Untitled Texas Attorney General Opinion ( 1948 )

Honerrble Gee. H. Sheppard
Comptroller of Public Accounts
Austin, Texas Opinion No. V-665
Re: Whether foreign corpora-
tion is liable fer Motor
Vehicle Use Tax on buses
purchased out of state and
to be used in Texas only
in interstate commerce.
Deer Mr. Sheppard:
You request our opinion as to whether the Transconti-
nental Bus System, Inc. should pay the Motor Vehicle Use Tax
on ten buses to be used only in interstate commerce. You en-
closed a letter to you from the corporatidn which reads, in part,
as follows:
“We will have ten buses based in the State of
New Mexico which will operate under interstate
rights from Albuquerque, New Mexico to El Paso
end return to Albuquerque. Interstate passengers
enly will be handled and no local passengers will
be taken on the buses or discharged from these
buses at any points between the state line and El
Paso.
“These buses were originally purchased in
the State of Kansas on which Kansas sales tax
and license fees were paid. At the time they were
trenderred to New Mexico, New Mexico license
ices were pid. We new propose to license these
buses in the State of Texas and pay the Texas mo-
tor bus license fees; however, we feel that these
buses should be exempted from payment of the Mo-
tOr Vehicle Sales and Use Tax due ta the fact, that
they ore to be ulssd exclusively for interstate pur-
poses atld no intra-state passengers are to be han-
dled.
“We feel that payment of the Motor Vehicle
Sales and Use Tax would constitute &n undue bur-
-z-able Gee. H. Sheppard, Page 2 (V-665)
We have been ahired by the Secretary ef Stats that the
Trurcentinental Bus System i* incerporated under the laws af
Delaware 8ad ia operating in Texas u nder l permit te do hrsi-
n4#8 in tbie State. This c4rpor4tien is enpled, in bddition to
it4 iaterst4te business, in intrastate business in Tene end h40
l hu$~@r, &ice in J&Us, frem which meat 4 its Texas busi-
wsn is ceaducted.
Tti perhnt eectfonr lf Article 7047k, V.C.S. are le
feU4wo;
‘Seottm 1. (4) There io hereby levied l ~$4~
upoa every retail rale ef every meter vehicle sold
in this State, euuh tax tm be equel te one (I) per cent
4f the ktdcadlere~r p4id or to k paid to *a
rre4ler by the buyer, wYch ceneideratien ihll in-
cluU4 the amount paid lr to be p&id for acid mater
vehicle and all lc c 4 sr 4 r ies
attached ther4t4 et the
tin&o d the able, what&r eutih censideretieh be in
,,,th8 nture of cae,h, credit, w exchn#e ef ether
prep4rty, Q r:r``!rllttru4.,~‘~‘~.,rr*cnt
aw+8a*ew8 r44*tlmep* ‘se&f&T includes
w tea8 wd by tJa&,Federai Government, then
lm& F-86 tax s+aU ba d&acted frem .4ui;h c+
ru4rdda br an pirp4sr 4f c~pt6lz# ;q4 mwDt
d Car. lw48d by *i4 Artlels upen iuch rbt&tl 8414.
. .
Hamerable Geo. H. Sheppard, Page 3 (V-665)
“When a tax becomes due on a motor vehicle
purchased outside of this State and brought into
this State for use upon the highways, the person,
firm, or corporation operating said motor vehicle
upon the public highways of this State shall pay
the tax imposed by Section 2 to the Tax Collector
of the county in which such motor vehicle is to be
registered. The tax ahall b4 paid at the time ap-
plication is made for registratien ef said motor
vehicle, and the Tax Collector ah11 refuse to is-
me the registration licenre until the tax is paid.”
