iionorablcTom L. Beeuchamp,Tase 5 capitol structure prior to Xay 1st and the filing of the amend- ment would not affect the rmount of tax due for that year. Prior to 1930, Artlole 7091)ii.C. S., 1925, provided 68 follov:s: "In the event of increase in the author- ized capitol stook of any domestio or for- eign corporation, it shall also pay in ad- vance a supplemental franchise tax thereon for the remainder of the year down to and Inoludlngthe 3Qth day or April next there- after, the amount of whioh shall be doter- mined a.8ie provided In the third artlole OS this ohapter in oaae of the firat iraaohlse tax payment to be made by a domestic oorpo- ration whIoh may be hereafter authorized to do buainses nithln this state," This statute wae repealed by Aots, lOSO, 4lrt Legls- lature, 5th 0. S., page 220, . Ch. 68, Seo. 1. W-a hive been.unableto'rlnd any rurther atatutoa authoriai+gthe oolleotion of a eupplementaltranohleetax. upon filing a oharter amendment,and by the reppal of the a- bove quoted statute it was evidently th8 intention ot the leg- Icllaturethat :a mpplemental franchise tax ehould no longer be paid under these olroumetanoea. We, therefore,,answeryour first queetlon in the negative. Having anawered your first question In the negative, your seoond question does not require an answer. As pointed out above tha iranohiae tax due on May 1, 194C, In advance for the year 1941 will be based upon the oor- porate atruoture as of the last day of the flsoal year next pre- oeding May 1, 1940. This being true its present oapltol attruo- ture ~511 not in any way beocme a raotor in oaloulatfngthe amunt of tax due for the year 1941 and your third questlon may not materialize. We reoognlze that in submitting your third question you might have also had in mind oorporatlone similarly situated with reapeot to-this year's tax and a pre- sent answer Is desired. If this is true we reepeotfully lionorableTornL. B8aUChmp, Page 0 request that you resubmit your third question and we shall be glad to give it our further consideration. Yours very truly ATl!OE..YGEIERAL OF T%X&3 BY Aaalstant cccrn APPRiX'liD~ 24, 1939 ATTOBWBY .GliXItML OF !mxAs