## 816

OFFICE OF THE AlTORNEY GENERAL OF TEXAS AUSTIN



### &xsoroblaY. 0. Flower8 se~e~r;yof~statl *

Doa! Sir; Attsntionl I&. iittormyp

x levied by raid

oorporatloar under of ArtIsle 7lo5,
are nowpaying their
r the terse and provirriona di~hi0n f~) R. c. s. **0r** h of thr total amount of

ohacked Rnwabsr **or** tham ooret contend 

### theyars requiredto 

### ~~'intangibJ.ataror and find **that** in 

### truth on& In taot they are 

### notpejizg 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 t0direct your ott6Rtlon to ths r0ii0viing underllnsd portion of Article 7284, Subdlvlalon (E),8. C. S. of Tuoa, *(b) CorPoratIonawhloh 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 forvarloar r4asc.m they do not ova lntangibls taxes, when aasoss%dby tho Intsngiblr Tax Eoard, and at the saae tlmr prspareand file their franchlee tax returnwith thle department classifying themselyesee corporations required to pay the intangIble ter.

"x6 will apprdolateyour answer 

### to th% **r0ihing** question:

"Doe% a corporationhave to pay ennuallp lntarqlble taxesupon 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, larleean Intangible taxupon oertalnRemed corporationa in the foll~wlng lnnguage:

Taoh lnaorporet%drailroad 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%dia tb6 traneportatlanof **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~ corporationor 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

tie8which era or say be lrspoaad upon them rospectloaly,by lew, shallpay en ennuel tax to th6 State, beginningwith the iirat dey Of **Ja2IUarg** Of each yaor, 013t?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%dupon suah Intangibleasasts md property in the menner prorICed In this cheptor. The county
or oountlcs inwhich 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'eAnnoktted Clril Statutes, or4et48a pert161 sxemption in ieyor o? oarteln oorporatloca ?roa the tex lcrled by subdlvlslon (A) o? said franahlse tex statute,whloh examptlonreads es iollans:

'(B) Corporationawhlc); are now raqu5radby law to pay annually a taxupon lntenglbl%aaaets, oorporatlona owning or operetlng rtreat rallwa~ti in or upon th% public strsati o? any touQ or efty, en4 oorporatlonsorganlzab to meintaln or owning or operating aleotrlo interurban reilvfiya, shell be raqulrad to hsraafterpa 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 questionaon@nde ?or the right toat&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 eaaarta4under aubdiyiaian (B) o? the frenehlss tex atatuts next above quoted, an4 is deubtlaesupon the theory that them6r% nemlng o? such corporatlonnin hrtlala 7105, Vernon*8Annotatatl Cfvil Statutas, as bolng pot%ntlelly subject to an ad ralorem tax on intanglbla essota, brings th%m squer%lpHonorable M. 0. Plovers, page 4

within the purview of this partial exemption from ths franGhis

e tax.
With this contentionwe cannot agree. It la **Our** conolusion that there must rest upon the oorpora**tione** Olaking this partial exemption fromfranchise taxes, en aatual annual llablllty for en ad .valorem tax **On** their lntenglble asasts, rather than amere theoreticalor potential liability for such taxes. In otherwords,
**Arti** 7105,

not all of the corporationsdescribed in Vernon’s Annotated Civil Statutes,become liable eachyear to this tax on Intangible assets,as such liabilitydependa upon the facts appearing in the **COrpOret8** statement required by Article 7106 and Article 7lO7,Vernon’sAnnotated Civil Statutea, and the msthod of computation fbllowedby the IntangibleTax 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, conoerningthe levy, assessmentand oollection of taxas on -tangible assets, no such tax is oertifledby the IntangibleTax Board to the assessors of the various countiesof Texas against any given corporationfor a partloularyear, then how can it reasonablybe said that such corporation is *requiredby law to pay annually a tax upon intangible assets* within the language of subdivision (B),**Axtfols** 7084,Vernon’sAnnotated Civil Statutes, so as to allow such corporationto pay its franohise taxes on the basis of one-fifth of the total tar levied? In determiningwhether 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 *suohadditionel tax shall be assessed and levledupon such intangible assets and property in themanner provided in this ohapter.”

This oonolusion is without thsbenefit of supportingauthorities,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 intangibleassets of said oorpora%lons Is OScan 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



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