Untitled Texas Attorney General Opinion ( 1950 )

191
February 21, 1950
Hon. Robert S. Calve1 t Opinion No. V-1010.
ComptroLler of Public Accounts
Austin, Texas Re: Several questions regard-
ing the gross receipts tax
liability of carriers whose
intangible taxes are delin-
Dear Mr. Calvert: quent.
You submit for the opinion of this office several ques-
tions, the pertinent portions of which we quote below:
“I wsh to call your attention to H.B. No. 8, .Acts..
47th Legislature, Articles 13 and 14, with”respect to
the motor bus and common carrier truck lines. Arti-
cle 13 amends Chaprer 4. T-.tle 122, Article~JL05, coy- 7
ering the tax on Intangible assets. Article 14 becomes
a part of the Gross Receipts Law and places a 2.2%
tax on the receipts of motor bus, common carrier and
contract carriers as defined in Chapter 277, Acts 47th
Legislature. Ai title 7116 V.A.C.S. 1925, contains an
exemption from th7: payment of Gross Receipts Tax,
should they pay in ful- and within the year for which
the Intangible Tax may be assessed o. .
“Each of the several counties in this State fi.e
annual lists of insolvent and delinquent tax payers at
June 30th of the succeeding year. We check these in-
solvent lists with oui~ County Certificates, to deter -
mine those that failed to pay this tax. We then pr~oceed
to mail the taxpayer a notice calling his attention to
the delinquent taxes in the various counties, with cop-
ies to the county tax collectors. At this time we are in
the process of checking the 1948 lists that became de-
linquent in 1949.
“In view of the facts as set out above, certain
questions have arisen and we request a ruing on those
submitted hei ewith:
“(1) Is the taxpayer due the Gross Receipts Tax
on his operations as a specialized, common, or motor
bus company should he become delinquent on his Intan-
gible Taxes for any year? If the taxpayer fails to pay
Hon. Robert S. Calvert, Page 2 (V-1010)
his Intangible Tax for ,any given year and becomes lia-
ble for the tax on the gross receipts, then the Gross
Receipts Tax becomes due for what period of time?
“(2) The taxpayer may travel through four or
r more .+zannties. and each,rrf&hem,receive a .+ortion of *
his Intangible assessment. He may pay in one, two
or even three counties, but omit one or more of them.
Does the exemption, contained in Art. 7116. apply to
those that only pay a part of their total assessment,
letting one or more counties become delinquent?
“(3) The tax collector may have accepted pay-
ment and issued Insolvent Tax ~Receipts after June
30th. And should you ruie that the taxpayers are due
.the Gross Receipts Tax because of failure to pay the
’ _ Intangible Ad Valorem Taxes, should the taxpayer be
allowed credit for Intangible Taxes so paid against the
Gross Receipts Taxes?
“(4) Should you rule that the Gross Receipts Law
becomes operative on these delinquent taxpayers, can
the county officials proceed to collect the Ad Valorem
Taxes: In your Opinion No. 05770, copy of which.is at-
tached, you ruled that,
” ‘Until the carrier operating under the certificate
of convenience and necessity as a Specialized Carrier
becomes subject to liability for Intangible Assets Tax,
it cannot avail itself of the exemption from Gross Re-
ceipts Tax as is contained in Article 7066(A) VRCS.’
-3
‘This question involves those that have been sub-
ject to a liability for Intangible Assets Tax and have neg-
lected to pay this tax within the year in which it was
assessed.”
Our answers to your questions will be more easily un-
derstood if we first state some rules of law appiicable to taxation
of intangible assets as provided in Articles 7105-16, V.C.S. This
is an ad valorem tax assessed upon an annual basis, and January
1st is a specific date upon which the status and value of the prop-
erty shall be fixed and determined. In this regard the same rule
applies to intangible taxes as to ad valorem taxes on tangible prop-
erty. Texas Consolidated Transportation Co. v. State, 210 S.W.Zd
891 .(Tex. Civ. App. 1948, error ref.).
We assume for the purpose of this opinion that full tax-
able years are involved in all your questions. A taxpayer may be
193
```` Robert S. Calvert, Pa+ 3 (V-1010)
,ubject to both a tax upon intangible assets as provided in Articles
7105-16, V&S. (the intangible tax statute) and a gross receipts tax
as provided in Article 7066b. V.C.S., at the same time and for the
same year. ‘But the Legislature has provided that under certain
circumstances a taxpayer who IS subject to both taxes may be re-
lieved of liability for gross receipt s taxes upon certain conditions.
These conditions are set out in Article 7116. V.C.S., which pro- C(
“ides:
“Whenever any individual, company. corporation
or association, embraced within the eighth article of
this chapter, shall pay in full, and within the year for
which same may be assessed, all its State and county
taxes for that year upon all its intangible properties as
determined, fixed and assessed under the provisions
of this chapter, such individual, company, corporation
or association shall thereby be relieved from liability
for and from payment of any and all occupation taxes
measured by gross receipt-, for or accruing during that
year under any law of this State; but no such individual,
company, corporation or association shall be entitled I
to any such exemption, except for the year for which it
shall, before same shall become delinquent, pay all its
aforesaid intangible State and county taxes for that year.”
