Honorable Robert S. Calvert 

Comptroller of Public Accounts 

OpInlon Ho. (C-328) 

Austin, Texas Re: Whether Article 10.03(3) 

V.C.S. requires a supplier 

to collect the tax on all 

special. fuels delivered to 

statutorily defined dealers 

or users who are not bonded, 

or whether it requires the 

supplier to collect the tax 

only on deliveries made to 

dealers and users who are 

acting in the capacity of 

non-bonded dealers or nonbonded users as classlfled 

by Article 30.11(l), V.C.S. 

Dear Mr. Calvert: and related questions. 

We quote your letter requesting the opinion of this 

office on the above captioned matter: 

‘we desire the opinion of your office as to 

the following questions lnv6lvlng the sales of 

special fuels to *users’ as that term Is defined. 

“‘User’, as defined by Article 10.02(8), 

‘means and includes every person who delivers 

any special fuels into the fuel supply tanks 

of motor vehicles owned or operated by him. 

“User” also means any person who Imports ape~clal 

fuels into ~thls State in fuel supply tanks of 

motor vehicles owned or operated by him. f 

” * Supplier I, as defined by Article 10.02(6), 

‘means any person who delivers special tie16 to 

dealers or users (Including locations of the 

supplier) for redelivery by them Into the fuel 

supply tanks of motor vehicles.’ 

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Honorable Robert S. Culvert, Page 2 Oplnlon No. (C-328) 

“Article 10.03(3), provides that, ‘Every 

supplier shall collect the tax, at the rate 

Imposed, on each gallon of special fuels delivered to nonrbonded dealers or users and shall 

report and pay to this State the tax so 

collected. . . . I 

“Article 10.06, provides in part as follows: 

‘Except In the case of tax-paid dellverles into 

the fuel supply tanks of motor vehicles, It Is 

unlawful to make bulk sales of special fuels 

to any person who (1) iS not licensed as a 

supplier, or (2) Is not licensed as a dealer 

.or user of special Reels, or (3) does not 

furnish a signed statement that none of the 

special fuels purchased will be delivered by 

him or permitted by him to be delivered Into 

the fuel supply tanks, of motor .vehlcles. @ 

“Article 10.09, provides that, ‘Every 

person defined herein as a stippller, dealer or 

user shall secure from the Comptroller. the kind 

sclass of permit required herein to act in 

such capacities or to perform such functions.’ 

“Intrastate ‘users’ with whom we are coticerned here are classified In Article 10.11(l) 

as follows: 

‘NonGonded Users are persons 

whose purchaseoofclal fuels are 

predominantly for delivery by them 

Into the fuel supply tanks of motor 

vehicles owned. or operated by them. 

‘Bonded Users are persons whose 

purchaEG?T ZiGETa fuels are not 

predominantly for delivery by them 

Into the fuel supply tanks of motor 

vehicles owned or pperated by them. t 

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Honorable Robert S. Calvert, Page 3 Opinion NO. (c-328) 

"This office has before It 

the records of bonded suppliers 

. ._ _. . 

two audits made from 

of special fuels which 

Show that 8816 auppllers have sold special fuels tax 

free In large quantities to persons who were operating 

In the capacity of bonded users, as classlfled above, 

but such persons Were not licensed or dld not hold 

permits as bonded'ussrs, which would have enabled them 

to purchase special fuels tax free. 

"In one case,, the supplier entered into an 

arrangement with the user to consis the special fuels 

l to him and, after the fuel was used, he collected the 

tax from the user only on the fuel that said user was 

presumed to have delivered into the fuel supply tanks 

of his motor vehicles for use on the highway - which 

was not supported by records which a user is required 

to keep. 

"In the other case, the supplldr merely sold 

and delivered the special fuels tax free to a user 

whom he thought was llcen,eed as a bonded user and 

was reporting and paying the tax on the highway 

use as a bonded user Is required to do by Article 

10.13(4). 

"Sinde Article 10.03(3), quoted above, places ' 

the collection of the tax by the supplier upon each 

gallon of special fuels delivered to non-bonded users, 

this office has construed the law to mean that the 

supplier bust collect the tax on all deliveries made 

to any person operating in the capacity of a nonbonded user as classified by Article 10.11 - which, If 

correctly oonstrue would require collection of the 

tax on special fue 9 s dellvered to a non-bonded user 

by consignment or otherwise. 

"In these cases, the suppliers sold and delivered 

special fuels to users who were operating In the capacity 

of banded users as classlf$ed by Article 10.11, but who 

were not licensed as bonded users, which made the sales 

unlawful under the terms of Article 10.06, above cited. 

