Honorable George H. Sheppard

Comptroller-'of

PublicAccounts Austin, Texas

Dear Sir: OpinionNo. O-5468 Re: LiabilLty of a motor carrier for tax imposedby ArticleXIV of Hduse Bill No. 8, Acts 47th Legislature,Regular Session.

Your letter of July 20, 1943 relating to the above captioned subject reads as follows:

"ArticleXIV~of House Bill No. 8 of the 47th Legislature provides a tax of 2.2s on receipts earned by Motor Contract Carriers.

"There is an operator inHouston, Texas who operatesunder InterstateContractMotor Carrier's permit issuedby the Railroad Commission of Texas. He is also operatingunder I.C.C. permit formerly issued to another operatorbut purchasedby the subject concern and approved by the InterstateCommerce CommFsslonon September 23, 1941 in MC-FC 15542, and by the Railroad Commission of Texas on September 27, 1941, Motor CarrierDocket, C-34.

"The concern In question hauls food products for a nationallyknown distributor, the merchandise is shippea in carload lots from a point outside the State of Texas to Houston, Texaswhere the products come to rest, being unloaded in warehous,es

and later assigned and delivered to stores in incorporated townswithin the Houston territory. In some instancesthe merchandise is loaded onto the trucks from the warehouse platform and delivered direct to the merchantswithin the incorporatedtowns.

"Thisconcern, in February, 1936, applied to the Interstate Commerce Commission for a Contract Carrierpermit to distributemerchandise out of the Houston, Texaswarehouse of the food distributor to their retail storeswithin theHouston territory. The Commissiondenied the application on the groundsHon. Geo. H. Sheppard, page 2 f3-5468

that the transportationfrom the warehouse to the retail storeswas intrastatetraffic and not interstate traffic. Itwas in September, 1941 that the Houston ContractMotor Carrierpurchased the I.C.C. permit referred to above from anotherMotor Carrier, which he claims gives him the authority to transport themerchandise as interstate.

"'Please

tell me if the above concern is liable for the gross receipts tax under ArticleXIV in House Bill No. 8 of the 47th Legislature."

From the several conferences thatwe have had with your department,we understand that a large chain store corporation operates a number of retail storeswithin the City of Houston, Texas and In other cities in that area. Said corporationmaintains a warehouse in the City of Houston from which merchandise is distributed to its retail stores in accordancewith their requfrements.

It appears that the carrier in question was refused
an Intrastatepermit by the Railroad Commission of Texas to transportmerchandise for the above mentioned corporation. Later, the Interstate Commerce Commission,hereinafterreferred to as I.C.C., refused the carrier an I.C.C.permit for the same transportationon the grounds that said transportationwas intrastate. See I.C.C.Reports, Motor Carrier Cases,Vol. 4, page 488.

Thereafter, the carrier 1n question purchased an I.C.C. permit from another individualwhich was,the exact type of permit which he had theretoforebeen unable to obtaln from the I.C.C.and theRailroad Commission of Texas. As to this particularpermit, it appears that the I.C.C. found that the particular transportationwas interstateand it also appears that the Rallroad Commission issued a permit to use the highways 1n connection therewith upon the same basis.

As is clearlypointed out in the aecislon of the I.C.C., supra, the transportation in questlon is Intrastate in character and.not interstate. It remains however that said transportation IS done under au,thorlty of an I. C. C. permit and it appears that the Railroad Commisslonhas recognized such transportationas Interstate.

It seems to us that the answer to your question depends upon this issue, to-wit: Is a motor carrier subj'ect~to the tax imposedby ArticleXIV, House Bill No. 8, supra, on Intrastatebusiness transactedunder authority of an I.C.C. permit notwithstandlngthat the I.C.C. and the Railroad Com-Hon. Geo. H. Sheppard, page 3 .' o-5468

mizssion

### had issued orders, alleged to be,final orders, to the effect that such transportationwas interstateand had issued permits accordingly?

Article 14, Section.1 (a),H. B. No. 8, Acts 47th Leg., Regular Session, imposes, the following tax:

"Section1. (a) Each Individual,partnership, company,association, or corporationdoing business'asa 'motorbumscompany' as defined in Chapter 270,Acts Regular Session of the Fortieth Legislature, as amended by the Acts of 1929, First Called Session of the Forty-first Legislature, Chapter 78, or as 'motorcarrier' or 'contractcarrier' as defined in Chapter 277,Acts Regular Session of'the Forty-second Legislature, over and by
use of the public highways of this State, shall make quarterly on the first day of'January,April, July, and October of each year, a report to the Comptroller,under oath, of the individual,partnership, company, association, or corporationby itspresident, treasurer, or secretary, showing the gross amount received from intrastatebusiness done within this State in the payment of charges for transportingpersons'for compensationand any freight or commodity for hire, or from other
sources of revenue received from intrastatebusiness within this State during the quarter next preceding. Said individual,partnership, company, association, or corporationat the time of making 

### said report, shallpay to the State Treasurer an occupation tax for the quarter be date equal to two and two tenths 7inning on said 2.2) per cent of said gross receipts, as shownby saidreport. Provided, however, carriers of persons or property who are required to pay an Intangibleassets tax under the laws of this State, are hereby exemptec from the provisions of this Article of thisAct.

