Hon. Robert S. Calvert Opinion No. V-1371 

Comptroller of Public Accounts 

Austin, Texas Re: The validity of ad valorem 

tax on intangible assets of 

an interstate bus or truck 

Dear Mr, Galvert: company. 

Your request for an opinion states that two out-ofState motor carriers have requested an exemption from the payment of the intangible assets and property tax imposed by the 

provisions of Article 7105, Vernon’s Civil Statutes. The particular facts with respect to these two carriers reflect that each is 

authorized to use the highways of Texas in interstate commerce 

pursuant to interstate certificates of convenience and necessity 

issued by the Railroad Commission of Texas. The certificates 

allow the carriers to operate interstate only in accordance with 

the authority granted to them by the Interstate Commerce Commission. Neither has offices or shops in Texas, nor do they have 

tangible personal property permanently located in this State. On 

the other hand, each has a designated resident service agent in 

Texas, and each is operating over the highways of Texas for compensation and hire under the certificates issued by the Railroad 

Commission of Texas. One of the carriers is authorized by the 

Texas Railroad Commission to operate one hundred twelve (112) 

trucks over our highways while the other carrier is authorized to 

operate thirty-three (33) tracks. Each has purchased from the 

Commission the identification plates required by Article 91 lb, 

V,,C.S. Each transports interstate freight into and out of Texas, 

using Yn such operations the highways of this State. 

Based upon the above facts, you ask: 

May the State Tax Board validly assess for tax- 

:: s ation a proportionate share of the intangible assets _. 

‘..and property of an out-of-State motor carrier under 

-, 

Article 7105, V.C.S. (such tax to be allocated on the 

basis of the miteage traveled in Texas compared to 

the total mileage traveled and the resulting percentages multiplied by the total intangible assets of the 

company, or some comparable method) although the 

company has no permanent tangible property in Texas 

on Jaswrp 1 of the tax year in question? 
.- 

Hon. Robert S. Culvert, Paga 2 (V-1371) 

Article 7105, V.C.S., was amended in 1941 (Acts 

47th Leg., R.S. 1941, ch. 184, p* 269, at p. 295) so as te make 

subject to the Intangible Tax Act 

,s 

~ o * each ‘motor bus company,’ as defined in ~ . ~ 

[ Art. 91 la] and each ‘common carrier motor carrit 

er’ operating under certificates of convenience and 

necessity issued by the Railroad Commission of Tex- 

‘as, doing business wholly or in part within this State 

* * * . The intangible taxable values of said motor bus 

companies and said common carrier motor carriers 

shall be apportioned to the counties in or through 

which they operate in proportion to the distance in 

milea of the higbwaya traversed by aaid carriers in 

each rsapective county.” 

The Supreme Court of the United States has conoirtently held that interstate commerce can be made to pay its way by 

bearing a nondiscriminatory share of the tax burden which each 

state may impose on the activities OP property within its bordess, 

Western-Life-Stock V. Ru~eau of Reve&m;30< U.S. 250 (1938), 

and cases therein cited. In the r¢ cape of Ott v. Mississinni 

Valley Barge Line CQ., 336 U.S. i69 (1949), its udana and N~ew O~lean# could levy an ad valorem tax on bargea 

used in interstate c aaunerce, busied on the number of mile6 of 

huge Rues in Louisfuuu mud New Orleans in relation to the total 

milwge”uf the lima. This purccntaSe wae then applied to the totul pnopertp of tha tir#a Rue to determine what portion of the 

property wao pcranuuutl7 ,within the State during the tauin~ 7ear 

aod aabject to taxa%& The Laafeiana l tatute, like the Texas 

we, p w~k iesU. Asser mnentl s bull be mpde on the be&r of the 

coudltfou of thinga afatfng on the 1st day of January of eachyear.” 

