September 2, 1959 

Honorable Roberts. Calvert OPINION NO. w-694 

Comptroller of Public Accounts 

Austin, Te,xas Re: Correct definition of "Articles made of precious 

metals" and proper valuation 

of such metals and "precious 

or semi-precious stones" 

Dear Mr. Calvert: 

for purpose of tax imposed 

by Art. 20.06 a, H.B. 11, 

3rd C.S. 56th Leg. 

'You'have.posed.several questions, regarding Art. 20.06 3 -ZL 

of H.B. 11,.3rd, C.S., 56th Leg., 'which is quoted as follows:' 

'Precious or semi-precious stones; all articles 

made of fur on the hide or pelt; articles made 

of precious metals. There is hereby levied and 

shall be imposed upon the sale,.distribution or 

use In this State on al1 articles commonly or 

commer?lally known as lprecious or semi-precious 

stones'; all articles made of fur on the hide or 

pelt; articles made of precious metals; having a 

value in excess of Twenty-five 

excise'tax equivalent to three 

the retail price for which any 

sold." 

You specifically ask: 

1. Is the tax on precious metals limited to metals 

so defined in the trade or industry, I.e., gold, 

silver, platinum, and all metals having a comparable 

or higher value? 

2. Does this mean that the tax shall be levied only 

upon pure gold or pure silver? 

24 karats, 

Gold Is composed of 

Anything less than this is c~onsldered an 

alloy. The Federal Trade Commission prohibits the 

use of the unqualified gold in advertising unless 

it is 24 karats. 
Hon. Robert S. Calvert, page 2 (w-694) 

3. If Question No. 1 is decided in favor of taxlng'~ 

other than the precious metals, what will be the 

dividing line? 10 karat gold which is less than 

one-half? 14 karats which Is barely more than onehalf? 

4. Are articles made of non-precious metal but 

coated with a precious metal to be taxed? 

5. Is sterling silver to be taxed? Silver Is composed of 1000 parts fine. Sterling silver Is .925 

fine and Is defined as an alloy of silver by all 

standards, Including federal law (U.S. Stamping Law, 

Webster's Dictionary, etc). 

6. Whe~n anarticle Is made of part pure gold or pure 

silver, and the ~::lue of the pure gold or pure silver. 

is lens t.'>;;;: 

$ 

25 >but the aggregate value of the article 

is more than 25, is this Item to be taxed? Example: a 

cha~rm made of pure gold worth less than $25 but containing a semi-precious stone worth less than $25, the aggregate value being $40. ~What tax, If any? Another example would be where~ ah Individual has a charm and purchases three separate 'stones to'be attached thereto. 

The aggregate value'of 'the stones,being over $25 but 

each stone.having a value of less than $25. 

"It Is interesting to note that the Legislature in 

drawing this Section provided 'for a tax on articles commonly 

or commercially known as precious or semi-precious stones but 

Imposed a tax on articles made of precloub metals. This implies that the tax on p~reclous orseml-precious stones is a 

tax on the stones themselves and not to the articles to which 

they are attached. The question is, therefore, whether or not 

a watch which is made of stainless steel, having 12 diamonds 

each of a value of less than $25, that is Itself worth $250, 

shall be taxed. If so, what portion?" 

>, 

Questions Relating to "Precious Metals" 

In construing civil statutory enactments, "The ordinary 

signification shall be applied to words, except words of art 

or words connected wlth'a particular trade or subject matter, 

when they .shall have the significance attached to them by experts In such art or trade, with reference to the subject 

matter." (Bnphasls added) particle 10, Sec. 1, V.A.C.S. 
Hon. Robert S. Calvert, page 3 (w-694) 

The meaning attributed t,o "precious metals" by the trade 

or industry-accords wlth'the commonor ordinsry meaning 

of the 'term, as reflected by Webster's new International 

Dictionary (2nd Rd.): 

"Precious metal&: The uncommon and highly valuable 

metals, esp. gold, silver and patinum." 

The Federal government levies a retailers excise tax 

bn articles made of or ornamented, mounted or fitted with 

recious metals or imitations thereof. 26 U.S.C.A. Sec. 

