Untitled Texas Attorney General Opinion ( 1939 )

Hon. George H. Sheppard Opinion NO. o-1382 Comptroller of Public Re: Whether suit club award is Accounts taxable under’Article 7047f, Austin, Texas Revised Civil Statutes. Dear Sir: We are in receipt of your letter of September 2, 1939, wherein yoursubmit to us the ,followlngfact situation: “The operator of the club agrees to deliver one $25.00 suit’of clothes to a club member after he has paid the operator $2.50 per week for ten :consecutiveweeks. ‘IOna certain day of each’week for ten weeks all club members who .havepaid the $2.50 weekly payment to the club operator are entitled t,o; ‘par- ticipate in a drawing of names or numbers’whichis held to determine the winner of a credit equal to the unpaid balance the member owes for the $25.00 suit he is buying. If the winner has paid one weekly payment of $2.50, a credit of $22.50 (or the unpaid balance he owes for a suit,)is awarded to him. The second week some member is awarded a $20.00 credit or the balance he owes for a suit, and so on, until ten credits of,various amounts have been awarded, one each week for ten weeks.” You request our opinion as to whether or not the awards thus made‘are subject to the twenty per cent tax levied by Article 7047, Revised Civil Statutes of Texas. ‘SeotionA and the first .sentenceof Section B of Ar- title 7047f, Revised Civil Statutes, read as follows: “(a) Every person, firm, or corporationcon- ducting a theatre, place of amusement, or any busi- ness enterprise in connectionwith the operation of which a prize in the form of money or something of value is offered or given to one or more patrons of such theatre, place of amusement or business enterprise,and not given to all patrons therecf Hon. George H. Sheppard,Page 2 paying the same charge for any certain service, commodity,or entertainment shall make a veri- fied monthly report on the kenty-fifth day of each month to the Comptrollerof Public Accounts of the State of Texas, showing the amount of money so given in prizes, and the value of 611 prizes or awards so given in connectionwith such busi- ness during the next preceding month. "(b) There~is hereby levied a tax equal to twenty per cent (20s) of the value.of all such money, prizes, and awards given in connectionwith the operation of each and all of the foregoing business enterprises,and at the time of making the report to the Comptroller of Public Accounts, the owner or operator of any such business shall pay to the State Treasurer such,tax upon the total amount of money, prizes, and awards so given dur- ing the next preceding month." An examination of the facts in'this case discloses that each requirementof the statute is met such as to mature the tax. The prizesis given in connectionwith the operation of a business enterprise. Such prise is in the form of some- thing of value. It is given to a patron of the place of busi- ness and it is not given to all other patrons paying the same charge. The first winner received a $25.00 suit for $2.50. He thus received an award which otherspatrons paying $2.50 do not receive. Our answer to your question, therefore, is that the tax is clearly due. You also inquire as to whether tax liabilitywould be affected if no drawing is held to determine the winner of the award ,butinstead the operato- of the club arbitrarilyse- lects the member he wishes to receive the award each week. Our answer to this question is that tax liability would not be affected. The manner of making the award is immaterial. The statute does not require that the person receiving the award be selected by chance in order for the tax to be due. APPROVBD SEP 7, 1939 Yours very truly /s/ Gerald C. Mann ATTORNEY GBNBRAL OF TEXAS ATTORNEY GENERAL 0% TEXAS By /s/ Glenn R. Lewis APPROVED: OPINION COMMITTEE Glenn R. Lewis, Assistant BY: BWB, CHAIRMAN GRL.:F'L,vb