816 

OFFICE OF THE AlTORNEY GENERAL OF TEXAS 

AUSTIN 

&xsorobla Y. 0. Flower8 

se~e~r;yof~statl 

* 

Doa! Sir; Attsntionl I&. 

iittormyp 

x levied by raid 

oorporatloar under 

of ArtIsle 7lo5, 

are now paying their 

r the terse and provirriona 

di~hi0n f~) R. c. s. 0r 

h of thr total amount of 

ohacked R nwabsr or tham ooret contend they ars required to 

~~'intangibJ.a taror and find that in truth 

on& In taot they are not pejizg any lataaglbla 

taxes, ncrsrthalasr, payiq only 115th of their 

gnahlae taral umlar Artlola 7084, Bubdlrlaion 

. 
Eonorabls IL Q. Plowers, ps::t 2 

"~looe% 5llOw WI t0 direct your ott6Rtlon to ths r0ii0viing underllnsd portion of 

Article 7284, Subdlvlalon (E), 8. C. S. of 

Tuoa, *(b) CorPoratIona whloh are now re- -- 

~gi$l~O~t~ ,J?-%e"g!!!~lge~~ 

the tarmTTKls partioiilar atntute it ~a8 

the purpose 6nQ intention of the L6gii3l6tUr6 

to persit these corporatlcns W.-pay 1/5t.h 

Of their franchise tsxas, u&see they me 

&Ctllally payin intangibls taX6s. W4 understand a nuaber tf thes6 corporatlone contend 

for varloar r4asc.m they do not ova lntangibls taxes, when aasoss%d by tho Intsngiblr 

Tax Eoard, and at the saae tlmr prspare and 

file their franchlee tax return with thle 

department classifying themselyes ee corporations required to pay the intangIble ter. 

"x6 will apprdolate your answer to th% 

r0ihing question: 

"Doe% a corporation have to 

pay ennuallp lntarqlble taxes upon 

Intangible asrrets before bolng antitl%d to tb6 4/5tha redUOtiOn Of 

Its franahlse tax64 under Artlale 

7084, Sub&lvlrlon (b), R. C. S. of 

Tares?" 

Artiole 7105, Vernon*s Annotated Clyll Stetutelr, 

larlee an Intangible tax upon oertaln Remed corporationa 

in the foll~wlng lnnguage: 

Taoh lnaorporet%d railroad co3lgany, 

forry ocmpany, bridge oou;pany, turnpike 

or toll oomppany, 011 pip6 line aompany, 

and all uommon oerrier pip4 llna ooqwmiea 

Of 6Y6ry UhharaOt%r Wh?lllte!OeY%r, %II@g%d ia 

tb6 traneportatlan of Oil, aO* basinads 

vbolly or in part within this State, vhetb 

er inaorporeted. undar the laws ot this Stat%, 

or or any other State, t%rrltAW, Of fore&n 

aountry, snd every other lndiyldual, OoWmnuIJ~ 

corporation or assooiation doing busin%se of 

the same chareater in thle State, in 0dditiOll 

to the ad oelorem tares >n tangibl% proper- 
Sionoreble M. 0. FU~~6rst 95% 3 

tie8 which era or say be lrspoaad upon them 

rospectloaly, by lew, shall pay en ennuel 

tax to th6 State, beginning with the iirat 

dey Of Ja2IUarg Of each yaor, 013 t?6ir lntan@bl% asset% and proptrty, an4 local 

term thereon to the counties in uhich 

its business Is aarrldd on; uhlch addltlonel 

tax shell bs eas%ss%d and lavl%d upon suah 

Intangible asasts md property in the menner prorICed In this cheptor. The county 

or oountlcs in which such texss era to be 

paid, en4 tha manner o? epportionment or 

the 8890, rh%ll b6 dstarmln64 in eaoor4ence 

wlth th6 prOViSiOn% Of thiS chapter.” 

Subdivision (B), Artiala 7084, VeruoaL'e Annoktted Clril Statutes, or4et48 a pert161 sxemption in 

ieyor o? oarteln oorporatloca ?roa the tex lcrled by 

subdlvlslon (A) o? said franahlse tex statute, whloh 

examptlon reads es iollans: 

'(B) Corporationa whlc); are now raqu5rad by law to pay annually a tax upon 

lntenglbl% aaaets, oorporatlona owning or 

operetlng rtreat rallwa~ti in or upon th% 

public strsati o? any touQ or efty, en4 

oorporatlons organlzab to meintaln or owning or operating aleotrlo interurban reilvfiya, shell be raqulrad to hsraafter pa 

a rrenohlad tax aqua1 to one-flrth (I./57 

o? th6 franahlza tax h6r%in lmpos~d qeiDSt 

all other aor~retlons under Section (A) 

h6r4ln. c 

The aorpomtion In question aon@nde ?or the 

right to at&s a Trmahlss tax return en4 peym6nt on th% 

beais of one-Slith o? tha total ?renahl%% tax l%yl%d by 

subdiylslon (A), Artials 7084, Vernon's ,knWzdsd Clril 

Statutes, end pal4 by tha corporations therein -%4. 