Therefore, in answer to your first question, you are ad-
vised that if a taxpayer fails to pay his intangible tax for any given
year but permits the same to become delinquent, the gross receipts
tax is due for the full corresponding year.
In answer to your second question, you are advised that
a taxpayer may not avail himseif of the exemption contained in Ar-
ticle 7116, V.C.S., unless he pays all his intangible taxes in all the
counties to which they are apportioned, and before they become de-
linquent. The statute provides, -pay all its aforesaid intangible
State and county taxes for that year,” and this means all the taxes
assessed which have been apportioned to all the counties as provid-
$’ ed in Article 7113, V.C.S. That is the meaning of the statute, and
is in effect the holda of Texas Consolidated Transportation Co.
v. State, supra.. This decision states “that relief from liability for
th e gross receipts tax is absolsitely conditioned upon payment of
an intangible assets tax for the year during which such relief is
sought.”
In answer’ to your third question, you are advised that,
as pzeviously stated, a taxpayer may become subject to both an in-
tangible tax and a g: ass i eceipts tax by his failure to avail h’.mseLf
of the provisions of Article 7116, supra. In such case both become
fixed liabilities of the taxpayer. The intangible tax becomes fixed
Hon. Robert S. Calvert, Page 4 (V-1010)
.by.reason of the fact that he was subject to it on January 1st for
. . .~which proper assessment and legal levy is made, and his liability
. for the gross receipts tax becomes fixed by his failure to avail him-
self of the exemptiop provided in Article 7116. supra, in the time
and manner thereinState, supra, in construing these two statutes, the court said:
“Both of these statutes were a part of the .same
legislative enactment. Acts 1941. 47th Leg., p. 269;
ch. 184.
“Art. 7116, V.A.C.S., is contained in Chapter 4,
-7
Title 122, of the Revised Civil Statutes of 1925, . . .
“This Article is not in any manner repealed by
the legislative act of 1941. In fact it is carried for-
ward and became a part of the new law by specific r&-
erence. Nor is there any repugnancy or inconsistency
between art. 7116 and the concluding sentence of Sec.
(a), art. 7066b, supra. These statutes should, therefore,
be construed together. When this is done, the legisla-
tive intent plainly appears (1) that a taxpayer subject to
both an intangible assets tax and a gross receipts tax
should not necessarily be required to pay both at the
same time or for the same period, but (2) that relief
from liability ior the gross receipts tax is absolutely
conditioned upon payment of an intangible assets tax for
the year du~ring which such relief is sought.”
As stated in the Consolidated case, *a taxpayer subject
to both an intangible assets tax and a gross receipts tax should not
necessarily be required to pay both at the same time or for the same
period.” But in that case the court was not dealing with a situation
where the liability for both taxes had become fixed by reason of the
taxpayer’s failure to avail himself of the exemption contained in Ar-
ticle 7116. It was dealing with a situation where the taxpayer could
not in any event be subject to the intangible tax for the year involved
for the simple reason that he did not fall within the class required
under the law to pay an intangible tax until after January 1. and hence
eon. Robert S. Calvert, Page 5 (V-1010)
in no event could the taxpayer be subject under the law to pay an
intangible tax for that year. Therefore the taxpayer in that case
was subject to the gross receipts tax for the remaining portion of
the year after he fell into the classification of those required to
pay the tax. Construing these two exemption statutes together, Ar- .
title 7116 is a further limitation upon Article 7066b (the gross re-
ceiptstiatute) with the result as foilows:
*Provided, however, carriers of persons or prop-
erty who are required to pay an intangible assets tax
under the laws of this State, are hereby exempted from
the provisions of this Article of this Act.”
”
. . . but no such individual, company, corpora-
tion or association shall be entitled to any such exemp-
tion, except for the year for which it shall, before same
shall become delinquent, pay all its aforesaid intangible
State and county taxes for that year.”
Turning to your fourth question, if a taxpayerhas be-
come liable for both intangible and gross receipts tax upon the con-
ditions we point out above. then clearly the Tax Collector would
have no authority to allow credit against the gross receipts tax for
the amount paid for delinquent intangible taxes. This would have
the effect of forgiving a tax liability which had become fixed, and
this is forbidden by Section 10 of Article VIII of the Constitution, (-
which provides: ‘-
“The Legislature shall have no power to release
the inhabitants of, or property in, any county, city or
town from the payment of taxes levied for State and
county purposes, unless in case of great public calam-
ity in any such county, city or town, and such release
may be made by a vote of two-thirds of each house of
the Legislature.”
Not even the Legislature has this power, and certainly the Tax Col-
lector does not have it. The same would also violate Section 55 of ‘e
Article III of the Constitution which provides:
“The Legislature shall have no power to release
or extinguish, or to authorize the releasing or extin-
guishing, in whole or in part, the indebtedness, liabil-
ity or obligation of any incorporation or individual, to
this State, or to any county or other municipal corpora-
tion therein.”
