**,,.** :,,‘: .No$ember 13,, $3 .,:,,,: ,,, ..’ : ~.

~, ,, .,:.

,,, ,,. The H&orib:Le’ **Jack ,&is&**  Chief Clerk in.

,:~,I,, ,,, **“**
**. ‘** **bpinion,:I\lo~.IIH- (** **$f ’**  **~ ’**  ; ,General,,L&d Office:, .:I’, . :l., ., .., ,,~~. Austin,, Texa.s .78701, ,~~:~.. ,,, .,:,Re: .,,:.~$abllity .of,St+te and :.: ,,,:.:, ~:~..:

.,,,, ~ ,~. .Its a~gencles ,for A.irway ..~,,,T, Dear Mr.~‘Giberson: ..,.. ~. ,,: ,,.. i]‘se Tax’on civil aircraft .: Your letter requesting.our’opinion asks ,whether the General Land Office, as +,n,agency ,of the State.of Texas, #&required as.a matter of law, to pay an Airway Us,e..Tax on state-owned ai&craft~a$d”:if it is, whether the agency ib.o’bligat&d to :pay interest and pen&ties”& the amount not timely paid.; ,/ ~,:: As bagkgfound to:this request .are. the factk ~that in a cause tried in .the United states~.DistFict.,,Court,:~or th.:‘:~estcrn1,~i5tljct of Tellas styled Stat.e of T.&xas,,v.. United State6..of .Aineii&, ~..,thk’::State:,questianeaits liabili.ty under $4261 of Title 26 of the United States ‘&&y Internal Revenue Cod,e of 1954, fqr taxes. impo’se~d upon,the amount paid .by~~emp.loyees of the State for transportation.?n off+al.State ,business.: The State k’ought a refund.

,. Tha$.suit was,,$ermi&&d.dy a’.jtidg&ntlof &United States District **Court** in June,:of ..1?,72,denying the c:laim ,o! the state. That deci,sion was affirmed by the ,Uni,t,e,d,zSt+tes Cou,rt.of Appeals f.or,.t&&f ’th Circuit, per curiam, in December,.,,$9?2, &d is’now a final judg&&nt.

....~ In the~meantime,. when the p,uestion:of your+gency’s ,Liabili.ty for the

. tax on the **use** of civi:l aircraft, .imposed’by 54491 of Tit,ie 26,~,was ,brought to the attention, of the Att,orney ,G&eral’s office, :y&~&$$&vis’ed apparent:ly that this office ,was challlenging the 1iabi:tity of Sta’te age&d; &I payment of ..such taxes an+ that you shou:ld not pay the tax.

..~..~’ In the pribr suif, which’& &ce,‘fii&b, “’ ” ‘it ‘was Our c&e&ion that the tax levied upon transportation of State employees on State business was

p. 697The Honorable Jack Giberson, page 2 (H-149)

unconstitutional as being violative of an implied governmenta immunity. The United States District **Court,** in its conclusions of law, r,ejected this
. contention holding that the tax could be imposed constitutionaIl:ly upon individual State employees traveling on official State business. The Court pointed to the fact that the purpose of these taxes was to provide additional revenue to finance increased government outlays in the expansion and deve.lopment of airport and airway systems and to impose those additional costs upon the users of the system. It held that whether the tax was considered as an exercise by Congress of its power to ,re,gu.late interstate commerce ‘or as an exercise of the taxing power, it was constitutional as applied to employees of the State of Texas.

“The airway user charge is not a tax insthe traditional sense, but instead is a charge for services rendered and represents a quid pro quo, and as such, is outside the scope of the doctrine of implied intergovernmenta, tax immunity.
. . . ”

“Nothing in the historical basis of dual sovereignty underlying the principle of state immunity from federal taxation requires that the states continue to receive the benefit of airwayfaci,lities and services actual:ly used by states but furnished by the Federal Government without bearing their equitable share of the costs incurred in providing those particular benefits. Even employees of the Federal Government must pay the air transportation charge. No :logical reason exists why all users of the air transportation system should not pay their fair share of such costs. ” Since the issues are not identical, the State of Texas is not estopped fromquestioning& imposition of the tax on **your** aircraft. Nevertheless, it is our opinion that it would be unfruitful to question the tax. Your letter requesting our opinion also asks whether you. will be ob:ligated to pay interest and penallties on the unpaid portions of the tax.

p. 690The Honorabh Jack Gibeison,: ‘page :3”!.(H-149’)

Section 660,l ,of

’ Title 26 of the United States Code, the 1nt:ernal j Revenue Code of 1954, requires the payment &interest at the rate of 6% per annum in the event any tax imposed by the Code is not paid on or before the date prescribed for its payment. The interest is co:llected as a compensation for use of the money, and not as.a penalty. Vick:v. Phinney. 414 F. 2d 444 (5th Cir. 1969); Penalties,, which are governed by 56672 of ,Title 26 are assess’ed in the **nature** of punishment for failing to collect and pay over a tax when due. By the ,terms of the section, those, liab:k are’ “shy person’! defined in $6671 as including”‘an officer or employee .of a corporation, 

### oi'a.member or employee of a partnership, who as such officer, ‘employee or member ,is under a duty to per:form the act in respect of which the violation occur.3. ” Governmental agencies are not included. Cascade County v. Pemdl, 67 F. S~pp. 253 (D. C, Mont., 1946). It is our opinion, therefore, ‘that your agency should pay the tax imposed by 54491, et seq., of Title 26 of the United States Code, imposed for the use of c.ivil aircra.ft and owes interest on’those taxes from the time they were due.: It is, further our opinion that the State is not liable for penaltic,s. SUMMARY Under the decision in State of Texas v. United States of America that the governmental immunity of the State of Texas and the doctrine of dual sovereignty do not exempt the State from liability for federal taxes upon the use of civil aircraft where the taxes are imposed for the purpose of constructing and operating airports and airways, the Land Office shou,ld pay,similar taxes levied on a stateowned aircraft. The State may be liable for interest on the unpaid taxes but is not liable for any penalty.

Attorney General of Texas~~

- .-, .,,,--.-I ~--,..-.,, ~-~ .,,,.-..-,,...,- ~- .._._, _ ..,_, ,.__,._,,_

The Honorable Jack Giberson, page,4 (H;149)

APPRQVED:

DAVID M. KENDALL, Chairman Opinion Committee

,.

p.’ 700