Hon. T. M. Trimble 

First Assistant 

State Superintendent of 

Fublia Instruction 

Austin, Texas 

Dear Sirr Opinion 'No. O-5677 

Re: Are State and Federal excise 

stamps on hand in a liquor 

store subject to sohool taxes? 

pie have your request for opinion on the above question. YOU 

attach to your request, and in explanation thereof, a letter to you 

from Mr. George M. Waddill, & 81nsss hhnager of the Amarillo Publio 

Schools. The pertinent parts of said letter are as followsg 

Vn the case of I.. E. L. Sales Company, Inc. of 

Amarillo, Texas the tax equalization board raised the 

valuation of merchandise and other assets rendersd by 

the above Company8 and in protesting the raise of said 

values, L. h. L. Sales Company insists that certain 

items are not subject to taxation as follows: 

" 1 . State Excise Stamps, part attached to whiskey 

and wine and part loose stamps. . . . . . . . .$2,164.91 

'"2. Additional Federal. ::'xoise Tax. effective Nov. 

1st. 1942. &lled separately from the cost of whiskey 

and wine and 0. P. A. did not allow a markup at that time 

on this tax. . . . . . . . . . . . . . . . . . $1,70:;.64 

"This Company is in the wholesale liquor business 

and takes the position that the above two items are not 

subject to tax since they represent taxes paid. 

"Our equalization board took the position that these 

amounts represent money which has been used to increase the 

value of the merchandise on the shelf, and that it would 

be proper to inolude the cost of the stamps in arriving at 

the net oost of the arMales ori the shelf. 

"F'urther, that those stamps which were loose and not 

attached to merohandise are taxable for the reason th?t if 

the stamps were not on hand, the same amount would be represented in cash in the bank, which would be, without question, 

taxable." 
Hon. T. M. 'Irimble, page 2 O-5677 

As to the powor of the school district to siibjoct. the Fedsra? 

excise stamps to an ad valorem tax we observe as follows: 

These stamps oome into existence under the terms of an act of 

the Congress of the IJr~;ted States pertaining to the collection of the 

internal revenue taxes imposed by the Federal Government on distilled 

spirits. 'The internal Revenue Code of the Government of the United 

States sets up an exhaustive and comprehensive method for the coiieotion 

of taxes on distilied spirits. In said Act among other things it is 

provided that, "No person shall transport, possess, buy, sell or transfer any dis,tilied spirits, unless the immediate container thereof has 

affjxad thereto a stamp denoting the quantity of distilled spirits oontained therein and ovidwcing paymsnt of all. internal rsvonue taxes imEs-?d on such spirits.- --_- 

The law further provides in substance that the stamps mentioned 

shall be issued by the Commissioner to each Collector, upon the requisition of the Collector, and that the issue shall be in such numbers as may 

be necessary in the particular Collector's district, and shall be sold 

by the various Collectors to persons entitled thereto upon their making 

application for stamps and complying fully with the regulations which 

may be set up under this law. 

When any stamps so procured are destroyed by fire or water, 

or made useless by erroneous over-printing or cutting before they have 

been used, the Commissioner under re,gulations approved by the Secretary 

may issue new stamps in exchange for the old stamps. And in case the 

oxbxer of the stamps has no use for them by reason of the discontinuanoe 

or transfer of hj.s business, and has on hand quan.tities of the value of 

$5.00 or more, and presen-ts hj~s claim within one yoar aftor tho date on 

which the stamps wre purchased the Commissioner may refund the value 

of said unused stamps under regulations approved by the Secretary. 'I'he 

law furhter provides that every person emptying any container stamped 

under ths provisions of this law shall at the time of emptying such container destroy the stamp thereon. (See United States Code Annotated, 

Title 26, Chapter 26, Sections 2800 to 5045, inolusive) 

The .stamps of the Federal Government, about which you inquire, 

are a device used by the Federal Government in the collection of its 

taxes on alcoholj~c liquor. These stamps are evidence of a tax paid to 

the Federal Government by the taxpayer. They are an instrument, or instrumentality, used by the Federal Government as a part of its system 

and method for the collection of taxes due the Government of the kilited 

States under the terms of i,ts internal Revenue Laws. 

