### E * OFTEXAS 

## GENERAL

AUSTIN 1~1.

TEXAS January 21, 1957

Honorable Robert 5. Calvert Opinion No. WW-4 Comptroller of Public Accounts Capitol Station Re: Whether or not, under the Austin, Texas terms of lease agreements, the lessors of trucking equipment are liable for gross reDearMr; Calvert: celpts tax as provided for by Article 7066b, V.C.S.
Your letter requesting our opinion in reference to the captioned matter reads in part at follows:

“Sub-Section Aof Section I of Article 7066b, V.C.S. reeds as follows:
iil Each individual, partnership, company, association or corporation doing business as a “motor bus 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 Fort Chapter 7,8, or as “motor carrier x-first Legislature, or “contraqt carrier” as defined in Chapter 277, Acts, Regular Session of the Forty-second Legislature, over and byuse of the public highways of this State, shell makequarterly on,the first day of January, April, July endOctober of each year, areport 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 donewithin this State in the payment of charges for trensporting persons for compensation andany freight or commodity for hire, or ~fromother 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 next preceding said date equal to 2.42% of said gross receipts, as shown bysaid report. Provided, however, carrier5 of persons or property whoare required to pay an intangible assets tax under the laws of this State, are hereby exempted from the provisions of this Article of this Act.’. - i,

Hon. Robert S. Celvert, Page 2 (WW%)

“1 have contacted anumber of truck owners for the tax endhave.been furnished with copies of Lease Agreements, copies of which Lease Agreements, covering leased commerclel ,vehicles, ere on file with the Department of Public Safety in accordance with Article 67OlC-1, R.C.S.

“lam enclosing ecopy of one of the Lease Agreements between OR.F. Moore, L. H. McCeIvey andJoe Ferguson of Temple, ,Texes, lessors andBaldwin-Hill of Trenton, NewJersey, lessee.

“Please advise mewhether or not, under the terms of this Lease Agreement, the lessors are liable for the gross rece.ipts tax provided for byArticle 7066b, V.C.S. If the lessors are not required to pay the tax, please advise mewhether or not the lessee or anyone else is required to pay the tax.” Under the express provisions of Article 7066b, Vernon’s Civil Statutes, agross receipts tax is only levied against those whotransport persons or freight for compensation. Anyone whotransports himself or his owncommodities is not subject to the tax. In doing h,is owntransporting, whether h,euses a vehicle that he owns, borrows, leases, or rents is immaterial.
Wehave ca,rafully examined the lease agreement f,urnished us* andfind that same,:gives the lessee full control over the leased tractors end trailers; that the operators of the vehicles are to be hired bythe lessee and to be under lessee’s control. It is our opinion that this lease agreement is valid-and, if the parties thereto operate in compliance therewith, no tax will accrue under said Article 7066b.

Ofc-*rrse, if the lease agreement is asubterfuge, and the lessor of the ,vehicles operates themhimself or through his owndrivers, then the lessor is liable fourthe gross receipts tax.

Individuals, partnerships, companies, assoclatlons or corporations maytransport their owncommodities by use of leased motor vehicles without subJetting themselves or their lessee to the payment ofHon. Robert”S. Celvert, page 3 (WV!-4)

the motor carrier gross receipts tax levied byArticle 7066b, V.C.S., whepthe lease agreement provides that the lessee shall have full control over the vehicles and the lessee is to hire the drivers andcontrol them. However, if the lease agreement is is asubterfuge andthe lessor retains control over the vehicles or drivers, the tax will accrue against the lessor. Approved: Opinion Committee *’ H. Grady Chandler Cha1rman

I, Yours very truly,

WILLWILSON Attorney General of Texas

Ass1stant