EATFORNEYGENERAI. OFTEXAS

Honorable George Ii.Sheppard Comptroller of Publi~c Accounts Austin, Texas
Dear Sir: OpinionNo. O-6195 Re: Whether~or not a claim for refund of the tax on motor fuel exported or lost by fire or other accident is subject to a sixmonths limitation period for filing;whether' such six months limitationperiod in fire or other accident losses runs from the time of the delivery of the motor fuel'or from the date of the accident; and whether the Comptrollerwould be authorized to deduct from a current claim filed by an exporter, the amountof a former claim filed after safd six months period and paid in error.~. In your letters of the 7th and 26th of September, 1944, you submit in substance the followingquestions:

1. Is a claim for a refund of the tax on motor fuel exported or lost by fire or other accident subject to 'thesix months limitationperiod for filing?

2. If the answer isyes, does the six months llmitation period on fire or other accident losses run from the time of the delivery of the motor fuel or from the date of the accident.

3., If the six months limitati,,on period apolies in export cases,would the Comptroller'sDepartment be authorized to deduct from a current claim filed by an exporter the amount of a former claim filed after said six months period and paid in error by saidDepartment?

The motor fuel tax law is quite lengthy. Shorn of the verbiageunnecessary to a solution-ofthe problems here involved, Se'ction13 of saidAct (Art. 7065b,Vernon's Annotated Civil Statutes),being the sectiondealing with refunds, provides as follows:Hon. George Ii.Sheppard, page 2 o-6195

"(a) Any personwho'purchases motor fuel in the"State of Texas, and any distributorwho appropriates motor fuel~'for use . . e for any purpose other than use in' a motor vehicle operated or intended to be operated inwhole or in partupon any of'the public highways,roads, or streets of the State of Texas, on which'motor fuel tax has been paid, *

. : shallbe refunded the amount of such taxes o . m . . 0 '"(b)

. . s No refund of'the tax shall be granted on any motor fuel to any person . . .unless suchmotor fuel has been purchased from or used by a licensedrefund dealer s . .;and the Comptroller is hereby prohibited from issuing

.,,

. . . .refund of the taxion any motor fuel notpurchased from a licensed'refunddealer except refund ? on-'motor

fuel exported,'lostby accident or purchasedby theUnited States Government. "(c) An~invoice of exemption shallbe demanded by the purchaser or recipient of motor fuelused for re’fund~

purposes,kid upon each delivery by a refund dealer, or upon each appropriation foruse of motor fuel

. . *,an invoice of exemption shallbe issued

. . . . . . . "'(a)When a claimant purchases or acquires for use motor fuel upon which a refund of the tax may be due, he shallwithin six months from the date of delivery of the motor fuel

. .;,and not thereafter, filewith the Comptrolleran affidavit. e . . . e "No refund shallbe made where motor fuel is used later than six months from date of delivery 01"appropriation,and no refund shall everbe made where it appears from the Invoice, or from the affidavits, or other'evidencesubmitted, that the sale or deliverywas made more thanksix (6) months prior to the date of filing of the application for refund. 1, e . . If any person shall export or lose~by fire or other accident any motor fuel in quantities of one hundred (100)gallons OP more, '.o . or shall sell motor fuel 0

. . to the United States G'overnment, for the exclusiveuse of sa'id Government, claim for refund of the 'taxso"paidmay be made in'themanner herein nrovided, or as the Comotroller may direct.- .

Hon. George H. Sheppard, page 3 o-6195

Providea,,further,that a bondea and licensed diitributormay, in lieu of filing claim for refund of the tax paid on motor fuel thereafter exported or sold to theunited StatesGovernment for thenexclusiveuse of saidGovernment, take credit on any monthly r@p’tiet’ and tax ‘payment made to the’COmptrOllerwithln six’(6) months of the~date of said sale or exportation, for the amount of tax so paid. The Motor Fuel Tax Law contains an elaboraterecord and reporting systemdesigned,to.‘prevent tax evasion: Every person”’ engaged in the production, &WUfkctUre, refining, t??atiSPOrtatiDtI or’sale of motor fuel Ln Texas Is required to keep records as to motor fuel handled’ by theme

and to make reports to the comptroller concerning its possession and disposition, the purpose of these requirementsbeing to gLve the Comptroller informationas to every gallon of motor’fuel produced’ in or’importedinto the State of Texas. This elaborate record systemgreatly assists ‘the Comptrollerin collectFng the’tax, checking refund claims and preventing tax evasionand fraud.