001 (I.R.C. 1554). In reference to the tax, the following 

departmental construction has been issued: 

"The term precious metals ~includes patinum, gold, 

silver, and other metals of similar or higher' value; 

The term 'Imitations thereof" includes platings and 

alloys of such metals." 

Title 26 c.F.R., 

added.) 

Sec. 320.33 (l&4 Rd.) (emphasis 

It Is apparent that the term "precious metals" has a, 

clearly defined and well established meaning. Had the'legislature intended to extend the scope of the tax beyond such 

metals, it could easily have used language appropriate to the 

purpose. The same is true regarding plating. The tax is 

imposed on articles made of precious metals; such language 

negatives any Intent to tax articles "coated" with or made 

"In part" of precious metals. Questions concerning whether 

a revenue measure extends to particular objects are to be 

strictlv construed aaainst the tax and in favor of the taxConstruction, 

17~S.W. 2d 160 (Tex. 

Public Service Co. 

7; Sutherland, 

Ch. b7, Sec. 6701. 

From the foregoing discussion, it is apparent that 

questions No. 1 and 2 must be answered in the affirmative and 

questions 4 & 5 answered in the negative; having affirmatively 

answered questions 1 & 2, it is unnecessary to answer question 

3. 

Questions concerning valuation 

Your fifth question presents problems concerning proper 

valuation of certain articles. 
, 7. ? . : ; 

.,:2d 

Hon. Robert S. Calvert, page 4 (W-694) 

Article 20.06 f of H.B. 11 imposes an excise tax On.the 

sale,~ distribution or use of "all artlcles commonly or corn:' 

mercially'known as 'precious or semi-precious stones'...having 

a value in excess of Twenty-five Dollars. . . ."(emphasis 

added). Again, had the legislature intended to levy the tax 

upon the sale or use of stones having an aggregate value 

in excess of $25, or had it intended to levy the tax on 

articles containing or made of stones having an aggregate 

value in excess in excess of $25,'it would have employed 

language appropriate to such purpose. Since the leglslature failed to employ such language, but Instead used 

language clearly evidencing the contrary, It follows, as 

you have correctly stated, that "the tax on precious or semlprecious stones is a tax on the stones themselves and not the 

articles to.which they are attached." Consequently the answers 

to the questions concerning such stones are apparent. Where 

an individual purchases stones to be attached to a charm, 

the tax is on any stone having a value in excess of $25, but 

is not levied on the stones having less than such value. 

Likewise, no tax is imposed on a watch containing 12 stones 

each of a value less than $25; however, if any such stone 

had a value In excess of $25,, the tax would apply to such 

stone. 

The tax on precious metals Is on articles made cf 

precious metals. Since the legislature did not levy the tax 

on articles made "in part of" or "coated or plated with" 

precious metals,,it Is obvious that before an article Is 

taxable It must be made principally of precious metals. Consequently, if an article 1s maae OS purer gold and pure silver, 

the tax Is on the aggregate value. But, where-e article 

is made of gold or silver plated non-precious metal, or gold 

or silver alloy, no tax attaches regardless of the aggregate 

value of the article or the Individual value of the gold 

and/or silver used in such article. But the addition of 

another item such as a diamond to a pure gold ring does not 

defeat the tax. 

~SUMMARY 

The,term "articles made of precious~metals" 

as used In Art. 

56th Leg., 

20.06 + of H.B. 11, 3rd C.S. 

means articles made of gold, silver, 

platinum or:metals of similar or higher value 

of combinations thereof, and does not include 

articles plated with such metals or alloys, I.e., 

combinations with non-precious metals. 
Hon. Robert S. Calvert, page 5 (w-694) 

The tax Imposed on precious or semi-precious 

stones is levied on individual stones of a 

value In excess of $25.; tax on precious 

metals Is upon articles made of such metals, 

or combinat3.ons thereof, having a value in 

excess of $25. 

Yours truly 

WILL WILSON 

Attorney General of Texas 

,Assistarit Attorney General 

OPINION COMMITTEE: 

Geo. P. Blackburn, Chairman 

‘3. C. pads, Jr. 

James R. Irion III 

Marvin Thomas 

REVIEWED FCB THE ATTORNEY.GERERAL ,~ 

By: W. V. Geppert