(Emphasis ours)
Section 2 4f the l bev4-quoted article levies a u*4 tax
upon every metor vehicle purchased at retail sale outside of
this State and brought into this State for use upon the public
hiphways ef this Stat4 by . , . corpordioas domiciled or doing
business in this State. A corporation, although incorporated by
one state, may have a “commercial domicile in another. See
Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S. Ct. 773. Even
though under tbc facts the Transcontinental may not have a com-
mercial domicile in Texas, it is doing an intrastate business in
Texas and comes clearly within the taxing statute. It will thee-
fore be required to pay the use tax, unless such tax amounts to a
regulation of or a burden on interstate commerce. This tax is
an excise tax; and if it effecta interstate commerce indirectly,
incidentally, or remotely, it will be valid unless it actually dis-
criminetrq against such cemmerce. Hump Hairpin Mfg. Go. v.
Eknmerson, 250 U.S. 290, 42 S. Ct. 305. Here we have a tax not
directed at or discriminating lgain4t interstate commerce, It
is not directly imposed upon it or those engaged in it. It only
affects such commerce, as any tax will affect it, by adding to
the uxpeaec af huainetir.
While a 4tat4 may n4t directly burd4n interstate com-
merce bg taxatia, it may require all who 1~44 her reada to make
reanonabla campeneation therefer. WcCarroll v. Dixie Grey-
hound Lirue, Inc., 309 U.S. 176, 60 S. Ct. 504; Hendrick v. Mary-
land, 235 U.S. 610. By the t4rms of the statute there is no use
tax levied unless the rnet4r vahicle in purchaatd and brought in-
ts this State for use upon the public highway6 of this State. It is
also significant that th4 use tax must be paid before the Tax Col-
lector is authoriced to registar the motor vehicle end issue a li-
cense for itr use upon the highways. Thus it ia seen that the pay-
ment of this tax is a prerequisite to the us4 of th4 motor vehicle
upon the highway8 in that it is unlawful to operate such vehicles
upon public highways of this Stat4 without registration. In other
worde. the privilege of operating such m4tor vehicles upon our
highways is conditioned upon the payment of th4 tax.
Honorable Gee. H. Sheppard, Pale 4 (V-665)’
It is true that thu revenue derived from this tax is
not allecatcd to the use or maintenance of the public highways
af this State. We do nit believe that the use to which the funds
are allocated i$ controlling. The United States Supreme Court
kr D&O OUm ICkpress Co, v. State Revenue Cammission, 306
U.S. 72, 59 6. Ct. 435 in upholding a state tax on motor vehicleo
maa~ed in interstate cemmerce, used the following language:
“Thescope and laagua&e of the challenged en-
actment unmistakably disclose intention of the State
to require payment of compensation for tha privi-
lele of operating over its roads the specified ve-
hicles for the transpertatfon ef property. It cen-
taino no hint of hostility to interstate commerce or
of purpose to imporc a charge on the privilege or
basinesr af interstate traraportation. The exaction
ie not to be deemed Jfenpive ti the commerce clause
merely because the State, in the conduct of its fiscal
affairs, chooses to use part or all of the psocoeds
for purposes other than the construction, improve-
ment. or maintenance ot its
Poor, supra, pale 557 *7 S
Bingaman, supra, 412,‘56 S.‘Ct. page 758. I( (E
phasis added )
The Supreme Court ef New Mexico in Gso. E. Breece
Oumber Co. v. Mirabal, 287 P. 699, in construing a statute
all *asoline and mo-
, in upholdin the tax
< * . Much effort
u
is made in the argument and
brief of c-al fox apjcllees to convince us that
this ie a special privilege ax upon users af the pub-
lic ruds of the state by means ef automobiles in
trawling upar such hithways. If we understand the
argument, it is as follows: Tke tax is a tax upen
the use of the public hi@ways by gasoline prepelied
vehicles; lppellees di not use tbe public, highrays
in the censumption of gasoline in their qserations;
therefore, they canrqt legally be charged with the
tax. If both of appollees’ premises were true, their
cwelusion would inevitably follow. The treuble is
with the m8jir premise, In the first place, as we
have hereMore assumed, tba tax ia tiot laid on the
use ef the public bi#hways. The statute dees not say
so, and nowhere in the statute can such a conclusion
Wbnorable Geo. H. Sheppard, Page 5 (V-665)
oroceeds
r~----~--
of the tax are devoted. bv statute. to the
---~ ``~-``- ``~--``-. ``, --``--``, -~ --~-
yment ti such bon%s and debentures as may have
een msutd by the state to secure a fund with
which to build and improve thehighways of the
B,at e. But this has nothing to do with the matter.