Thla parttal axamption is eaaarta4 under aubdiyiaian 

(B) o? the frenehlss tex atatuts next above quoted, an4 

is deubtlaes upon the theory that the m6r% nemlng o? 

such corporatlonn in hrtlala 7105, Vernon*8 Annotatatl 

Cfvil Statutas, as bolng pot%ntlelly subject to an ad 

ralorem tax on intanglbla essota, brings th%m squer%lp 
Honorable M. 0. Plovers, page 4 

within the purview of this partial exemption from ths 

franGhis e tax. 

With this contention we cannot agree. It la 

Our conolusion that there must rest upon the oorporatione Olaking this partial exemption from franchise 

taxes, en aatual annual llablllty for en ad .valorem 

tax On their lntenglble asasts, rather than a mere 

theoretical or potential liability for such taxes. In 

other words, 

Arti 7105, 

not all of the corporations described in 

Vernon’s Annotated Civil Statutes, become 

liable each year to this tax on Intangible assets, as 

such liability dependa upon the facts appearing in the 

COrpOret8 statement required by Article 7106 and Article 

7lO7, Vernon’s Annotated Civil Statutea, and the msthod 

of computation fbllowed by the Intangible Tax Board in 

arriving at such tax liability for any given year. It, 

under all of the pertinent articles of’ Chapter 4, Title 

122, Vernon’s Annotated Civil Statutes, conoerning the 

levy, assessment and oollection of taxas on -tangible 

assets, no such tax is oertifled by the Intangible Tax 

Board to the assessors of the various counties of Texas 

against any given corporation for a partloular year, then 

how can it reasonably be said that such corporation is 

*required by law to pay annually a tax upon intangible 

assets* within the language of subdivision (B), Axtfols 

7084, Vernon’s Annotated Civil Statutes, so as to allow such corporation to pay its franohise taxes on the 

basis of one-fifth of the total tar levied? In determining whether or not a oertaln corporation is “required 

by law to pay annually a tax upon Intangible aaaets,* 

it ia neoesaary to refer to all of the pertinent statutes’ 

for the assessment end oaloulatlon of such tax, beoauae 

Article 7105, Vernon’s Annotated Civil Statutea, in levying said tax, provides that *suoh additionel tax shall be 

assessed and levled upon such intangible assets and property in the manner provided in this ohapter.” 

This oonolusion is without ths benefit of supporting authorities, beaause this ia en open quea~ion in Texas; 

being relegated to the bare text of the etatUt inmlrsd, 

we are constrained to sooord to such statute a reasonable. 

rather than an unreasonable, construotion, end we, feel that 

the foregoing conclusion end an errirmative answer to your 

question 1s the only reasonable’ Construation. 
Honorable ki. 0. Flowers, page 5 

Tbo manifest @mpose of subdlvlsion (B). Artlole 7084, Vernon*s Annotatad Clril Statutes, Is to 

lessen to tbe extent of four-fifths the franohlrre tax 

burden resting upon eorpoTatlaus which w6ro likewise 

liable ror tax on tbolr lntanglble assets. If, from 

oontrolllng statutes, it eppsars that no assessment ror 

suoh lisx on the intangible assets of said oorpora%lons 

Is OS can ba oertlflod by the Intangible Tax Board to 

the proper tax officials of the various oountiee In whloh 

the property of the oorporatloa is found, then such oorporatlon does not have to pay the eddltlonal tax oa 

intangible aeeeta and the reason for the exemption 

of such corporetlon from the payment of four-fifths 

of ita franchise taxer no longer obtains. 

To ellw suoh oorpontlon to pay only one-lift& 

of the rranohls6 tu lsrled against it, whlle other oarporatlonci ,ara paying such rranahi8e tu in It6 entlretr, 

would be to oonter a gratuity or gift upon such oorpomtion, and the intention to do this Ml1 not be aaorlbed 

to the Legislatare, absent lauguaga l.n the statute oompelllug such oonstmotlo~. 

Tours vary truly 

BT