. - 

EY GENERAL 

Honorable Robert S. Calvert 

Comptroller of Pub1 ,ic Accounts 

Opinion Ro. (c-346) 

Capitol Station Re: Whether under stated facts 

Austin, Texas a "lessor" of motor vehicles propelled with special 

fuels which are leased to 

and operated entirely by the 

"lessee" or his drivers in 

interstate commerce may be 

construed to be the "user" 

of the special fuels delivered to such vehicles or 

imported in the fuel supply 

tanks of the motor vehicles 

and consumed on the Texas 

Dear Mr. Calve&: highways. 

We quote the following excerpts from your letter requesting 

the opinion of this office on the above captioned matter: 

"A number of truck leasing companies are engaged 

in the business of leasing commercial trucks and trailers 

owned by said companies to carriers for use in interstate 

commerce. The truck owner or 'lessor' enters into contract with the 'lessee' under which said lessor agrees to 

furnish everything necessary to the proper operation and 

maintenance of the vehicles including the special fuels 

consumed in the operation of said motor vehicles. Under 

the agreement the lessor delivers the fuel to the vehicles from various bulk storages maintained by said lessor 

whenever possible and agrees to reimburse the lessee for 

the cost of any special fuels necessary for the lessee to 

purchase elsewhere. 

-1640- 
. . 

Honorable Robert S. Calvert,,Page 2 Opinion No. (C-346) 

"The lessors of such vehicles urge that the 

furnishing of special fuels from lessor’s storage to 

leased vehicles owned by the lessor or reimbursement 

to the lessee fom cost of fuel purchased elsewhere qualifies the lessor as user of the fuel as the 

term )userl is defined and that said lessors should 

be authorized to furnish bond and secure user-import 

permits to report and pay taxes accruing on special 

fuels used in such leased vehicles and to claim refund 

of the tax paid on special fuels purchased in Texas and 

used in such vehicles in other States. In fact, some 

of the lessors acting under the above impression have 

filed applications and secured user-import permits 

under which they have filed refund claims for tax paid 

special fuels used in such leased vehicles in other 

States. 

“For ready: reference, it appears that it will 

be necessary to examine the following provisions of 

the special fuels tax law - Chapter 10, Title 122A, 

Taxation-GeneralI 

'Article 10.03(l) imposes the tax 

upon the use of special fuels for the 

propulsion of motor vehicles upon the 

public highways of this State. 

‘Article 10.03(3) requires the 

supplier to collect the tax on all 

special fuels delivered to non-bonded 

users - who 

10.11 (1 f 

are classified by Article 

as persons who purchase special 

fuels predominantly for delivery into 

fuel supply tanks of motor vehicles owned 

or operated by said user.) 

'Article 10.03(5) requires every user 

to report and pay taxes to the State on all 

special fuels imported in fuel supply tanks 

or motor vehicles owned or operated by said 

users (who are classified as bonded userimporters by Article 10.11(l).) 

-1641- 
. - 

Honorable Robert S. Calvert, Page 3 Opinion No. (C- 346) 

tArticle 10.02(8) defines 'user' as 

follows: 

“(8) 'user' means and includes 

every person who delivers any special 

fuels into the fuel supply tanks of 

motor vehicles owned or operated by 

him. 'User* also means any person 

who imports special fuels into this 

State in the fuel supply tanks of 

motor vehicles owned or operated by 

him." 

'Article 10.07. Tax Liability on Leased 

Motor Vehicles. "Any user who as lessee, in 

furtherance of his business, enters into a 

lease or contract or other arrangement with 

another person for the operation of a motor 

vehicle, the operation of which will create 

a liability for the tax herein imposed, shall 

be deem to be the operator of said motor 

vehicle and shall report and pay the tax 

accruing by reason of the use under such lease 

or contract. This provision shall not be 

construed as relieving any lessor or person 

acting as a user from the payment of the tax 

herein imposed in cases where the lessee is 

not qualified as a licensed and bonded user 

as required herein. Nothing herein shall be 

construed as requiring the filing of more than 

one (1) report covering a given special fuel 

use operation or as,requiring the payment of 

the tax herein imposed more than once on the 

same special fuels." (Note: See Comptroller 

Rule and Regulation No. VII, in reference to 

Article 10.07 attached.) 

'Article 10.08. Optional Computation of 

Tax. "In the event the tax herein imposed on 

special fuels imported into this State in the 

fuel supply.tanks of motor vehicles. . .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 consumed), or in case it is more 

practicable to so determine the tax, the Comptroller is hereby authorized to approve and 

adopt such basis." (Note: the mileage basis- 

-1642- 
. . 

