Honorable George H. Sheppard 

Comptroller-'of Public Accounts 

Austin, Texas 

Dear Sir: Opinion No. O-5468 

Re: LiabilLty of a motor carrier for 

tax imposed by Article XIV 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: 

"Article XIV~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 in Houston, Texas who 

operates under Interstate Contract Motor Carrier's 

permit issued by the Railroad Commission of Texas. 

He is also operating under I.C.C. permit formerly 

issued to another operator but purchased by the 

subject concern and approved by the Interstate Commerce CommFsslon on September 23, 1941 in MC-FC 

15542, and by the Railroad Commission of Texas on 

September 27, 1941, Motor Carrier Docket, C-34. 

"The concern In question hauls food products 

for a nationally known distributor, the merchandise is shippea in carload lots from a point outside the State of Texas to Houston, Texas where 

the products come to rest, being unloaded in warehous,es and later assigned and delivered to stores 

in incorporated towns within the Houston territory. 

In some instances the merchandise is loaded onto 

the trucks from the warehouse platform and delivered 

direct to the merchants within the incorporated towns. 

"This concern, in February, 1936, applied to 

the Interstate Commerce Commission for a Contract 

Carrier permit to distribute merchandise out of the 

Houston, Texas warehouse of the food distributor to 

their retail stores within the Houston territory. 

The Commission denied the application on the grounds 
Hon. Geo. H. Sheppard, page 2 f3-5468 

that the transportation from the warehouse to the 

retail stores was intrastate traffic and not interstate traffic. It was in September, 1941 that the 

Houston Contract Motor Carrier purchased the I.C.C. 

permit referred to above from another Motor Carrier, 

which he claims gives him the authority to transport the merchandise as interstate. 

"'Please tell me if the above concern is liable 

for the gross receipts tax under Article XIV in 

House Bill No. 8 of the 47th Legislature." 

From the several conferences that we have had with 

your department, we understand that a large chain store corporation operates a number of retail stores within the City 

of Houston, Texas and In other cities in that area. Said 

corporation maintains a warehouse in the City of Houston from 

which merchandise is distributed to its retail stores in accordance with their requfrements. 

It appears that the carrier in question was refused 

an Intrastate permit by the Railroad Commission of Texas to 

transport merchandise for the above mentioned corporation. 

Later, the Interstate Commerce Commission, hereinafter referred to as I.C.C., refused the carrier an I.C.C. permit for 

the same transportation on the grounds that said transportation was 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 individual which was,the exact 

type of permit which he had theretofore been unable to obtaln 

from the I.C.C. and the Railroad Commission of Texas. As to 

this particular permit, it appears that the I.C.C. found that 

the particular transportation was interstate and it also appears that the Rallroad Commission issued a permit to use the 

highways 1n connection therewith upon the same basis. 

As is clearly pointed 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 Commisslon has recognized such transportation as 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 imposed by Article XIV, House Bill No. 8, supra, on 

Intrastate business transacted under authority of an I.C.C. 

permit notwithstandlng that 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 transportation was interstate and had issued 

permits accordingly? 

Article 14, Section.1 (a), H. B. No. 8, Acts 47th 

Leg., Regular Session, imposes, the following tax: 

"Section 1. (a) Each Individual, partnership, company, association, or corporation doing 

business'as a 'motor bums company' 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 'motor carrier' or 'contract carrier' 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 corporation by 

its president, treasurer, or secretary, showing 

the gross amount received from intrastate business 

done within this State in the payment of charges 

for transporting persons'for compensation and any 

freight or commodity for hire, or from other 

sources of revenue received from intrastate business within this State during the quarter next 

preceding. Said individual, partnership, company, 

association, or corporation at the time of making 

said report, shall pay to the State Treasurer an 

occupation tax for the quarter be 

date equal to two and two tenths 7 

inning on said 

2.2) per cent 

of said gross receipts, as shown by said report. 

Provided, however, carriers of persons or property 

who are required to pay an Intangible assets tax 

under the laws of this State, are hereby exemptec 

from the provisions of this Article of this Act. 

In order to clarify the scope and meaning of the 

above Section, the~same Legislature enacted H.B. No. 1039 

which provides as follows: 

"Section 1. The term 'intrastate business' as 

used in Article ,XIV. Section 1 (a) of House Bill 

No. 8, Acts of the Regular Session of the Fortyseventh Legislature shall mean and apply Only to 

that portion of revenues derived from transportation 

iect t 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, association or corporation doing business as a contract carrier as defined in Chapter 277, Acts 42nd Leg., Re ular Session. The definitions referred to are as follows 7 codified 

in Section 1, 

V.A.C.S.): 

sub-sections (g) and (h), of Article~gllb, 

"(g) The term 'motor carrier' means any person, firm, corporation, company, co-partnership, 

association or joint stock association, and their 

lessees, receivers or'trustees, appointed by any 

Court whatsoever owning, controlling, managing, 

operating or causing to be operated any motorpropelled vehicle used in transporting property 

for compensation or hire over any public highway 

ln this State, where in the course of such transportation a highway between two or more incorporated cities, towns or villages is traversed; provided, that the term 'motor carrier' as used in 

this Act shall not include, and this Act shall not 

apply to motor vehicles operated exclusively within the incorporated limits of cities or towns. 

"(h) The term 'contract carrier' means any 

motor carrier as hereinabove defined transporting 

property for compensation or hire over any highway 

in this State other than as a common carrier. As 

amended Acts 1931, 42na Leg., p. 480, ch. 277, R 1." 

It is clear to us that the transportation in question 

is intrastate 1n character. It is equally clear to us that 

at least the intercity part of such transportation comes within the purview of Chapter 277, Acts 42n8 Leg., supra. Looking 

only at the provisions of Article XIV of House Bill NO. 8, 

supra, the gross recipts derived from such transportation WOUla 

be included in measuring the amount of tax due. The confusion 

results because of the language contained in House Bill No. 

1039, supra. This Act in effect defines "intrastate business', 

as used In Article XIV of House Bill No. 8, supra, as that 

transportation subject to the renulatlon of the Railroad Commission of Texas. (Underscoring ours). 

In determining the meanlng of House Bill NO. 1039, 

we wish to first point out that Article XIV of House 

i?gaEjo. 8 supra provided that the tax should be measured 

not only f;om grois receipts derived from transportation but 

also included gross receipts from other intrastate business. 

It followed that if the carrier also received revenue from 

the operation of a storage warehouse 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 'be ir:- 

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