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Honorable Robert S. Calvert Opinion

Comntroller of Public Accounts Capitol Station Austin, Texas

Dear Mr. Calvert: RE: Whether a foreign co-operativemarketing association incorporated in a fo'reignstate is reuired to deposit st 500 as required by Article 12.03, Title 122A, Taxation-General, V.C.S., and if
a sum so paid can be refundedby the Comptroller

By your recent letter,you request our opinion as to whetherArticle 

### 12.06,Title 122A, Taxation-General,Vernon's Civil Statutes (asamended by Acts 

### 1969,61stLeg. Ch. 801, p. 

### 2366),requires that $500.00be depositedby a foreign cooperativemarketing association licensed'to transact business in this State, and if so paid, doiyou have the authority to refund the same? Agricultural co-operativemarketing associationsare governed by the provisions of Articles 

### 5737-5750,inclusive,Vernon's Civil Statutes, and foreign co-operative marketing associations are permitted to transactbusiness in this State by the expressprovisions of Article 

### 5763, supra,which provides as follows:

"Theprovision6 of the general corporation laws of this State, and all powers and rights'thereunder shall apply to associations organizedhereunder extent when in conflictwlth the nrovisions of this chapter. Provided,however, that an cooperativemarketing association incor ora e *r the laws of any other Statemay apply for and be granted a permit to do business in this State end pay the same filing fee as required of domestic corporationsoSganized for a similarpurpose. Provided. further. that such foreian coonerative marketing associations shallnot be required to have
a paid-up capital or sny portion of the capitalpaid-up

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Honorable Robert S. Calvert,

in order to be entitled phasis added.) 

### page2 

### (M-579

to suchpermit". (RmArticle 5764, supra, dealingwith marketing associations organizedunder Chapter 8, Title 93, Vernon's Civil Statutes,requires an annual license fee of ten dollars,
a filing fee of ten dollars, and two dollars and fifty cents for any amendments to their charter, and further provides that such associations shallbe exempt ,fromall franchise or license taxes. Under Article 12.01 et seq, Title 122a,~

Taxation-General,a foreign corporationqualifying for business in Texas Is liable only for franchise taxes in the samemanner and on the samebasis as a domes2;; corporation. 14 Tex.Jur.2d 761, Corporations, Sec. To require a foreignmarketing association to pay franchise taxes when a domesticmarketing association is exempt from franchise tax would be a violationof our Federal and State Constitutions. U. S. Constitution, FourteenthAmendment, Section I; Article VIII, Section 2, Texas Constitution. The foreignmarketing association which is the subject of your inquiryhas apparently already obtained a permit to do business and otherwise complied with all state regulationsgoverning the trsnsaction of business within the State. Under these facts, the imposition of a franchise tax upon such foreign corporations alone and exemption of all such domestic corporations would be discriminatoryand unconstitutional. Southern R. Co. v. Green, 216 u.;S.400 (1909);77 A.L.R. 1494; 14 Tex.Jur.2d 667, Corporations, Sec. 574.
From,the above statutoryprovisions, and our interpretation thereof, a foreign co-operativemarketing associationwhose charter and permit provisionsmeet the requirements of Articles 5737-5764 need only show its articles of incorporation in a foreign state,pay the required fees as set forth inArticle 5764, and secure a permit from the Secretary of State in order to be authorized to do business in Texas; subject only to the provisions of Article 12.06, supra, if they are applicable.