Obviously,‘thepassage of time makes the checking of, the motor fuel on a given date more difficult. Consequently, the Legislature saw fit in the~.above statutoryprovlsions to fFx the six months period of limitation,within which certain refund claims must be filed.

The answer to ‘the first question turnsupon a proper construction of the statutoryprovision that claim for refund incases of export accidental loss, or~‘sales to the United , States Government ‘maybe made in the manner herein provided, or as the Comptrollermay direct.I’Section 23 of the Act’~‘in questYon gives the Compti?bller power to promulgate rules and regulations for the enforcement of the M-ctor Fuel Tax I&w; We are” advised that no rule or regulationhas been promulgatedby your departmen? fixing. a time 1imLtwithin which.a claim’based on exports or accidental losses may be filed, if; indeed,you could Iawfully fix other than a six months limitationperiod’. Suffice it”to say that you havenot done so, and we.do not pass upon“your authorLty to do so, samenot being necessary in reaching a decision In this opinion. I

Refuhd claims on”exportsand accidental losses, then, ai?& to “bemade’In the manner herein provided,“’ -We think this language shows a”legislative Intent that the balance of the’Act be looked to as’‘apattern for filing requirements for such claims. We think the’

words “In’

the manner herein provided” imply a six months limitation ‘period 0 Section 13 (d) of the Act,wherein these’wordsappear, is repletewith the Mea of a SJxmonths. limitationperiod, thewords “sfx (6) months” appearing in saidHon. George K. Sheppard, page 4 Q-6195

Section no less than five times. Our conclusion in the matter is further~strengthenedin that the"Act provides (fourthparagraph of Section 13 d) that bonded snd licenseddistributors, oh motor fuel exported or sold to the Un‘ited States Government, may, 1n lieu offiling refund claims, take credit on their monthly report and tax payment "within s~ix(6) months-'of the date"of said~sale or exportation~.. .'for the tax paid. It appea~rs'unreasonable to assume that the Legislature'infended to impose a six months limitation PerLodduring which a d'istributor could collecta refundby listing St on hls~'report aspan off&t against taxes he owed the State, and yet have'no such limitation on his direct application for'such refund. We'conelude, therefore, that the Legislature In Itsuse of'thewords "in the manner herein provided" Intendedthat the refund claims there'in

referred to shouldbe subject to a sixmonths limitation perlod for filing.

The secondquestion deals with the method of application of this rule In cases of motor fuel loss by fire or other accident. Again we must be guided by the pattern revealed in the remainder of the Act.

A close analysis of~Sectlon 13 of the Act reveals that motor fuel tax refunds are authorized in five general situations as follows:

(1) Sale by a licensed refund dealer to a purchaser for a non-highwayuse.

(2) for non-highwayuse by a distributor 'Yp;w;;a;;~;er ,, licensedas a .

(3) Exports.

a es Government for its exelusive62: Sale to theUnited St t

0 (5) Loss by fire or other accident.
In the first two cases mentloned,Section 13(c) of the Act requires that the refund dealer issue an invoice of'exemption at the time of delivery OP at the time of appropriation, respectively, As we construe,the Statute, the six months period In the first situation, supra,begins to run at the time of delivery of the motor fuel to the purchaser; and in the second, the period begins with the appropriation,atwhich time the claimant "acquires foruse" the motor fuel in question, receiving, at the time he appropriates It, at least a constructive "delivery."Hon. George H. Sheppard, page 5 0-6195

" In the third and fourth situations, supra;the fourth paragraph of Sectlon 13'(d) Provides that a bonded and licensed di.strLbutor

may obtaln a refund 'on motorfuel exported or sold to the Government by crediting same as an offset on his monthly report and tax payment "within six (6) months of the date of said sale or exportati'on."' We"have no difficulty in holding tha't an affirmative clalm'forrefund on motor fuel exported or sold to the Governmentmust be filedwithin the same'tlme limit as the credit on the monthly report above referred to.

In reviewing the picture as thus far made,we find that in each of the four situations,the claimant has a'full six months between the time he knows he will have's claim and the deadline for filing. A personwhose only basis for refund is loss of'motor fuelby accident obtains his first knowledge oft, the existence of a situation in which the law allows a refund, at the time of the loss. He is not In a position to exercise any diligencewith reference to the filing of a claim prior to that time. Accordingly, in keepingwith the pattern setby'the Statute in'other refund situations, it is our oplnionthat a claimant has six months from the date of the accidental loss In which to file h1.sclaim rather than'from the date of'delivery. It is Immaterialunder the statute as to when an exporter or a seller to the Government fir'st acqu'ired

the motor fuel. We think It likewise follows that the date of purchase br acquisition by onewho suffers loss by accrdent Is immaterial. '.Acontrary holdingwould discriminate against the victims of adversity, and the statute reflectsno such legislative intent.