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Honorable Robert S. Calvert, Page 4 Opinion No. (c-328) 

"Our questions are therefore as follows: Does 

Article 10.03(3), cited above, require a supplier to 

collect the tax on all special fuels delivered to 

statutorily defined dealers or users who are not 

bonded, or does It require the sler to collect 

the tax only on deliveries made to dealers and users 

who are acting In the capacity of non-bonded deor non-bonded users as classified by Artlcle.10.11(1) 

of the law? 

"If you answer that said supplier Is required 

to collect the tax only on deliveries made to users 

acting In the capacity of non-bonded dealers and users 

as classlfled by the said Article 10.11, then, will 

making of bulk sales of, special fuels to persons acting 

In the capacity of bonded dealers and users who are not 

so licensed as bonded dealers or bonded users make the 

suppller liable for collection and payment of the tax 

to the State on such unlawful deliveries? Or, will 

such supplier merely be liable to punishment under the 

civil and criminal penalties of the law for such sales?" 

Article 10.03(3) places a mandatory duty upon every 

supplier to collect the tax on each gallon of specialfuels 

delivered to non-bonded dealers or non-bonded users and to 

report and pay to the State~the tax so collected. We are 

therefore In accord with your construction that the supplier 

must collect the tax whether the special fuels were delivered 

to the non-bonded user or non-bonded dealer by consignment 

or otherwise. 

We are further of the opinion that the tax must be 

collected even when said dealers and users were acting In 

the capacity of bonded dealers and bonded users but had not 

been properly licensed. This for the reason that said dealers 

and users were In fact non-bonded since they were not properly 

licensed. 

Since' the suppliers in the cases under consideration 

have falled‘to perform the mandatory duty of collection Imposed 

by Article 10.03 and since the sales-were therefore unlawful 

under Article 10.06, we think the suppliers are liable to the 

State for the amount of taxes due at the time of said deliveries. 

We are not here concerned -with any possible recourse they may 

have against the parties to whom the unlawful deliveries were 

made. 

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Honorable Robert S. Calvert, Page 5 Oplnon No. (C-328) 

Article 10.18 provides, In part, as follows: 

"(1) If any person affected by this Chapter 

shall fall or ref’use to comply with any provision 

of this Chapter or shall violate the same, or shall 

fall or refuse to comply with any rule and regulation 

promulgated hereunder by the Comptroller or shall 

violate the same, he shall forfeit to the State of 

Wxas as a penalty the sum of not less that Twentyfive Dollars ($25) nor more than Five Hundred Dollars 

($500). . . .Provlded that In addition to such penaltles, If any supplier, dealer or user does not make 

remittance for any taxes collected, or pay any taxes 

due the State of Texas by sald supplier, dealer or 

user, within the time prescribed by law said supplier, 

dealer or user shall upon the first offense forfeit 

two per cent (2s) of the amount due; and If said taxes 

are not paid within ten (lO)days from the date of 

notice in wt&tlng by the Comptroller that any taxes 

have not been reported and paid, an additional eight 

per cent (8%) shall be forfeited; provided that upon 

each subsequent offense during any calendar year of 

falling to remit taxes collected or due the State 

within the tlme prescribed by law, such supplier, 

dealer or user shall forfeit twenty-five per cent 

(25%) of the amount due. All past due taxes and 

penalties shall draw Interest at six per cent (6%) 

per annum. 

11 II 

. . . 

The suppliers are likewise subject to the penalties 

provided by the provisions above quoted. 

Article lo.23 provides penalties In those cases In which 

the taxes have been collected but willfully not paid to the 

State. Its provislons.are therefore not applicable here. 

SUMMARY ------- 

Every supplier must collect the tax on 

all special fuels delivered to non-bonded dealers 

or non-bonded users and pay to the State the tax 

collected. The tax must be collected whether delivery was by consignment or otherwise and even In 
-. . 

Honorable Robert 9. Calvept, Page 6 Opinion No. (C-328) 

cases when said dealsrs and users were acting 

In the capacity of bonded dealers and bonded 

users but had not been properly lioensed. 

Suppliers who fall to collect taxes due the State 

are liable to the State therefor and are likewise 

subject to the penalties Imposed by Artlole 10.18, 

V.C.S. 

Yours very truly, ,‘, 

WAOOONER CARR 

:. 

Attorney Qeneral of Texas 

APPROVED: 

OPINION COMMITTEE 

W. V. Qeppert, Chairman 

Arthur Saridlin 

Roy Johnson 

J3 H. . Broadhur’st 

APPROVED FOR ,THE ATTORNEY GENERAL 

B;y: Roger Tyler