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 and El 

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 &n undue bur- 
-z-able Gee. H. Sheppard, Page 2 (V-665) 

We have been ahired by the Secretary ef Stats that the 

Trurcentinental Bus System i* incerporated under the laws af 

Delaware 8ad ia operating in Texas under l permit te do hrsin4#8 in tbie State. This c4rpor4tien is enpled, in bddition to 

it4 iaterst4te business, in intrastate business in Tene end h40 

l hu$~@r, &ice in J&Us, frem which meat 4 its Texas busiwsn is ceaducted. 

Tti perhnt eectfonr l f Article 7047k, V.C.S. are l e 

feU4wo; 

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

upoa every retail rale ef every meter vehicle sold 

in this State, euuh tax tm be equel te one (I) per cent 

4f the ktdcadlere~r p4id or to k paid to *a 

rre4ler by the buyer, wYch ceneideratien ihll incluU4 the amount paid l r to be p&id for acid mater 

vehicle and all l c c 4 sr4r ieattached s ther4t4 et the 

tin&o d the able, what&r eutih censideretieh be in 

,,,th8 nture of cae,h, credit, w exchn#e ef ether 

prep4rty, Q r:r~~!rllttru4.,~‘~‘~.,rr*cnt 

aw+8a*ew8 r44*tlmep* ‘se&f&T includes 

w tea8 wd by tJa& ,Federai Government, then 

l m& F-86 tax s+aU ba d&acted frem .4ui;h c+ 

ru4rdda br an pirp4sr 4f c~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 on a motor vehicle 

purchased outside of this State and brought into 

this State for use upon the highways, the person, 

firm, or corporation operating said motor vehicle 

upon the public highways of this State shall pay 

the tax imposed by Section 2 to the Tax Collector 

of the county in which such motor vehicle is to be 

registered. The tax ahall b4 paid at the time application is made for registratien ef said motor 

vehicle, and the Tax Collector ah11 refuse to isme the registration licenre until the tax is paid.” 

(Emphasis ours) 

Section 2 4f the l bev4-quoted article levies a u*4 tax 

upon every metor vehicle purchased at retail sale outside of 

this State and brought into this State for use upon the public 

hiphways ef this Stat4 by . , . corpordioas domiciled or doing 

business in this State. A corporation, although incorporated by 

one state, may have a “commercial domicile in another. See 

Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S. Ct. 773. Even 

though under tbc facts the Transcontinental may not have a commercial domicile in Texas, it is doing an intrastate business in 

Texas and comes clearly within the taxing statute. It will theefore be required to pay the use tax, unless such tax amounts to a 

regulation of or a burden on interstate commerce. This tax is 

an excise tax; and if 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 not directly imposed upon it or those engaged in it. It only 

affects such commerce, as any tax will affect it, by adding to 

the uxpeaec af huainetir. 

While a 4tat4 may n4t directly burd4n interstate commerce bg taxatia, it may require all who 1~44 her reada to make 

reanonabla campeneation therefer. WcCarroll v. Dixie Greyhound Lirue, Inc., 309 U.S. 176, 60 S.Ct. 504; Hendrick v. Maryland, 235 U.S. 610. By the t4rms of the statute there is no use 

tax levied unless the rnet4r vahicle in purchaatd and brought ints this State for use upon the public highway6 of this State. It is 

also significant that th4 use tax must be paid before the Tax Collector is authoriced to registar the motor vehicle end issue a license for itr use upon the highways. Thus it ia seen that the payment of this tax is a prerequisite to the us4 of th4 motor vehicle 

upon the highway8 in that it is unlawful to operate such vehicles 

upon public highways of this Stat4 without registration. In other 

worde. the privilege of operating such m4tor vehicles upon our 

highways is conditioned upon the payment of th4 tax. 
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 

kr D&O OUm ICkpress 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 of compensation for tha privilele of operating over its roads the specified vehicles for the transpertatfon ef property. It centaino no hint of hostility to interstate commerce or 

of purpose to imporc a charge on the privilege or 

basinesr af interstate traraportation. The exaction 

ie not to be deemed Jfenpive ti the commerce clause 

merely because the State, in the conduct of its 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. If we 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. If both 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 ia tiot laid on the 

use ef the public bi#hways. The statute dees not say 

so, and nowhere in the statute can such a conclusion 
Wbnorable 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,at e. 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,. . . ” (Km v 

*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 applied 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, 

“A State may validly tax the ‘use’ to which gas- 

*line is put in withdrawing it from storage within 

the &ate, and placing it in the tanks of the planes, 

notwithstanding tNt its ultimate function is to generate motive power for carrying on interstate commerce. Such a tax cannot be distinguished from that 

considered and upheld in Nas*ville, Chattanooga 81 
Honorable 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 

tom indirect 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 tire Motor 

Vehicle Use Tax is paid thereon. 

We affirm the holdins in Attorney 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; 53 S. 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