Honorable Robert S. Calvert

Comptroller of Public Accounts 

### OpInlonHo. (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 whoare not bonded, or whether it requires the supplier to collect the tax only on deliveries made to dealers andusers whoare 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. Wequote 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),
‘meansand includes every person whodelivers any special fuels into the fuel supply tanks of motor vehicles owned or operated by him.

“User” also meansanyperson whoImports ape~clal fuels into ~thls State in fuel supply tanks of motor vehicles ownedor operated by him.f ”* Supplier I, as defined by Article 

### 10.02(6),
‘means any person whodelivers special tie16 to dealers or users (Including locations of the supplier) for redelivery bythemInto the fuel supply tanks of motor vehicles.’

-1564--6.. , \ 1’

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 andpay 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 makebulk sales of special fuels to anyperson 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 himor permitted by himto 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 whomweare 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 bythem.

‘Bonded Users are persons whose purchaEG?T ZiGETa fuels are not predominantly for delivery bythem Into the fuel supply tanks of motor vehicles ownedor pperated by them.t

-1565-1 c ^.

Honorable Robert S. Calvert, Page 3 Opinion NO. 

### (c-328)

"This office has before It the records of bonded suppliers

. ._ _. . twoaudits madefrom of special fuels which Showthat 8816 auppllers have sold special fuels tax free In large quantities to persons whowere operating In the capacity of bonded users, as classlfled above, but such persons Werenot 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 himand, after the fuel wasused, 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 wasnot supported by records which a user is required to keep. "In the other case, the supplldr merely sold anddelivered the special fuels tax free to a user whomhe thought was llcen,eed as a bonded user and wasreporting andpaying the tax onthe highway use as a bonded user Is required to doby 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 meanthat the supplier bust collect the tax on all deliveries made to anyperson 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 fue9s dellvered to anon-bonded user by consignment or otherwise. "In these cases, the suppliers sold and delivered special fuels to users whowere operating In the capacity of banded users as classlf$ed by Article 10.11, but who were not licensed as bonded users, which madethe sales unlawful under the terms of Article 10.06, above cited.

-1566-.O

.

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 whoare not bonded, or does It require the sler to collect the tax only on deliveries madeto dealers andusers whoare 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 madeto users acting In the capacity of non-bonded dealers andusers 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 andusers whoare not so licensed as bonded dealers or bonded users makethe suppller liable for collection andpayment 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 andto report and payto the State~the tax so collected. Weare 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. Weare further of the opinion that the tax mustbe collected even whensaid dealers andusers were acting In the capacity of bonded dealers and bonded users but hadnot been properly licensed. This for the reason that said dealers andusers 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 andsince the sales-were therefore unlawful under Article 10.06, wethink the suppliers are liable to the State for the amountof taxes due at the time of said deliveries. Weare not here concerned -with any possible recourse they may have against the parties to whomthe unlawful deliveries were made.

-1567-c ‘

. l .~ , f

Honorable Robert S. Calvert, Page 

### 5 Oplnon No. 

### (C-328)

Article 

### 10.18provides, In part, as follows: "(1) If anyperson affected bythis Chapter shall fall or ref

’use to comply with anyprovision of this Chapter or shall violate the same, or shall fall or refuse to comply with any rule andregulation promulgated hereunder by the Comptroller or shall violate the same, he shall forfeit to the State of Wxas as a penalty the sumof not less that Twentyfive Dollars ($25) nor morethan Five HundredDollars 

### ($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 amountdue; 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 andpaid, 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 amountdue. All past due taxes and penalties shall drawInterest 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 andpay to the State the tax collected. Thetax mustbe collected whether delivery was by consignment or otherwise andeven In-. .



### Honorable Robert 9. Calvept, Page6 Opinion No. 

### (C-328)

cases whensaid dealsrs andusers wereacting In the capacity of bondeddealers andbonded users but had 

### not beenproperly lioensed. Suppliers whofall to collect taxes duethe State are liable to the State therefor andare likewise subject to the penalties Imposedby Artlole 

### 10.18, V.C.S. 

### Yoursvery truly, ,‘, WAOOONER

CARR 

### :. Attorney Qeneral of Texas

APPROVED: OPINION

COMMITTEE W. 

### V. Qeppert, Chairman Arthur Saridlin RoyJohnson J3H.

.Broadhur’st APPROVED

FOR ,THE ATTORNEY 

### GENERAL B;y: RogerTyler