In order to clarify the scope and meaning of the above Section, the~same Legislature enactedH.B. No. 1039 which provides as follows:

"Section 1. The term 'intrastatebusiness' as used in Article ,XIV. Section 1 (a) of House Bill No. 8, Acts of theRegular Session of the FortyseventhLegislature shallmean and apply Only to that portion of revenues derived from transportation iectt the r ation of the Railroad Commission &.' (UndZoring ours).Hon. Geo. H. Sheppard, page 4 o-5468

By the express terms of House Bill No. 8, supra, the, tax is imposed on each individual,partnership, company, associationor corporationdoing business as a contract carrier as defined in Chapter 277, Acts 42nd Leg., Re ular Session. The definitions referred to are as follows 7codified in Section 1, V.A.C.S.): sub-sections (g)and (h), of Article~gllb,

"(g) The term 'motorcarrier'means any person, firm, corporation, company, co-partnership, association or joint stock association, and their lessees,receivers or'trustees,appointed by any Courtwhatsoever owning, controlling,managing, operating or causing to be operated any motorpropelledvehicle used in transportingproperty for compensationor hire over any public highway ln this State,where in the course of such transportation a highwaybetween two or more incorporated cities, towns or villages is traversed;provided, that the term 'motorcarrier' as used in thisAct shall not include,and this Act shallnot apply to motor vehicles operated exclusivelywithin the incorporatedlimits of cities or towns.
"(h) The term 'contractcarrier'means any motor carrier as hereinabovedefined transporting property for compensation or hire over any highway in this State other than as a common carrier. As amendedActs 1931, 42na Leg., p. 480, ch. 277, R 1."

It is clear to us that the transportationin question is intrastate 1n character. It is equally clear to us that at least the intercitypart of such transportationcomes within the purview of Chapter 277, Acts 42n8Leg., supra. Looking only at the provisions of ArticleXIV of House Bill NO. 8, supra, the gross recipts derived from such transportationWOUla be included inmeasuring the amount of tax due. The confusion results because of the language contained inHouse Bill No. 1039, supra. ThisAct in effectdefines "intrastatebusiness',
as used InArticle XIV of House Bill No. 8, supra, as that transportation subject to the renulatlon of the Railroad Commission of Texas. (Underscoringours).

In determining the meanlng of House Bill NO. 1039,
we wish to first point out that ArticleXIV of House i?gaEjo. 8 supra provided that the tax shouldbe measured not only f;om grois receipts derived from transportationbut also includedgross receipts from other intrastatebusiness. It followed that if the carrieralso received revenue from the operation of a storagewarehouse or from some other source,Hon. Geo. H. Sheppard, page 5 O-5468

this revenue would also be included in determicing ;;l!~: amount of tax due according to the literal language of the Act.

It is our opinion that the only meaning and effect of House Bill No. 1039, supra, is to limit the application of the tax imposed by Article XIV of House Bill No. 8, supra, to those gross receipts derived only from that transportation which the Legislature, by statute, authorized the Railroad Commission to regulate. See our Opinion No. O-5335.

We do not believe that the tax liability of any motor carrier is contingent upon any action or non-action taken by the Railroad Commission of Texas. For example, we do not believe that interstate receipts could legally 'beir:- eluded In determining the amount of tax due even though the Railroad Commission thought that the transportation was i;itrz state and issued an order to that effect nor do we believe,

as in this case, that intrastate receipts should be excludai in determining the amount of tax even though the Railroad Commission had years ago issued a permit based upon an order finding the transportation to be interstate. Going a step further, suppose a situation where a carrier was regularly transporting merchandise intercity for hire and had never obtained any kind of a permit from the Railroad Commission. Notwithstanding the lack of any actual regulation, the carrier, in our opinion, would clearly be liable for the tax.

Irrespective of the order issued by the Railroad Commission to the motor carrier in question and irrespective of whether such order may be said to be final or otherwise,

we are of the opinion that said carrier is subject to the tax imposed by Article XIV of House Bill No. 8, supra.

Yours very truly

ATTORNEY GENERAL OF TEXAS

LS:fo:wc By s/Lee Shoptaw Lee Shoptaw, Assistant APPROVED AUG 24, 1943 s/Gerald C. Mann ATTORNEY GENERAL OF TEXAS
Approved Opinion Committee By s/RWF Chairman