E 

OF XAS 

L?aSrnN ‘11, TEXAS 

June 13, 1960 

Honorable Robert S. Calvert Opinion No. W-845 

Comptroller of Public Accounts 

Capitol Building Re: Questions concerning the 

Austin, Texas permit provisions of the 

Soeclal Fuels Tax Law. 

Art. 10.11(l) chapter 10, 

Ii. B. 11, 3rd C. S. 56th 

Leg.., as it pertains to 

Dear Mr. Calvert: “User Permits" 

.You have requested an opinion on two questlona concerning the Special Fuels Tax Law;(Art. 10.11(l) Chapter 10, 

Ii. B. 11, 3rd C. S. 56th Leg.). ‘iYour first question is 

whether a “user” who maintains a fuel storage In Texas and 

purchases special fuels in bulk, quantities predominantly for 

delivery into the fuel .supply tanks of hi8 motor vehicles, 

and who also operates a ~number of the motor vehicles in 

interstate commerce, nece.ssitatlng the importation of special 

fuels in the fuel supply tanks of such vehicles, is required 

to obtain a non-bonded user permit as well as a bonded user 

import permit. 

Answering this question requires a brief examlnatlon of the purpose and scope of the Special Fuels Tax Act. 

Article 10.03 of the Act Imposes a tax upon the use of special fuels for the propulsion of motor vehicles upon the 

public highways of this State. Revisions of the Act enacted 

by the Third Called Session of the 56th Legislature were designed to remove the collection of the tax from the service 

station level to the wholesale supply level. Ninety per cent 

or more of the special fuels sold in Texas are used for nonhighway purposes. Since the tax Is laid only on fuels uSed 

for highway purposes, the collection system Is aimed at reducing to a minimum the amount q tax refunding. This is 

accomplished through a System of permit controls. This system: 

operates as follows: A wholesale supplier Is required 

(1) to collect the tax on all deliveries to licensed nonbonded retail dealers and bulk user8 (such as truck and bus 

lines) whose purchasers are predominantly for delivery into, 

the fuel supply tanks of motor vehicles; (2) to sell tax free 

to licensed and bonded retail dealers and bulk users whose 

purchases are predominantly for non-highway use, and who are 

required to pay taxes directly to the State only on the fuel 
Honorable Robert S. Calvert, page 2 Opinion No. W-845 

sold and/or delivered into fuel supply tanks of motor 

vehicles; and (3) to sell tax free to exclusive non-highway 

consumers who furnish a signed statement that none of the 

special fuels so purchased will be delivered into fuel tanks 

of motor vehicles. 

” User” , as contemplated by the Act, means every 

person who delivers any special fuels into the supply tanks 

of motor vehicles owned or operated by him, and any person 

who imports special fuels into this State in the fuel supply tanks of motor vehicles owned or operated by him. 

Article 10.11(l) provides, in so far as pertinent: 

“Upon approval of an application and approval 

of bond if a bond is required, the Comptroller 

shall Issue to the applicant a permit authorizing 

him to engage in the kind of business or other 

operations or to perform the functions set out in 

and authorized by the class of permit so issued . . . 

Such permit shall be of the kind and classifications as set out herein below: 

. . . . 

“NON-BONDED USER PERMITS. 

‘Authorizing persons whose purchases of special 

fuels are predominantly for delivery by them into 

the fuel supply tanks of motor vehicles owned or 

operated by them to act as users. 

” RONDED USER PERMITS. 

“Authorizing persons whose purchases of special 

fuels are not predominantly for delivery by them into 

the fuel supply tanks of motor vehicles owned or operated by them to act as users. 

“BONDED USER IMPORT PERMITS. 

“Authorizing persons who import special fuels 

into this State in the fuel tanks of; motor vehicles 

owned or operated by them to act as users.” 

A wholesale suppli;er may sell only to those holding 

permits as bonded or non-bonded users or dealers. He is required by Article 10.03(3) to collect the tax on each gallon 

of special fuels dellvered to non-bonded users. No provision 

of the law requires or authorizes the supplier to collect the 
Honorable Robert S. Calvert, Page 3 Opinion No. WW-845 

tax from any bonded user, or any person operating only in the 

capacity of a ,bonded user. 

A bonded user import permit authorizes the holder 

to import special fuels in the fuel supply tanks of his motor 

vehicles. Article 10.03(5) requires him to report and pay 

the tax to the State on each gallon so Imported and consumed in the operation of, the vehicles upon the Texas highways. However, Article 10.13(5) appears to limit the 

reporting required to be made by the user-importer to special 

fuels used In interstate vehicles only, and not -that used 

in vehicles operated entirely In intrastate commerce. 

Article 10.11(l) authorizes a supplier to operate 

aa a dealer or user without securing a separate permit, and 

authorizes a licensed dealer to operate as a user without 

obtaining a separate permit. No comparable provision authorizes a bonded user-importer to., act a8 a non-bonded user without obtaining a separate Permit. 

For the foregoing reasons, It is ‘cle,ar that If a 

user is maintaining storage tanks in Texas and purchasing 

special fuels from suppliers In bulk quantities predominantly 

for delivery Into fuel supply tanks of his motor vehicles 

(thereby qualifying him as a non-bonded user), and ,ls also 

operating a number of motor vehicles in interstate commerce 

(which requires him to secure a bonded user-import permit), 

such user is required to obtain both a non-bonded user permit 

and a bonded user import permit. 