In answer to your question No. 4, you are advised that
if a taxpayer becomes subject to both intangible and gross re-
ceipts taxes under the circumstances we have discussed above, the
Hon. Robert S. Calvert. Page 6 (V-1010)
tax collector is not onIy authorized but it is his duty to collect the
ad valorem taxes’on the taxpayer’s intangible assets assessed by
virtue of Articles 7105-16, V.C.S.
You submit a supplemental request as follows:
“Supplementing our request of September 19, 1949,
I wish to’submit additional questions on delinquent In-
tangible Taxes and/or Gross Receipts Taxes.
t
“(a) A man sells his bus certificates~to a larger
line during 1947 and did not pay his 1946 taxes on in-
tangible assets or on his gross receipts.
“(b) A man sells his equipment, shops and ter-
minals during February 1945 and leases his certificates
to a corporation who continues the same business. The
lease is for ten years, but within a year or two the cor-
poration buys his certificates and lease contract. The
lease contract provides that the corporation will not be
liable for, nor do they assume any obligations then ex-
isting against the individual. The individual does not
pay the tax on intangible assets during the period of the
lease, nor does the corporation pay on either of the tax-
es on intangible assets, or gross receipts.
“The question arises: do we look to the present
owners of these properties, since the intangible asgets
and/or gross receipts taxes have not been paid? Does
a tax lien attach itself to the certificate for delinquent
taxes, either on intangible assets or gross receipts? ”
In answer to the questions therein presented, we think
it only necessary to say that personal liability for, taxes exists only
against those against whom the taxes are lawfully-assessed, and a
subsequent purchaser does not become personally liable therefor.
This is the holding of the case of City of San Antonio v. Toepper-
wein, 104 Tex. 43, 133 S.W. 416 (1911). To the same effect are
scks v. State, 41 S.W.2d 714, (Tex. Civ. App. 1931); Slaughter v.
City of Dallas, TO1 Tex. 315, 107 S.W. 48 (1908). The law does not
fix a lien against the operator’s certificate to secure the payment
of delinquent intangible taxes or gross receipts taxes. But a lien
does attach upon ail the property of the taxpayer as provided in Ar-
ticle 7083. V.C.S., and a subsequent purchaser would take such prop-
erty subject to the lien provided in said Article of the statute.
In Acts 1941, 47th Legislature, chapter 184, known as
the Omnibus Tax Law, there was included as Article 21, and incor-
porated as Article 7083b, V.C.S., the following general provision:
PY7
Ron. Robert S. Caiv,ert. Page 7 (V-1010)
“All taxes, fines, penalties, and interest . . due
. . . to the State of Texas, by virtue of this.Act, shall
be a preferred lien, first and prior to any and all other
existing liens, contract or statutory, legal or equitable,
and regardless of the time such liens originated, upon
all the property of any individual, firm, association,
jokh’rrtockoompny+ rydieace, oupa~bkemship, cerpe
ration, agency, trustee, or receiver. This lien shall be
cumulative, and in addition to the liens for taxes, fines,
penalties, and interest now provided by law, and shall
attach as of the date such tax or taxes are due and pay-
able. ”
The Omnibus Tax Bill amended the intangible tax law
by including motor bus companies, common carrier motor carriers,
and specialized motor carriers. The foregoing lien provision would,
therefore, apply for intangible taxes assessed against motor bus
companies, common carrier motor carriers, and specialized mo-
tor carriers; and it would likewise apply for gross receipts tax un-
der Article 7066b, V.C.S., where liability attaches under the condi-
tions we have set out above. Therefore, a subsequent sale of any
property that had become subject to the lien provided by the fore-
going statute would not operate to extinguish the lien, and a subse-
quent purchaser would take such property subject to the lien, but
would not be personally liable for the tax.
SUMMARY
A taxpayer may become subjecfto a tax on intan-
gible assets as provided in Articles 7105-711’6~, V.C.S.,
and to gross receipts tax as provided in Article 7066b,
V.C.S.. for the same year or years and for the pame
time if he fails to pay the intangible tax before it be-
,comes delinquent as provided in Article 7116, V.C.S.
Under such circumstances credit may not be allowed
against the gross receipts tax for the delinquent intan-
gible’tax when paid. The Tax Collector is authorized
to collect the intangible tax where a taxpayer has also
become liable to pay a gross receipts tax. A subsequent
purchaser is not personally liable for taxes of his pre-
decessor in title, and no liens exist against the certifi-
cate of a bus or motor carrier to secure the payment
of either intangible taxes or gross receipts taxes. But
~Hon, Robert S. Calvert, Page 8 (V-1010)
a lien does attach upon.*11 property of the taxpayer as
provided in Article 7083b, V.C.S., and a subsequent
-purchaser would take such property subject to the lien
.provided in said Article of the statute.
‘.Yours very truly,
;PRIC E DANIEL
Attorney .General
‘W.. ‘V,. :Geppert
Taxation:Division
Price .Daniel
Attorney General
:LPL/mwb