Honorable Robert S. Calvert, Page 4 Opinion No. (C-346) 

average miles per gallons - was necessarily 

adopted as the most accurate method of computing 

the tax due or refundable on s ecial fuels used 

in interstate vehicular travel P . 

'Article 10.14 provides that, '. . .any 

licensed user who shall have paid said tax 

upon any fuel which has been used by such user 

for any purpose other than propelling a motor 

vehicle upon the public highways, may file 

claim for a refund of the tax or taxes so 

paid. . . .' 

1 . . . , 

"The Comptroller's interpretation of the law under 

discussion is set out in Rule and Regulation No, VII, 

attached hereto. The ruling did not take into consideration the claims now'advanced by the lessors that 

they would deliver most of the special fuels consumed 

in said leased vehicles from their own storage facilities 

or would contract with retail dealers to make such deliveries for the lessor's account into the fuel supply 

tanks of the leased motor vehicles which are owned by 

said lessors - though operated by the lessees. 

11 II . . . 

Ruling No. VII is headed as follows: 

"Construing the Law as it applies to: 

TAX LIABILITY OF A LESSEE ON 

SPECIAL FUELS IMPORTEB AND USED ON 

THE HIGHWAY IN LEASED MOTOR VEHICLES." 

This ruling was adopted September 1, 1961 and filed with 

the Secretary of State November 15, 1961. 

In quoting the statutory definition of 'user"' as it applies 

to user-importers - the ruling underscored "or operated" in the 

phrase "motor vehicles owned or operated. . *' 

-1643- 
Honorable Robert S. Calvert, Page 5 Opinion No. (C- 346) 

We quote the following excerpt from the ruling: 

"Therefore, a person who actually imports the 

special fuels in motor vehicles operated exclusively 

by himself, or by his employee drivers, becomes the 

'user' of the fuel, as user is defined; and is required by Article 10.03(5), above cited, to report 

and pay the tax on each gallon of special fuels so 

imported and used or consumed in the operation of 

such motor vehicles upon the Texas Highways, and 

regardless of whether such motor vehicles are 

owned by him or are leased from another person. 

"The fact that a lessor of motor vehicles enters 

into a private contract or agreement with the lessee 

to pay for or furnish the special fuels used in the 

operation of the leased motor vehicles, or to reimburse said lessee for the cost of such fuel, would 

not change or alter the status of the lessee as the 

statutory luser* of the fuel consumed in the operation 

of said leased motor vehicles; nor could such agreement be construed as constituting or qualifying the 

lessor as the user of special fuels consumed in motor 

vehicles which said lessor does not operate or direct 

the course of operations in any manner. 

"However, the Legislature obviously recognized 

that there are cases where a lessor contracts or 

agrees to lease to a lessee motor vehicles to be 

operated by the lessor, or by drivers furnished 

by the lessor, in which the lessor will purchase 

or furnish the special fuels used but will operate 

such leased motor vehicles entirely under the 

direction and control of the lessee, which would 

present a legal question as to whether the lessor 

operating his leased motor vehicles, or the lessee 

directing and controlling the course of operations, 

or both, would come within the statutory definition 

of aluserl. The Legislature resolved the question 

by fixing the legal incidence of the tax liability 

and its payment to the State upon the lessee of 

such motor vehicles by the enactment of Article 

10.07 which reads as follows: 

11 . . .rQuoted, supra, at page 37 

-1644- 
Honorable Robert S. Calvert, Page 6 Opinion No. (c-346) 

"The above article does,not relieve a 'lessee' from 

securing the bonded user-dmporpermit required to import 

and use special fuels in leased vehicles operated by him 

or under his direction and control, nor does it relieve 

him from liability for the tax imposed, or of the penalties 

or impoundment prescribed for operating without a permit. 

But if a 'lessor' acts as .a user of special fuels imported 

in vehicles leased~a~e%~v oneratina said vehicles 

for and under the direction of such-lessee, he must make 

certain that said lessee is licensed as a user-importer 

to be relieved of liability for the tax. The use tax is 

secured by a preferred lien upon each vehicle in which the 

taxable fuel is used - regardless of ownership of the 

vehicle. Johnson-Burnham v. State 95 S.W.2d 144." 

You have submitted three questions for our consideration. 

