Honerrble Gee. H. Sheppard Comptroller of Public Accounts Austin, Texas Opinion No. V-665

Re: Whether foreign corporation is liable fer Motor Vehicle Use Tax on buses purchased out of state and to be **used**in Texas only in interstate commerce.

Deer Mr. Sheppard:

You request our opinion as to whether the Transcontinental Bus System, Inc. should pay the Motor Vehicle Use Tax
on ten buses to be used only in interstate commerce. You enclosed a letter to you from the corporatidn which reads, in part,
as follows:

“We will have ten buses based in the State of New Mexico which will operate under interstate rights from Albuquerque, New Mexico to El Paso end return to Albuquerque. Interstate passengers enly will be handled and no local passengers will be taken on the buses or discharged from these buses at any points between the state line andEl Paso.

“These buses were originally **purchased** in the State **of** Kansas on which Kansas sales tax and license fees were paid. At the time they were trenderred to New Mexico, New Mexico license ices were pid. We new propose to license these buses in the State of Texas and pay the Texas motor bus license fees; however, we feel that these buses should be exempted from **payment** of the MotOr Vehicle Sales and Use Tax due ta the fact, that they ore to be ulssd exclusively for interstate purposes atld no intra-state passengers are to be handled.

“We feel that payment of the Motor Vehicle Sales and Use Tax would constitute &nundue bur-

### -z-able Gee. H.Sheppard, Page 2 (V-665)

Wehave **been**

### ahired **by the** 

### Secretary **ef Stats** 

### that **the** 

### Trurcentinental **Bus System**  

### i* **incerporated under**  **the laws** **af** 

### Delaware 8ad ia operating in Texas underl 

### permit te do hrsin4#8 intbie

### State. This c4rpor4tien is 

### enpled, in bddition to it4 iaterst4te 

### business, in intrastate business inTene endh40
l

### hu$~@r, &ice inJ&Us, frem which meat 

### 4 **its** 

### Texas busiwsn is ceaducted.

Tti perhnt eectfonr l fArticle 7047k, **V.C.S.** 

### are l

### e feU4wo;

‘Seottm 1.(4) There iohereby levied l ~$4~ 

### upoa **every** 

### retail rale ef every meter vehicle sold inthis State, euuh tax tmbe equel te one (I) per cent 4fthe ktdcadlere~r p4id **or** 

### tok paid to *a rre4ler 

### by the buyer, wYch ceneideratien ihll incluU4 the amount 

### paid l

### r tobe p&idfor acid mater vehicle and all l

c c4sr4ries

attached ther4t4 

### et the tin&od the able, what&r eutih censideretieh be in ,,,th8**nture** 

### ofcae,h, credit, w 

### exchn#e efether prep4rty, Q r:r~~!rllttru4.,~‘

~‘~.,rr*cnt aw+8a*ew8 r44*tlmep* 

### ‘se&f&Tincludes
w tea8

wd bytJa&

,Federai Government, then 

## l **m& F-86**  **tax s+aU**  **ba d&acted**  

### frem .4ui;hc+ ru4rdda br an pirp4sr 4fc~pt6lz# ;q4 mwDt d Car.lw48d by *i4 Artlels 

### upen iuch rbt&tl 8414.. .



### Hamerable Geo. H.Sheppard, **Page 3**  **(V-665)**

“When a tax becomes due ona motor vehicle purchased outside ofthis State andbrought into this State for use uponthehighways, theperson, firm, or corporation operating said motor vehicle uponthe public highways ofthis State shall pay the tax imposed bySection 2tothe **Tax Collector**  ofthe county inwhich such motor vehicle is tobe registered. The tax ahall b4 paidat thetime application is made **for** registratien ef said 

### motor vehicle, andthe Tax Collector ah11 refuse to isme the registration licenre until the tax is paid.” **(Emphasis ours)** 

Section 2 4fthe

## l

bev4-quoted article levies a u*4 tax **upon**every metor vehicle purchased at retail sale outside of this State andbrought into this State 

