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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-operative marketing association 

incorporated in a 

fo'reign state 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 

refunded by the Comptroller 

By your recent letter, you request our opinion as to 

whether Article 12.06, Title 122A, Taxation-General, Vernon's Civil Statutes (as amended by Acts 1969, 61st Leg. 

Ch. 801, p. 2366), requires that $500.00 be deposited by a 

foreign cooperative marketing association licensed'to transact business in this State, and if so paid, doiyou have the 

authority to refund the same? 

Agricultural co-operative marketing associations are 

governed by the provisions of Articles 5737-5750, inclusive, Vernon's Civil Statutes, and foreign co-operative 

marketing associations are permitted to transact business 

in this State by the express provisions of Article 5763, 

supra, which provides as follows: 

"The provision6 of the general corporation 

laws of this State, and all powers and rights'thereunder shall apply to associations organized hereunder extent when in conflict wlth the nrovisions 

of this chapter. Provided, however, that an cooperative marketing association incor *r ora e 

the laws of any other State may apply for and be 

granted a permit to do business in this State end 

pay the same filing fee as required of domestic 

corporations oSganized for a similar purpose. 

Provided. further. that such foreian coonerative 

marketing associations shall not be required to have 

a paid-up capital or sny portion of the capital paid-up 

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. . 

. 

Honorable Robert S. Calvert, 

in order to be entitled 

phasis added.) 

page 2 (M- 579 

to such permit". (RmArticle 5764, supra, dealing with marketing associations organized under 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 shall be exempt ,from all 

franchise or license taxes. Under Article 12.01 et seq, 

Title 122a,~ Taxation-General, a foreign corporation qualifying for business in Texas Is liable only for franchise 

taxes in the same manner and on the same basis as a domes2;; corporation. 14 Tex.Jur. 2d 761, Corporations, Sec. 

To require a foreign marketing association to pay 

franchise taxes when a domestic marketing association is 

exempt from franchise tax would be a violation of our 

Federal and State Constitutions. U. S. Constitution, 

Fourteenth Amendment, Section I; Article VIII, Section 

2, Texas Constitution. The foreign marketing association 

which is the subject of your inquiry has apparently already obtained a permit to do business and otherwise complied with all state regulations governing 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 discriminatory and 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 statutory provisions, and our interpretation thereof, a foreign co-operative marketing association whose charter and permit provisions meet the requirements of Articles 5737-5764 need only show its 

articles of incorporation in a foreign state, pay the 

required fees as set forth in Article 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 corporations applying for a certificate of authority to do business, shall at the 

time of filing its application deposit with the 

Comptroller of Public Accounts 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's payment of all filing fees, filing 

all franchise tax reports and payment of franchise taxes , penalties and interest due this 

State according to the provisions of this Chapter. In the event a foreign corporation has 

ceased doing business in Texas prior to the 

forfeiture of the corporationts Certificate 

of Authority, and can demonstrate that all 

franchise tax reports, franchise taxes and 

penalties have been filed and paid, such deposit or balance thereof, if any, shall be 

returned by the Comptroller of Public Accounts 

to the legal agent of such foreign corporation 

in this State, designated in conformity with 

Article 12.11 of this Chapter. 

"Whenever a corporation's Certificate 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 shall not 

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, including penalty and: interest, shall be 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 the proper statutory construction of the pertinent 

statutes and the Federal and State Constitutions, and 

that the necessary filing and license fees were paid at 

the time of filing, that such corporation would not be 

required to deposit the $500.00 as set forth in Section 

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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 sufficient basis for the Comptroller 

to refund the Five Hundred Dollars under question. 

page 246 of 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 corporation has through mistake 

of law or fact overpaid the amount due the State. This 

office has heretofore in its Opinion No. M-140, dated 

October 2, 1967, reiterated the reasoning set forth In 

the Austin National Bank opinion. 

In view of the foregoing and to the extent of any 

conflict with this opinion, the holding in former Attorney General Opinion O-6045 (1944) that such a kind of 

agricultural marketing association as is under consideration in this present opinion is not exempt from the 

franchise tax is overruled. We have held (supra) that 

Article 5764 should be given an interpretation which 

would uphold rather than void it on the constitutional 

grounds above considered. 

SUMMARY 

A foreign co-operative marketing 

;;I;Elation, incorporated in a foreign 

whose charter provisions meet the 

requiiements of 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 State may be refunded 

by the Corn troller. 

Opinion 0- if 045 

Attorney General 

(1944) is overruled to 

the extent of any conflict with 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 

~MEADE F. GRIFFIN 

Staff Legal Assistsnt 

ALF'RED WALKER 

Executive Assistant 

NOL4 WHITE 

First Assistant 

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