Question number three.presentsa fact situationwherein a claim for refund, filed, by an exporter after the six months period, hasbeen paid." Our OpinlbnNo. o-2765 discussed the payment of a refund claimwhich fafled~'to meet statutory'.'requirements'and'concludedthat "asthe claimant has caused a warrant to Issue and be paid upon such claim, void by reason of his'own acts and omissions, he becomes indebted to the State of Texas for moneys improperlyhad and received from the Treasury of'the State',In the amount of suchwarrant
. 0

. We think the same rule aDplies here and that said claimant becomes indebted to the State for the"amount of'suchwarrant. "Further, It is our opinion that in paying a current refund claim filed'by said exporter,your departmentmay lawfullydeduct the amount of this debt due the State, and Issuewarrant for the difference.

In so holdingwe~'are not, unmindful of Article 4350, Revised Statutes,which reads:

"Nowarrant shallbe issued'toany person in-, debted to the State,"or to his agent, or assignee, untL1 such debt is paid."Hon. George H. Sheppard, page 6 o-6195

The rightsof the State to offseta debt due.it from a payment by the State to ttie debtor, even afterwarrant for the full amount had issued,was upheld in the case of Citizens' State Rank v.~

AmerIcanSurety Co., 65 S.W. (2d) 778, error refused. In that case, a sheriff filed claimwith the State for fees Andyreceived a deficlehc'y warrantwhich he endorsed to'the bank. Ttie'Comptroller refused to allow the warrant to be paid when It matured becau'se the sheriffhad collected certain~fees from the Statewhich were unlawful, and the Comptroller "offset and deducted therefrom the amount of unlawful items. "The bank sued the sheriff and his surety. The Court held'that the suretywas not liable. The Court said,:

"The obligatfonof appellee, as surety, on the bond to pay'the State theunlawful'fees collected, ceas'ed when the State collected such fees, which it was authorized to do, by deducting the amount thereof from the deficiency certifdcate theretofore issued to the sheriff." Judge S 227 (Comm,App.Peer, in the case of Shannon'v.Ratcher, 299 S.W.

states the purpose of Article 4350 as follows: "TheStatute was evidentlypassed in order that a person.might not receive money from the State when indebted to the State, and then, If said personswere lnsolve,nt, prevent the State from recovering the amount due it." It~is obvious that a withholding of'the‘amount of the debt tothe State such is contemplated in this case affords ample protection to the State and satisfies the intent of the Statute.

Judge Alexander in the case of Thompson v. Prince, 126 S.W. (2d) 574, error'refiised, states: "Inorder'to authorize the offset of ohe claim against another, the demands must be." mutual. 0

.that is', they itiustbe between the same parties and must be due in'the same capacity OP right;" We think the offset here involved complles"with these requirements,and with t'he further requirement that the demands in question be liquidated demands; Other authorities supporting out holding include; Rule 97, TexasRules'of Civil Procedure; 57 C-J. 454; Wood v. N,Y,, 73 N.Y. 556; Price v. Lancaster CO., 24 Pa. Co. 225; 24 R.C.L. 813; Johnson v. City of Aberdeen, 266 Pac. 707 (Wash.).

In order to avoid .misunderstanding,'we think it appropriateto mention that the'rulehere enunciatedd,oes,not work bothways- A tax payer, on grounds of public policy, Isnot permitted to offset a refund due him by the State agatnst his liability for taxes'owed to the State, in the absence of statu- ;o";"(~~~;""c';"~:.

State v, Humble Oil & Rfg. Co. 16g'S.W. (2d) The Act only gives such statutoryauthority to a limitedgroup, to-wit, bonded and licenseddistributors onHon. George H. Sheppard, page 7 0-6195

claims basedupon exports or sales to the United StatesGovernment. See fourth paragraph of Section 13(d).

We trust this satisfactorilyanswers your inquiry.
Yours very truly
ATTORNEYGENERAL OF TEXAS

By s/J.Arthur Siindlin J. Arthur Sandlin Assistant
JAS:fo:wc
BPPRUVED OCT 9, 1944 s/Carlos C. Ashley FIRST ASSISTANT ATTORNEYGENERAL Approved Opinion CommitteeBy s/BWB Chairman