Your next question concerns the provisions of 

Article 10.08, which provides as follows: 

“OPTIONAL COMPHTATION OF TAX. 

“In the event the tax herein imposed on special 

fuels imported into this State in the fuel supply 

tanks of motor vehicles and the tax on”: special 

fuels used In mototi vehicles iowned or’%perated by 

licensed supplier or other persons acting as users 

can be more accurately determined on a mileage 

basis (that IS by determining and using the total 

number of miles traveled and the total gallons of 

fuel~consumsd), or In ease It is more practicable 

to so determine the tax, the Comptroller is hereby 

authorized to approve and adopt such basis.” 
Honorable Robert S. Calvert, ,Page 4 Opinion No. WW-845 

vise: 

In reference to the foregoing provision, you ad- 

“The Comptroller has construed the above 

10.08 to be, and clearly Intended by the 

Article 

Legislature to be, an exception to Article 10.03-(5) 

providing that the tax shall be paid to the State 

on each gallon delivered by a user into the fuel 

supply tanks of motor vehicles, and to Article 10.14- 

(3) penalizing the filing of a claim for tax refund 

on any special fuels delivered into fuel supply 

tanks of motor vehicles. And that upon adoption 

by the Comptroller of the mileage basis authorized 

in Article 10.08 for determining the amount of tax 

due Texas on special fuels delivered into motor 

vehicles in Texas and thereafter used partly on the 

Texas hlghwa s and partly In other States, the said 

Article 10.0 ii will supersede and control over the 

other Articles cited herein.” 

Article 10.08 authorizes the Comptroller to measure 

the tax due from a given user on a mileage basis if that system is more practicable and will more accurately determine 

the amount’ of tax due. In case the Comptroller elects to 

use this procedure, the provisions of Article 10.03(5) that 

the tax Is to be paid on each gallon delivered by a user Into 

the fuel supply tanks of motor vehicles is superseded. 

In cases where a user has paid taxes upon special 

fuels delivered into fuel supply tanks which travel in lnterstate commerce, an anomalous situation arises. Article 

10.14 authorizes a refund of taxes paid on special fuels 

consumed In non-highway use. However s Section (3) of Article 

10.14 specifically provides that any dealer or user who files 

a claim for refund of the tax paid on any special fuel 

delivered into the fuel supply tank of’s motor vehicle shall 

forfeit the right to the entire amount of the refund claim 

filed. The Act imposes a tax only upon special fuels used 

on Texas’ highways, therefore It is apparent that gas used on 

hlghways~ of other states is used for a “‘non-,hlghway” purpose 

within the meaning of the refund provision. Consequently, 

to give effect to the plainintent of the Legislature that 

a user Is entitled to a refund on all special fuels used for 

non-highway purposes requires thatxctlon (3) of Article 

10.14 be disregarded to the extent that it Indicates that no 

refund may be had for taxes paid on special fuels subsequently 

used,in motor vehicles on highways of other ‘states. A user 

is entitled to a refund of taxes paid on special fuels used 

In motor vehicles out of state and may make application 
Honorable Robert S. .Calvert, Page 5 Opinion $0. ~~-845 

therefore In the form prescribed by Artiole 10.14. However, 

this’ does not mean that Article 10.08, when invoked by the 

Comptroller, supersedes any of the provision8 of Article 

10.14, for the right to refund exists regardlees of whether 

the amount of tax due is figured on a mileage basis, ors in 

some manner, by the amount of gallons actually used on 

Texas highways. (In this regard, It should be noted that 

the mileage formula for computing the tax may be used only 

where It will most accurately and practioally reflect the 

actual amount of gallons used for highway purposes. Where a 

certain number of gallons are delivered to a user, all of 

which are used on Texas highways, the tsx must be collected 

on each such gallon; in such a case, the Comptroller has no 

discretion to employ the mileage formula.) 

SUMMARY 

A specLa1 fuels “u8er” who .i8 maintaining storage 

tanks In Texas and purchasing special fuels from suppliers 

in bulk quantities predominantly for delfvery into fuel 

supply tank8 of his motor vehicles, and.18 also operating 

a number of the motor vehicle8 In Interstate commeroe, 

necessitating Importation of,,epecial fuels in the fuel supply tank8 of such vehicles, Is r’equired to obtain both a 

non-bonded user permit and bonded user import permit. 

Article 10.08 of,the Special .?uel8 Tq Act, when 

Invoked by the Comptroller , supersedes the provision of 

Article 10.03 (5) that the u8er pay the tax on eaah gallon 

of special fuels delivered into the fuel supply tanks of 

his motor vehicle. Article 10.14(3) does not prevent a U8er 

from seauring a refund of taxes paid oti ,Bpeci,al fuels 

delivered into the fuel supply tank8 of motor vehicle8 and 

used on the highways of other states. 

Very truly yours, 

WILL WILSOR 

Attorriey General OS Texas 

APPROVED: RYw-4Lt 

RMck N. P ricer ’ 

OPIMIGN COMMITTEE: Assistant 

W. V. Geppert, Chairman JNP:jp 

J. Arthur Sandlin 

Riley *Eugene Fletcher 

Phoclons Park, II 

Marvin Ii. Brown, Jr. 

REVIEWED FOR THE ATTORNEY GENERAL 

By: Leonard Passmore