Article 12.06 of said Title 122A, as amended,provides
as follows:

"All foreign corporationsapplying for a certificate of authority to do business, shall at the time of filing its applicationdeposit with the Comptroller of PublicAccounts the sum of Five Hundred Dollars ($500)which sum shall be deposited in a trust fund to be held by the Comptroller

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Honorable Robert Si Calvert,page 3 

### (M-576)

of Public Accounts during the time the foreign corporation is engaged in doing business in this State. This deposit shall insure a foreign corporation'spayment of all filing fees, filing all franchise tax reports and payment of franchise taxes, penalties and interestdue this State according to the provisions of this Chapter. In the event a foreign corporationhas ceased doing business in Texas prior to the forfeiture of the corporationtsCertificate of Authority, and can demonstratethat all franchise tax reports, franchise taxes and penalties have been filed and paid, such deposit or balance thereof, if any, shall be returnedby the Comptroller of PublicAccounts to the legal agent of such foreign corporation in this State, designated in conformitywith Article 12.11 of this Chapter.

"Whenevera corporation'sCertificate of Authority to do business in this State be forfeited as provided in this Chapter, the entire amount of said deposit shall likewise be forfeited.

"The forfeiture of said deposit shallnot bar the State's full recovery of the amount of franchise tax due; however, upon proof by such corporation of the actual amount of such franchise taxes due, and upon the filing of all delinquent tax reports, any amount of said deposit in excess of such franchise tax, includingpenalty and:interest, shallbe refunded."

The language of the statute clearly shows that the condition of such deposit is the'payment of all fees and/or franchise taxes to become due and owing under said Chapter to the State by the foreign corporation seeking authorization to do business in this State.

It seems logical that if the corporation seeking admittance to this State is exempt from franchise taxes by statute, or exempt from the payment of franchise taxes by theproper statutory constructionof the pertinent statutesand the Federal and State Constitutions,and that the necessary filing and license fees were paid at the time of filing, that such corporationwould not be required to deposit the $500.00 as set forth in Section

-274g-Honorable Robert S. Calvert,page 4 

### (M-576)

2 of Article 

### 12.06,supra. Having paid Five Hundred Dollars under protest, we are of the opinion that~the reasoning set forth in the case of Austin National Bank v. Sheppard, 123 Tex. 272, 

### 71 S. 

### W. 2d 242 (1934),constitutes sufficientbasis for the Comptroller to refund the Five Hundred Dollars under question. page 

### 246of the case.) (See

In addition to the above authority,Article 1.1l.A of said Title 122A empowers the Comptroller to refund certain taxes and licenses therein enumerated upon determination that any person, firm or corporationhas throughmistake of law or fact overpaid the amount due the State. This office has heretofore in its OpinionNo. M-140, dated October 2, 

### 1967,reiterated the reasoning set forth In theAustin National Bank opinion.

In view of the foregoing and to the extent of any conflictwith this opinion, the holding in former Attorney General Opinion 

### O-6045 (1944)that such a kind of agriculturalmarketing associationas is under consideration in this present opinion is not exempt from the franchise tax is overruled. We have held (supra)that Article 

### 5764 shouldbe given an interpretationwhich would uphold rather than void it on the constitutional grounds above considered.

SUMMARY

A foreign co-operativemarketing ;;I;Elation, incorporated in a foreign whose charterprovisionsmeet the requiiementsof Articles 

### 5737-5764,Vernon's Civil Statutes, is not required to deposit the Five Hundred Dollars as set forth in Article 

### 12.06,Title 122A, Taxation-General,Vernon's Civil Statutes,
as a condition to secure a permit to do business in Texas, and a sum so paid

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Honorable Robert S. Calvert,page 

### 5 (M-576)

under protest to acquire a permit to do business in this Statemay be refunded by the 

### Corn

troller. Opinion 0-if



### 045 Attorney General (1944) is overruled to the extent of any conflictwith this opinion.

Prepared by Gordon C. Cass Assistant Attorney General neral of Texas

APPROVED: OPINION COMMITTEE

Kerns Taylor, Chairman W. E. Allen, Acting Co-Chairman

Jim Broadhurst Robert Davis Sally Phillips Ed Esquivel

~MEADEF. GRIFFIN Staff Legal Assistsnt

ALF'RED WALKER Executive Assistant

NOL4 WHITE First Assistant

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