Hun. Robert S. Calvert 

Comptroller of Public Accounts 

Capitol Station 

Austin, Texas 

Opinion No. S-128 

DeAr Mr. Calvert: 

Re: Applicability of the State Prize and Award 

Tax to the “What’s My Name” conGest. 

YOU request the opinion of this office on the question contained 

in your letter,of,May 3, 1954, and supplement thereto dated June 2, 1954, 

which respectively are as follows: 

“Thee Waples-Platter Company of Fort .Worth, ,Texas; 

recently held a contest known as ‘What’s My Name’. In order 

to participate in this contest it was necessary that a person 

purchase White Swan coffee in order to obtain the slip contained in each can of coffee, which slip had to accompany each 

entry blank. The winners were awarded various prizes. I 

called on these people for the State Prize & Award tax as 

levied by Article ,7047f. The Waples-Platter ,Company contends that the tax did not accrue as to tax these prizes and 

awards would be a burden in Interstate Commerce. 

“Attached is a letter from this Firm outlining their 

r,easons for believing the tax did not apply on the ‘What’s My 

Name’ contest. Also attached is a list showing the medium 

used in advertising this contest. I will appreciate your 

opinion as .to whether or not the State Prize &,Award tax 

accrued on the prizes given in connection with this contest. 

To my knowledge there is no litigation pending that would 

have any bearing on this question.” 

“I wish to supplement my request for an opinion 

dated May 3, 1954. This request was in connection with 

the liability of the State Prize & Award ‘Tax on awards 

given by the Waples-Flatter Company of Fort Worth, Texas, 

in a contest known as *What’s My Name.” 

“The contestants in the contest purchased the White 

Swarrcoffee, a product of Waples-Flatter Company, from 

retail outlets. The retail outlets in turn had purchased the 

coffee from Waples-Flatter Company, ,Would the customers 

of the retail outlets be considered as patrons of WaplesPlatter Company? 
.- 

Hon. Robert S. Calvert, page 2 (S-128) 

“Your opinion on this additional question to my 

previous request of May 3 will be appreciated.? 

In order to answer your question as to the liability of WaplesPlatter Company of Fort Worth for the State Prize Tax imposed by 

Article 7047f, Vernon’s Civil Statutes, we must answer two questions. 

First, is the incidence of this tax violation of the commerce clause of the 

Federal Constitution? Second, are the participants in the contest “What’s 

My Name,” sponsored by Waples-Platter, patrons of that business enterprise within the purview of the taxing statute7 We shall answer these 

questions in the order in which we have stated them. 

The advertising of this contest by Waples-Platter was primarily through the medium of radio, television and newspaper advertisements 

Concededly, some of these broadcasts and newspapers r,eached beyond 

State boundaries. This fact, however, does nat compel the conclusion that 

this tax is laid upon inters,tate commerce. The tax is not for the privilege 

of advertising the contest by means of radio, television and newspaper 

advertisements, but for the privilege of awarding the prizes. If the tax was 

upon the privilege of using these mediums in advertising the contest, then 

interstate commerce might be involved. The incidence of the tax is upon 

the awarding of the prizes to the successful participants, which is purely a 

local incidence taking place at Fort Worth and within the State. We therefore conclude that the awarding of the prizes by Wapies-Platter in the 

manner present here in no way contravenes the commerce clause of the 

Federal Constitution. 

Passing now to the second question as to whether the participants in the contest are patrons Of Waples-Platter, it is necessary to 

determine the legislative intent in the use of the word “patrons” in the taxing statute. This statute reads in part as follows: 

“(a) Every person, firm or corporation conducting 

a theatre, place of amusement, or any business enterprise 

in connection with 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 busi- 

.ness enterprise, and not given to all patrons thereof paying 

the same charge for any certain service, commodity, or 

entertainment, shall make a verified monthly report on the 

twenty-fifth day of each month to the Comptroller of Public 

Accounts of the State of Texas, showing the amount of 

money so given in prizes, and the value of all prizes or 

awards so given in connection with such business during the 

next preceding month. 

“(b) There is hereby levied a tax equal to twenty 

per cent (20%) of the value of all such money, prizes, and 

awards given in connection with th.e operation of each and 

all of the foregoing business enterprises, and at the time 

,, 
. 

Hon. Robert S. Calvert, page 3 (S-128) 

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 during the next preceding 

month. . . ,* (Emphasis added.) 

The statute does not define the word “patrons,” hence we may 

look to the generally accepted meaning of this word as commonly used. 

Webster’s New International Dictionary, among other connotations of the 

word patron, defines it in this language: ‘patron - one who supports a 

commercial enterprise.” 

It seems quite obvious to us that the participants in the contest in making purchases of White Swan Coffee which, as we understand, 

is exclusively processed by Waples-Flatter, lend support to WaplesPlatter, the business enterprise which awards the prizes, All participants in the contest, whether successful or unsuccessful, lend support’to 

Wbples-Platter, the business enterprise, in making purchases of White 

Swan Coffee. A participant, in ordqr to qualify for the contest, must purchase a can of White Swan Coffee in order to obtain the entry blank necessary for entering the contest. It is not an important factor that the selection of successful contestants is entrusted by Waples-Flatter to a professional organization in Chicago which specializes in selecting successful 

contestants such as involved here. 

You are therefore advised that from the information submitted 

by you, upon which this opinion is based, Waples-Platter Company is subject to and should pay the prize tax imposed by this statute upon the value 

of the prizes. 

SUMMARY 

A bus.iness enterprise awarding prizes in Texas to 

successful contestants, who are patrons of such business 

enterprise, is subject to the State Prize 81 Award tax imposed 

by Article 7047f, V.C.S. Even though the contest is open to 

residents of other States and is advertised through advertising 

mediums located in other States, the imposition of the tax by 

the State of Texas in these circumstances is not an unlawful 

burden on interstate comme~rce in violation of the Federal 

Constitution. 

Purchasers of a product through retail outlets are 

‘patrons” of the man~ufacturer or processor of the product 

within the meaning of that term in Article 7047f. 

APPROVED BY: 

W. V. Geppert 

Taxation Division 

John Atchison 

Reviewer 

Yo,urs very truly, 

JOHN BEN SHEPPERD 

BY AttogiJjjlJ 

. . 

Assistant 
Hon. Robert S. Calvert, page 4 (S-128) 

Mary K. Wall 

Reviewer 

Robert S. Trotti 

First Assistant 

John Ben Shepperd 

Attorney GeneTal