### for use uponthe public 

### hiphways efthis Stat4 by

. , . corpordioas domiciled or doing business inthis State. A corporation, although incorporated by
**one** state, **may** have **a** “commercial domicile inanother. See Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56S.Ct. 773. Even though**under** tbcfacts the Transcontinental may nothave a

### commercial domicile in Texas, it is doing anintrastate business in Texas and comes clearly within the taxing statute. Itwill theefore be required to paytheuse tax, unless such tax amounts to a regulation of

### or a burden oninterstate commerce. This tax is
an excise tax; andif it effecta interstate commerce indirectly, incidentally, or remotely, it will be valid unless it actually discriminetrq against such cemmerce. Hump Hairpin Mfg. Go. v. Eknmerson, **250 U.S.**  **290, 42** **S.Ct. 305.**  Here we have a tax not directed at or 

### discriminating 

## l gain4t interstate commerce, It is notdirectly **imposed** uponit or those 

### engaged in it. Itonly affects such commerce, as any tax will affect it, byadding to the uxpeaec afhuainetir.

While a 4tat4 may n4t directly burd4n interstate commerce bgtaxatia, itmay require all who 1~44her reada tomake reanonabla 

### campeneation therefer. WcCarroll v. Dixie GreyhoundLirue, Inc., **309**U.S. **176, 60** S.Ct. 504; Hendrick v. Maryland, 235 U.S. 610. By thet4rms of the statute there is no use tax levied unless the rnet4r vahicle in purchaatd andbrought ints **this** State for use **upon the** 

### public highway6 ofthis State. Itis also significant that th4 use tax must be paid before theTax Collector is authoriced to registar the**motor** vehicle **end** issue **a li** 
cense for itr use uponthehighways. Thus it ia seen thatthe payment ofthis tax is a prerequisite totheus4 ofth4motor vehicle uponthehighway8 inthatit is unlawful to operate such vehicles uponpublic highways of this Stat4 without registration. Inother worde. theprivilege of operating such m4tor vehicles upon our highways is conditioned uponthepayment ofth4tax.Honorable Gee. H. Sheppard, Pale 4 (V-665)’

It is true that thu revenue derived from this tax is not allecatcd to the use or maintenance of the public highways af this State. We do nit believe that the use to which the funds
are allocated i$ controlling. The United States Supreme Court krD&O OUmICkpress Co, v. State Revenue Cammission, 306 U.S. 72, 59 6. Ct. 435 in upholding a state tax **on motor**  vehicleo maa~ed in interstate cemmerce, used the following language:

“The scope **and** laagua&e of the challenged enactment unmistakably disclose intention of the State to require payment 

### ofcompensation **for tha**  privilele 

### ofoperating over its roads the specified vehicles **for** the transpertatfon ef property. Itcentaino no hint of hostility to interstate **commerce** or of purpose to 

### imporc a charge on the privilege or basinesr 

### afinterstate traraportation. The exaction **ie** not to be **deemed** 

### Jfenpive ti the commerce clause merely because the State, in the conduct 

### ofits fiscal affairs, chooses to use part or all of the **psocoeds** for purposes other than the construction, improvement. or maintenance ot its Poor, supra, pale 557 *7 S Bingaman, **supra,** 412,‘56 S.‘Ct. page 758. I( (E phasis added )

The Supreme Court ef New Mexico in Gso. E. Breece Oumber Co. v. Mirabal, 287 Pac. 699, in construing a statute all *asoline and mo-

, in upholdin the tax

u< * .Much effort is made in the argument **and** brief of c-al fox apjcllees to convince us that this ie a special privilege ax upon users af the public **ruds** of the state by means ef automobiles in trawling upar such hithways. Ifwe understand the argument, it is as follows: Tke tax is a tax upen the use of the public hi@ways by gasoline prepelied vehicles; 

### l

ppellees **di** not use tbe public, highrays in the censumption of gasoline in their qserations; therefore, they canrqt **legally** be charged with the tax. Ifboth of appollees’ premises were true, their cwelusion would inevitably follow. The treuble is with the m8jir premise, In the first place, as we have **hereMore** assumed, tba tax iatiot laid on the
use ef the public bi#hways. The statute dees not say so, and nowhere in the statute can such a conclusionWbnorable Geo. H. Sheppard, Page 5 (V-665)

oroceeds of the tax are devoted. bv statute. to the

r~----~-- ---~ ~~~-~~- ~~~--~~-. ~~, --~~--~~, -~ --~- yment ti such bon%s and debentures as may have
een msutd by the state to secure a fund with which to build and improve thehighways of the B,ate. But this has nothing to do with the matter. This is merely a imancial arrangement of the state to make sure provision i,or the prompt payment 61 its obligations when they become due,.

