Untitled Texas Attorney General Opinion

Hon. Robert S. Calvert
Comptroller of Public Accounts
Capitol Station
Austin, Texas Opinion No. S-47
Re: Application of Article 111 Id.
V.P.C.. as amended, the chain
store tax, upon concession
Dear Sir: stands within carnivals.
Your letter dated May 15. 1953, makes inquiry of the
applic~ability of the State’s chain store tax upon concession standa op-
crating within carnivals. I quote from your letter which reads:
*In one instance the entire carnival is operated
by one individual. This individual operator pays a
carnival tax and also pays a cigarette license fee. Is
this carnfval operated by one individual subject to the
store tax? If so, is he liable for one store tax or for
a tax upon each place within the area where goods,
wares and merchandise are sold?
*In another instance the owner and operator of
the carnival leases the places; such as. restaurants.
hamburger stands, curio and gift shops, to various in-
dividual operators. Are these individual lessees sub-
ject to an individual chain store tax, or is the carnival
operator subject to a chain store tax covering these
places? Would it mahe any difference in the applica-
tion of the chain store tax if the carnival were a travel-
ing carnival or circus ? ”
This office is of the opinion that a carnival which main-
tains stands that sell goods, wares and merchandise is a .store* with-
in the purport of the chain store tax and payment of a carnival ts* and
cigarette license fee neither affects its denomination as a store nor en-
titles it to any exemption, Art. lllld, Sets. 5(a), 7, V.P.C., as amended.
Is the carnival operator subject to the pyramiding store
tax computed upon each individnal stand within the carnival area? ‘Since
the Attorney General’s letter opinion to your department of April 2, 1938.
the Comptroller’s Office has adher.ed to the ‘under one roof” doctrine.
The question of whether an owner or operator of a department store was
subject to a tax on each individnal department was answered in the nega-
tive holding that as long as the operations were confined under one roof
Hon. Robert S. Calvert, page 2 (S-47)
only one store tax was payable. The doctrine’s reference to “roof”
was illusory and it is our opinion that various carnival stands op-
erated by an individual within a confined space and managed as a
single unit is subject to only one tax.
The doctrine appar,ently originated from a statement
made in the leading chain store tax case, Tax Commissioners v.
Jackson, 283 U.S. 527 (1931). In the Jackson case. the taxpayer in-
sisted that there was no substantial variance of operation between
chain stores and department stores and that the chain store tax w~as
an arbitrary classification. The Supreme Court stated on page 536:
‘While it is true that large department stores
reap many of the advantages and employ many of the
methods of a chain store group, such as large capital,
buying in quantity, and the ability to command the high-
est type of management, it is, nevertheless, evident
that, whereas a department store spreads its efforts
over a number of differ,ent sorts of shops under one
roof, the chain store owner concentrates its energy
upon the conduct of but one kind of stores located in
many neighborhoods. Obviously, greater specialina-
tion in management and methods is possible in the
latter type of enterprise than in the former, whose
management, however capable, must after all con~sist
of many separate types each devoted to a single store
similar to an independent retail store. The mass buy-
ing done by a chain store owner for a number of units
selling the same goods, is not comparable to the indi-
viduated purchasing of a department store for its gro-
cery, its shoe, its drug, and each of its other depart-
ments. It is not to be expected that the management
problems of stores, essentially separate and differing
entirely in the character of their business, under the
aegis of a single department store, will be the same
as those involved in the intensive selling of a chain
store owner operating an equal number of units all
devoted to a single line of business.”
The verbiage was carried into Texas’ leading chain store tax case,
Hurt v. Cooper, 130 Tex. 433, 110 S.W.2.d 896 (1937); certified ques-
tions disposed of in 113 S.W.Zd 929 (Tex. Civ. App. 1938).
It is impossible to anticipate all ramifications of this
rule. In our opinion the carnival maintaining various stands within a
confined area operated by one person as a single unit (i.e., integrated
bookkeeping, common purchasing, etc.), is subject to only one store
tax as a single unit.
Hon. Robert S. Calvert, page 3 (S-47)
Individual operation and management of the concessions
by different lessees changes the status of the carnival stands. The sta-
tute levies a tax upon every person operating or maintaining one or
mor,e stores. Art. 111 Id, Se- V.P.C., as amended. It is our op-
inion that each stand by virtue of the above facts would be subject to a
separate store tax. Restaurant and hamburger stands so oprrated
come within the exemption provided by Section 5(a) of Article 111 Id,
as amended, and are taxable Under Section 5(c) of Article 11 lid.
There is no differentiation to be made between a travel-
ing and permanent carnival. This office has previously stated *a store
is a store, whether mobile or immobile.” Atty. Gen. Op. O-7361 (1946).
SUMMARY
Carnivals are subject to the tax levied by Article 111 Id,
V.P.C., as amended. Stands owned and operated by one person as a
single unit are liable for a tax for one store only. If the concessions
are leased to various persons, the different stands are each subject to
a store tax. The mobility of the carnival of itself does not affect its
status as a StOTe or stores.
Yours very truly,
APPROVED: JOHN BEN SHEPPERD
Attorney General
W. V. Geppert
Taxation Division
By@LdM
Ci K. Richards
Reviewer William W. Guild
Assistant
,Robert S. Trotti
Firs,t Assistant
John Ben Shepperd
Attorney General
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