Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Capitol Station 

Austin, Texas Opinion No. S-47 

Re: Application of Article 111 Id. 

V.P.C.. as amended, the chain 

store tax, upon concession 

Dear Sir: stands within carnivals. 

Your letter dated May 15. 1953, makes inquiry of the 

applic~ability of the State’s chain store tax upon concession standa opcrating within carnivals. I quote from your letter which reads: 

*In one instance the entire carnival is operated 

by one individual. This individual operator pays a 

carnival tax and also pays a cigarette license fee. Is 

this carnfval operated by one individual subject to the 

store tax? If so, is he liable for one store tax or for 

a tax upon each place within the area where goods, 

wares and merchandise are sold? 

*In another instance the owner and operator of 

the carnival leases the places; such as. restaurants. 

hamburger stands, curio and gift shops, to various individual operators. Are these individual lessees subject to an individual chain store tax, or is the carnival 

operator subject to a chain store tax covering these 

places? Would it mahe any difference in the application of the chain store tax if the carnival were a traveling carnival or circus ? ” 

This office is of the opinion that a carnival which maintains stands that sell goods, wares and merchandise is a .store* within the purport of the chain store tax and payment of a carnival ts* and 

cigarette license fee neither affects its denomination as a store nor entitles it to any exemption, Art. lllld, Sets. 5(a), 7, V.P.C., as amended. 

Is the carnival operator subject to the pyramiding store 

tax computed upon each individnal stand within the carnival area? ‘Since 

the Attorney General’s letter opinion to your department of April 2, 1938. 

the Comptroller’s Office has adher.ed to the ‘under one roof” doctrine. 

The question of whether an owner or operator of a department store was 

subject to a tax on each individnal department was answered in the negative holding that as long as the operations were confined under one roof 
Hon. Robert S. Calvert, page 2 (S-47) 

only one store tax was payable. The doctrine’s reference to “roof” 

was illusory and it is our opinion that various carnival stands operated by an individual within a confined space and managed as a 

single unit is subject to only one tax. 

The doctrine appar,ently originated from a statement 

made in the leading chain store tax case, Tax Commissioners v. 

Jackson, 283 U.S. 527 (1931). In the Jackson case. the taxpayer insisted that there was no substantial variance of operation between 

chain stores and department stores and that the chain store tax w~as 

an arbitrary classification. The Supreme Court stated on page 536: 

‘While it is true that large department stores 

reap many of the advantages and employ many of the 

methods of a chain store group, such as large capital, 

buying in quantity, and the ability to command the highest type of management, it is, nevertheless, evident 

that, whereas a department store spreads its efforts 

over a number of differ,ent sorts of shops under one 

roof, the chain store owner concentrates its energy 

upon the conduct of but one kind of stores located in 

many neighborhoods. Obviously, greater specialination in management and methods is possible in the 

latter type of enterprise than in the former, whose 

management, however capable, must after all con~sist 

of many separate types each devoted to a single store 

similar to an independent retail store. The mass buying done by a chain store owner for a number of units 

selling the same goods, is not comparable to the individuated purchasing of a department store for its grocery, its shoe, its drug, and each of its other departments. It is not to be expected that the management 

problems of stores, essentially separate and differing 

entirely in the character of their business, under the 

aegis of a single department store, will be the same 

as those involved in the intensive selling of a chain 

store owner operating an equal number of units all 

devoted to a single line of business.” 

The verbiage was carried into Texas’ leading chain store tax case, 

Hurt v. Cooper, 130 Tex. 433, 110 S.W.2.d 896 (1937); certified questions disposed of in 113 S.W.Zd 929 (Tex. Civ. App. 1938). 

It is impossible to anticipate all ramifications of this 

rule. In our opinion the carnival maintaining various stands within a 

confined area operated by one person as a single unit (i.e., integrated 

bookkeeping, common purchasing, etc.), is subject to only one store 

tax as a single unit. 
Hon. Robert S. Calvert, page 3 (S-47) 

Individual operation and management of the concessions 

by different lessees changes the status of the carnival stands. The statute levies a tax upon every person operating or maintaining one or 

mor,e stores. Art. 111 Id, Se- V.P.C., as amended. It is our opinion that each stand by virtue of the above facts would be subject to a 

separate store tax. Restaurant and hamburger stands so oprrated 

come within the exemption provided by Section 5(a) of Article 111 Id, 

as amended, and are taxable Under Section 5(c) of Article 11 lid. 

There is no differentiation to be made between a traveling and permanent carnival. This office has previously stated *a store 

is a store, whether mobile or immobile.” Atty. Gen. Op. O-7361 (1946). 

SUMMARY 

Carnivals are subject to the tax levied by Article 111 Id, 

V.P.C., as amended. Stands owned and operated by one person as a 

single unit are liable for a tax for one store only. If the concessions 

are leased to various persons, the different stands are each subject to 

a store tax. The mobility of the carnival of itself does not affect its 

status as a StOTe or stores. 

Yours very truly, 

APPROVED: 

W. V. Geppert 

Taxation Division 

JOHN BEN SHEPPERD 

Attorney General 

Ci K. Richards By@LdM 

Reviewer William W. Guild 

Assistant 

,Robert S. Trotti 

Firs,t Assistant 

John Ben Shepperd 

Attorney General 

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