. .” (Kmv *asis added)
Furthermore, this tax is levied upon the privilege of purchasing at retail a motor vehicle out of the State and bringing it into this State for use upon the highways of this State. The tax is not a cha<ge upon the use of the highways and is due and payable before the vehicle is used in either intra or interstate commerce. The mere fact that the motor vehicle is used subsequent to the incidence of the tax as an instrument of interstate commerce does not make such tax a forbidden burden on inter state commerce. The tax is on a privilege secured before interstate commerce begins. See Nashville C. &St. L. Ry. V. Wallace, 288 U.S. 249, 53 S.Ct. 345. Also see Edeiman et **al** v. Boeing Air Transport, Inc., 289 U.S. 249. 53 S.Ct. 591 wherein the Court said:

“As the statute has been administratively construed and applied the tax is not levied **upon** the consumption of gasoline in furnishing motive power for respondent’s interstate planes, The tax is **ap** plied to the stored gasoline as it is withdrawn from the storage tanks at the airport and placed in the 

### planes. No tax is collected for gasoline consumed in respondent’s planes either on coming into the &ate or on going out. It is at the time of withdrawal atone that ‘use’ is measured for the purposes of the tax. The stored gasoline is deemed to be ‘used’ within the,State end therefore subject to the tax, when it,is withdrawn from the tanks. 

### Compare Nashville, Chattanooga 6 St. Louis Ry. v. Wallace,



### “AState may validly tax the ‘use’ to which gas- *line is put in withdrawing itfrom storage within the &ate, **and** placing it in the tanks of the planes, notwithstanding **tNt** its ultimate function is to **gen** erate motive power for carrying on interstate commerce. Such a tax cannot be distinguished from that considered and upheld in Nas*ville, Chattanooga 81Honorable Geo. H. Sheppard, Page 6 (V-665)

St. Louis Ry. v. Wallace, supra. There it was pointed out that ‘there can be no valid obiection io the taxation of the exercise of any right or power incident to

. . . ownership of the gasoline, which falls short of a tax directly imposed an its use in interstate commerce, deemed forbidden in Helson v. Kentucky,’ 279 U.S. 245. As the exercise of the powers taxed, the storage and withdrawal fro&r storage of the #asolin&,
was complete before interstate commerce began, it was held that the bu,rden of the tax was tomindirect and remote from the function of interstate commerce, to transgress constitutional limitations,.

, .”

It is therefere our opinion that the Tax Collector should not register the ten buses in question 6ntil tireMotor Vehicle Use Tax is paid thereon.

We affirm the holdins inAttorney General’s Opinion No. .O-6529, written during a prior administration, on the sole ground that the corporation in question in that opinion was neither domiciled in Texas nor doing an intrastate business in Texas. Ail language used in such opinion that is in conflict with this 

### l

piaion is hereby expressly overruled.

SUMMARY

A use tax is due upon ,motor vehicles, purchased out of Texas by a foreign corporation that is either domiciled in Texas or doinS an intrastate business in Texas, if brought into Texas for use uRen the highways of this SCte, even though such metor vehicles will be used only in interstate commerce. Art. 704lk, V.C.S.; Edeltnrn v. RoeinS Air Transport, Inc., 219 U.S. 249; 53S. Ct. 591; Dixie O&o Express Co. v. State Rev. Corn... 306 U.S. 72, 59 8, ct. 435.

Yburs very truly

ATTORIVEYGENERALOFTEXAS

By W. V, Gcppert

Assistant