It is u;nl~l settled that the State of Texas, as well as its 

politics.1 subdivi~sions which possess taxing powsrs, do not have authority 

to tax an instrumentality of the United States when such tax operates as 

a burden upon the means or sgenoy whereby the Federal Government performs 

its governmental functions. 
-- - 

Hon. 2'. M. Trimble, page 3 O-5677 

‘lie rmFrard the Federal stamps inquired whoEt by you as f:&llicg 

within the ruiec last mentioned, arid you are therefore advised that the 

school district cannot assess, levy or colleot any tax on said stamps. 

(See Texas Jurjsprudence, Vol. 40, Section 11, page 24, and cases cited 

therein) 

-4s to the taxability of the liquor stamps of the State of Texas 

about which you inquire, you are advised as follows: 

School districts do not possess an inherent power to tax, as 

does the State. Schooi distrj.cts derive their taxing poxers solely from 

the statutes. {See VOL. b7, Texas Jurisprudence, page 990) 

The lax scripta of Texas contemplates the collection of an ad 

vaiorem tax form all personal property of every description whatever. 

This gelera rule is limited by the principle of law to the effect that 

~when the State delegates to a looal unit or political. subdivision a 

power to levy a tax, that the power to levy said tax on property and 

agencies of the State is impliedly reserved from this delegation of power. 

The stumps of the 'State of Texas about xhich you inquire come 

into bnilg by virtue of th+ provisions of the Texas Liquor Lontrol Act. 

?‘h!s Act is set forth in Vernon's Penal Code RS ,lrticle 666-l to 666-49, 

and 667-l to 667-22, il:clusivo. The Texas Liquor Control h-t is Iengthy, 

3nd its reproduntiw here :w!u!d wxsime many pages. For the sake of 

brevity, 've omit sntt;,?g it out .In full. Xe believe it xi,11 suffice to 

my with reference to thjs Act that B tax is tIhere* imposed by the State 

of Texas upon the !'i,rs t sale of a11 alcoholic spirits or liquor which is 

oroducod by f!?e process of distil!atinn. 'i~he Act makes thins tax pa.yable 

by the affixing of the stamps to the containor of liquor so taxed. 

i‘labornta prov;sions for the issua:!ae of theso stamps and their method 

of? srtle, c&c., 31-a ilade by the tarms of ths ?'exss iiqwr Control .ict. 

(;jee ?~RIOE’S ~-'o:Is~ ::ode, Artio: es fifi6-%l.t, 666-21‘0, sn3 666-1.5a:l) 

A?-, nnalLysis a:ld digest of the verio~txs provisions of the kct 

?m!ier diso,lssio,n disclose that the stamps in ques-tion are "evidence of 

tho paymnt of e trx, "w&/or nn apnncy or instrlmental.ity of the !;t?te 

of‘ Texas usnd by :t as a means in the performance of i,ts povbmmoi?cii? 

functions of oollsctlng tho tax levied by the ~/Lot on the first sate of 

alcoholic spirits and liquors above mentioned. 
-- 

'don. T. Y. 'Crimblo, ~a@ 4 O-5677 

A, the Texas Liquor Tax Stamps about which you Inquire are zr! 

instrurne,nt or mear;s nr agency, rutilizod by the State in th- orderly process of the aollnction of taxes imposnd by the tezms of the Texas Liquor 

Control Aot, it follows that when the State delegated to the school 

district the power to collect ad vel.oram taxes, the power to levy such 

a tax on said instrument:ility of the State, as is the liquor tax stamp, 

was implindly withheld and not granted. 

Be are therefore, of the opinion and so advise you that the 

school district cannot levy an ad valorem tax upon the State Liquor Tax 

strunps, about which you inquire. 

Ey s,/Geo. P. Ala&burn 

George P. R,lackbura 

Assistant