The first of which reads as follows: 

"Where the owner and lessor of motor vehicles 

leased to and operated by interstate carriers will 

furnish and deliver into the fuel supply tanks of 

such motor vehicles most of the special fuels consumed therein from storage facilities of the lessor 

or from dealer-stations under contract to make such 

delivers for the account of the lessor, then, in 

such cases, may the lessor be construed to be the 

luser' of such specialfuels as the term 'user' is 

defined, and thereby be licensed as a user and userimporter liable for the tax due and authorized to 

file claims for refund when refunds are due?" 

We have concluded that under the submitted facts the lessor 

is a "user" within the meaning of the Special F'uels Tax Iaw. 

Article 10.02(S) makes ownership as well as operation a criterion 

of a "user".' Article~lO.OY; after declaring that a tax liability 

on leased motor vehicles may attach to a lessee user under a 

contract, expressly states that thl.s provision of the statute 

is not to be conr&i%+ued aw-relieing azSylessor or~person~acting 

as a user from the payment of the tax imposed in cases where 

the lessee is not qualified as a licensed and bonded user. 

Under the facts stated to us, the lessee is not qualified as a 

licensed and bonded user. Therefore, necessarily the burden 

of reporting and paying the tax must fall upon the lessor who 

is also entitled to make applications for refunds if any. 

-1645- 
. . 

Honorable Robert S. Calvert, Page 7 Opinion No. (C- 346) 

Article 10.03(5) contains the following provision: 

"Every user shall report and pay to this State 

the t&x,.&t the rate imposed, on each gallon of 

special fuels delivered by him into the fuel supply 

tanks of motor vehicles unless said tax has been 

paid to a licensed supplier." 

The lessor in the instant case delivers most of the special fuels 

involved into the leased vehicles from its own storage facilities. 

In this instances the tax has been paid to the supplier. When 

delivery is not so ma&the lessor controls and directs the supply 

of fuel by written agreements with retail suppliers, both within 

and without the state, and pays the taxes due. With re ard to 

special fuels imported into this state, Article 10.03(5 e; designates ownership or, in the alternative, operation as a criterion 

of texability. 

As you have pointed out, Article 10.03(l) imposes a tax 

upon the use of special fuels for the propulsion of motor 

vehicles upon the public highways of this State. We think that 

the lessor in the case under consideration is, in fact, engaged 

in a business which in large part, is dependent upon and directly 

connected with the use of special fuels for the propulsion of 

motor vehicles upon the public highways of,this State. We think 

that said fuels, which are owned by the lessor, are used by him 

in his business for the taxable purpose of propelling motor 

vehicles upon the highways of this State ragardless of the fact 

that a third person,, the lessee, furnishes the drivers of said 

vehicles and has no interest in the operation of the lessorqs 

business. 

Since we have determined that the lessor is a "user" within 

the meaning of the Special Fuels Tax Law, he may file claim for 

refunds under the provision of Article 10.14 in those instances 

in which the special fuels have been used for propelling the 

motor vehicles upon public highways other than those of this 

State. The exhibits you have furnished. us show that claims for 

such refunds are based upon trip reports, state line crossing 

reports, delivery receipts for ,fuel received from lessor or his 

appointed agent or similar documents or declarations. One of 

the foms furnished us constitutes a recap of miles traveled 

and gallons of fuel purchased, by state, for each truck by 

month. 

-1646- 
. . 

Honorable Robert S. Calvert, Page 8 Opinion No. (C-36) 

Since we have concluded that the lessor is a "user" 

within the meaning of the Special Fuels Tax Law, he may be 

licensed as a non-bonded user and accorded a bonded user 

import permit. We do not reach your second two questions 

which were predicated upon a negative answer to your 

first one. 

-e--m-- SUMMARY 

Under stated facts, a lessor $f motor vehicles 

propelled with special fuels is a user" within the 

meaning of the Special Rae18 Tax Law and may be 

licensed as a non-bonded user and bonded user-importer even though the leased motor vehicles are 

operated entirely by the lessee or his drivers. 

The lessor in question is liable for all special 

fuels taxes and is authorized to file claim for 

refunds when refunds are due. 

Yours very truly, 

WAGGONER CARR 

Attorney General of Texas 

MMcGP:sjl 

APPROVED: 

OPINION COMMITTEE 

W. V. Geppert, Chairman 

Arthur Sandlin 

Cecil C. Rotsch 

Roy Johnson 

Robert Lemens 

APPROVED FOR THE ATTORHEY GENERAL 

By: Roger Tyler 

-1647-