This is merely a imancial arrangement of the state
to make sure provision i,or the prompt payment 61
its obligations when they become due,. . . ” (Km v
*asis added)
Furthermore, this tax is levied upon the privilege of
purchasing at retail a motor vehicle out of the State and bring-
ing it into this State for use upon the highways of this State.
The tax is not a cha288 U.S. 249, 53 S. Ct. 345. Also see Edeiman et al v.
Boeing Air Transport, Inc., 289 U.S. 249. 53 S. Ct. 591 wherein
the Court said:
“As the statute has been administratively con-
strued and applied the tax is not levied upon the
consumption of gasoline in furnishing motive power
for respondent’s interstate planes, The tax is ap-
plied to the stored gasoline as it is withdrawn from
the storage tanks at the airport and placed in the
planes. No tax is collected for gasoline consumed
in respondent’s planes either on coming into the
&ate or on going out. It is at the time of withdraw-
al atone that ‘use’ is measured for the purposes of
the tax. The stored gasoline is deemed to be ‘used’
within the, State end therefore subject to the tax,
when it, is withdrawn from the tanks. Compare
Nashville, Chattanooga 6 St. Louis Ry. v. Wallace,
“A State may validly tax the ‘use’ to which gas-
*line is put in withdrawing it from storage within
the &ate, and placing it in the tanks of the planes,
notwithstanding tNt its ultimate function is to gen-
erate motive power for carrying on interstate com-
merce. Such a tax cannot be distinguished from that
considered and upheld in Nas*ville, Chattanooga 81
Honorable Geo. H. Sheppard, Page 6 (V-665)
St. Louis Ry. v. Wallace, supra. There it was
pointed out that ‘there can be no valid obiection
io the taxation of the exercise of any right or
power incident to . . . ownership of the gasoline,
which falls short of a tax directly imposed an
its use in interstate commerce, deemed forbid-
den in Helson v. Kentucky,’ 279 U.S. 245. As
the exercise of the powers taxed, the storage
and withdrawal fro&r storage of the #asolin&,
was complete before interstate commerce be-
gan, it was held that the bu,rden of the tax was
tom indirect and remote from the function of in-
terstate commerce, to transgress constitutional
limitations,. , .”
It is therefere our opinion that the Tax Collector
should not register the ten buses in question 6ntil tire Motor
Vehicle Use Tax is paid thereon.
We affirm the holdins in Attorney General’s Opinion
No. .O-6529, written during a prior administration, on the sole
ground that the corporation in question in that opinion was nei-
ther domiciled in Texas nor doing an intrastate business in
Texas. Ail language used in such opinion that is in conflict
with this lpiaion is hereby expressly overruled.
SUMMARY
A use tax is due upon ,motor vehicles, pur-
chased out of Texas by a foreign corporation that
is either domiciled in Texas or doinS an intrastate
business in Texas, if brought into Texas for use
uRen the highways of this SCte, even though such
metor vehicles will be used only in interstate com-
merce. Art. 704lk, V.C.S.; Edeltnrn v. RoeinS Air
Transport, Inc., 219 U.S. 249; 53 S. Ct. 591; Dixie
O&o Express Co. v. State Rev. Corn... 306 U.S. 72,
59 8, ct. 435.
Yburs very truly
ATTORIVEYGENERALOFTEXAS
By
W. V, Gcppert
Assistant