The method oeed by Louisiana is similar to the mathod popuaud fccp taxing the intan@blem of the companies in queation. We thfnk it in propup for a proportionate ebare of the intansiblou ti k allocated to Texas for tauutiou, juet as it was propep 

to allocate to Locrktisna its proponrtionate share of the tangible 

r 

roperty of the barge iine. Pn Curry v. McCanless, 307 U.S. 357 

f939), It wae rtated, *The taxpayer who is domiciled in one state 

bet camies on buttiness in awther is subject to a tax there mea‘- 

wed by the value of the intangfblea used in hia buaineacl.* The 

carrier8 are mimittedly doiuS iutepstate business in Texan, Theref&bee, Tame may valldky llrr a prepw poatiou of their intangible 

valw. 

334 U.S. 653 

tax levied by 
. . 

Hon. Rob,ert S. Galvert, Page 3 (V-1371) 

New York on the gross receipts of a common carrier from transportation between two points in New York but over routes that utilized the highways of Pennsylvania and New Jersey. It was contended “that since the taxed transportation was interstate commerce, New York may not constitutionally tax the gross receipts 

from such transportation.” Although the Court held that New 

York could not tax the entire revenue from such transportation, 

it held that 

a, 

. . a The tax may be ‘fairly apportioned’ to 

the ‘business done within the state by a fair method 

of apportionment. ’ Western Life St&k v. Bureau of 

Revenoe, 303 U.S. 2n), 255. There is no disoute as 

toftasibility in apportioning this tax. On th; record 

before us the tax may constitutionally be sustained on 

the receipts from the transportation apportioned as to 

the mileage within the State-. See Rat&man v. Western Union Telegraph Co., 127 U.S. 411, 42 1-428. 

1334 U.S. at 663.) 

In discussing the right of New Jersey and Pennsylvania to tax the 

proportionate part of the transportation over the highways of 

those states, the Court said: ‘“If New Jersey and Pennsylvania 

could claim their right to make appropriately apportioned claims 

against that substantisl part of the business of appe1Iant to which 

they afford protection, we do not see how on principle and in prec- 

,edeA such a claim could be denied.” (334 U.S. at 662.) 

We think the reasoning set forth in the above cases is 

applicable here and supports the right of the State of Texas to 

levy the intangible tax in question, since, in QW opinion, Texas is 

the situs for tax purposes of a proportionate share of the intangibk assets of a company doing interstate burintss in this State. 

That the rule applicable to intangibles is not different 

from that of tangible property is demonstrated by the following 

paragraph from Commonwealth of Virginia v0 Imperial Coal Sales 

Co., 293 U.S. 15n934): 

- 

“Such taxation may embrace intangible as well 

as tangible property. Adams Express Co. v. Ohio 

State Auditor, 166 U.S. 185, 218, 219, 17 S.Ct. 604, 41 

L.Ed. 965; Gudahy Packing Co. v. Minnesota, snpra; 

Wells, Fargo & Ce. v, Nevada, supra. It is not the 

character of the property that makes it nubject to 

such a tax, but the fact that the property has its situs 

w,ithin the state and that the owner should give appropriate support to the government that protects it. 

That duty is not less when the property is intangible 
. . 

Hon. Robert S. Calvert, Page 4 (V-1371) 

than when it is tangible. Nor are we able to perceive 

any sound reason br holding that the owner must have 

real estate or tangible property within the state in order to subject Lts fntangible property within the state 

to taxation.” 

In light of the above, the answer to your question is 

that the State Tax Board may validly assess for taxation a proper share of the intangible assets of a foreign corporation doing 

interstate business in Texas. 

SUMMARY 

An out-of-State common carbier motor carrier 

operating over the highways of Texas under a certificate of convenience and necessity issued by the Railroad Commission of Texas i.s subject to the intangible 

tax provided in Article 7105, V.G,S., regardless of 

the fact that it has no permanent tangible property in 

Texas on January 1. 

Yours very truly, 

PRICE DANIEL 

Attorney General 

APPROVED: 

Jesse P, Luton, Jr. 

Reviewing Assistant 

Charles D. Mathews 

First Assistant 

Assistant 

LPL/mwb