Hon. Zollle Steakley 

Secretary of State 

Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Capitol Station 

Austin, Texas 

OPINION NO. w-806 

Re: Authority of the Secretary 

of State and the Comptroller 

of Public Accounts concerning 

the administrative procedure 

for the forfeiture of the 

right to do business of a corporation which is delinquent 

in the filing of its franchise 

tax report and in the payment 

of franchise taxes. 

Dear Mr. Steakley and Mr. Calvert: 

You have inquired of us whether or not authority 

is vested in the Secretary of State or the Comptroller of 

Public Accounts concerning the responsibility for the 

administrative procedure for the forfeiture of a corporation's right to do business when the corporation is delinquent 

in the filing of its franchise tax report and in the payment 

of franchise taxes. 

Prior to the Third Called Session of the Fiftysixth Legislature, Article 7091, V.C.S., as amended by Acts 

1955, Fifty-fourth Legislature provided as follows: 

"Any corporation, either domestic 

or foreign which shall fail to pay any franchise tax provided for in this Chapter when 

the same shall become due and payable under 

the provisions of this Chapter, shall thereupon become liable to a penalty of ten per 

cent (10%) of the amount of such franchise 

tax due by such corporation. If the reports 

required by Article 7087 or Article 7089 be 

not filed in accordance with the provisions 
Hon.Zollle Steakley and Hon.Robert S.Calvert,page 2 (WW-806) 

of this Chapter, or if the amount of such 

tax and penalties be not paid in full on or 

before the thirtieth day after notice of 

delinquency Is mailed to such corporation 

as provided in Article 7092, such corporation shall for such default forfeit its 

right to do business in this State; which 

forfeiture shall be consummated without 

judicial ascertainment by the Secretary of 

State entering upon the margin of the record 

-in his office relating to such corporation the words, ‘right to do business forfeited' and the date of such forfeiture." 

(Underscoring added.) 

At the time of the above Act all of the duties 

with regard to the administration and collection of franchise taxes were the responslblllty of the office of the 

Secretary of State. The Third Called Session of the Fiftysixth Legislature passed House Bill No. 11 which Bill is 

titled in the Statutes 122A-Taxation-General. In Chapter 

24, Section 8 thereof, it is provided that this Act shall 

be effective September 1, 1959. This Act provides under 

Article 1.04, Paragraph 3 as follows: 

"For the purpose of carrying out 

the terms of this Article the Comptroller 

or any authorized agent shall have the 

authority to examine at the principal or 

any other office in the United States of 

any person, firm, agent or corporation 

permitted to do business in this State, 

all books, records and papers and also any 

officers or employees thereof, under oath; 

and failure or refusal of any person, firm, 

agent or corporation to permit such examination shall, upon certification of such 

refusal by the Comptroller to the Secretary 

of State, immediately forfeit the charter or 

permit to do business in this State until 

such examination as Is required to be made 

is completed..." (Underscoring added.) 

Article 12.14 of this same Act places the responsibility 

upon the Secretary of State of forfeiting the "right to 

do business of a corporation" in the following language: 

"Any corporation, either domestic 

or foreign which shall fail to pay any 
Hon.Zollie Steakley and Hon.Robert S.Calvert,page 3 (WW-806) 

franchise tax provided for in this Chapter 

when the same shall become due and payable 

under the provisions of this Chapter, shall 

thereupon become liable to a penalty of 

ten per cent (10%) of the amount of such 

franchise tax due by such corporation. If 

the reports required by Articles 12.08 and 

12.09 be not filed In accordance with the 

provisions of this Chapter, or if the amount 

of such tax and penalties be not paid in 

full on or before the thirtieth (30th) day 

after notice of delinquency is mailed to 

such corporation, such corporation shall 

for such default forfeit its right to do 

business in this State; which forfeiture 

shall be consummated without judicial 

ascertainment by the Secretary of State 

entering upon the margin of the record kept 

in his office relating to such corporation 

the words, 'right to do business forfeited' 

and the date of such forfeiture..." 

scoring added.) 

(UnderLikewise, Article 12.17 of the same Act places 

the responsibility for the administrative forfeiture of a 

corporate charter upon the Secretary of State in the 

following language: 

. ..Upon determination by the Secre1" 

tar of State that any domestic corporation 

t to do business has been previously 

forfeited by that officer, and which corporation has failed and refused to have its right 

to do business revived pursuant to the provisions of this Chapter, and which corporation 

fails to revive Its right.to do business prior 

to the first day of January next succeeding 

the date of forfeiture of its right to do business, and which corporation has no assets from 

which a judgment for the franchise tax, penalties, and court costs may be satisfied, and 

approval of such determination by the Attorney 

General, the charter of any such corporation 

may be forfeited, which forfeiture shall be 

consummated without judicial ascertainment 

by the Secretary of State entering upon the 

charter of such corporations filed in his 

office the words, 'Charter forfeited,' giving 
Hon.Zollie Steakley and Hon.Robert S. Calvert,page 4 (WW-806) 

the date thereof and citing this Act 

as authority therefor." 

added.. )

(Underscoring 

Article 12.22, the last paragraph of the Act 

provides as follows: 

"When administration of the franchise tax is transferred from the Secretary 

of State to the Comptroller of Public 

Accounts In accordance with Acts of the 

Fifty-sixth Legislature, Regular Session, 

1959, Chapter 325, all administrative 

powers and duties incident to collection 

and administration of the franchise tax 

conferred upon the Secretary of State by 

this Chapter shall devolve upon and be 

exercised by the State Comptroller of 

Public Accounts." 

The question at hand calls for an interpretation 

of the intent of the Legislature in transferring duties 

from the Secretary of State's Office to the Comptroller's 

Office with particular regard to the extent to which the 

"administrative powers and duties" to collect and administer 

the franchise tax were intended to be transferred to the 

Comptroller. 

It is noted from the above paragraphs that with 

the exception of Art. 12.22, no provision of this Chapter 

places any duty on the Comptroller. All duties in Chapter 

12 of the new Act are specifically placed on the Secretary 

of State and the Attorney Genera; with the exception of said 

Art. 12.22, which provides that . ..a11 administrative powers 

and duties incident to collection and administration of the 

franchise tax conferred upon the Secretary of State by this 

Chapter shall devolve upon and be exercised by the State 

Comptroller of Public Accounts." 

Nothing in the Act takes away the authority and 

responsibility of the Secretary of State to approve a 

corporate charter, to certify to same under the great seal 

of the State and otherwise to literally authorize the 

creation of a corporation, (see Art. 1313 V.C.S.) as well 

as the authority to keep the actual charter of a corporation. 

The "administrative powers and duties incident to 

collection and administration of the franchise tax" are 

only a part of the powers and duties with regard to the 
Hon.Zollie Steakley and Hon.Robert S.Calvert,page 5 (WW-806) 

regulation of corporations and corporate taxes. 

It is the opinion of this office that the powers 

and duties transferred to the Comptroller by this Act were 

limited to those incident to the collection of the franchise 

tax and that it was not the intent of the legislature to take 

away from the Secretary of State the authority and duty to 

administratively forfeit a corporation's right to do business. 

Therefore, the Secretary of State has the authority to administer the procedure for the forfeiture of the right to do 

business of a corporation which is delinquent in the filing 

of its franchise tax report and. is delinquent in the payment 

of franchise taxes. 

SUMMARY 

The Secretary of State has the authority to 

administer the procedure for the forfeiture 

of the right to do business of a corporation 

which is delinquent in the filing of its franchise tax report and is delinquent in the payment of franchise taxes. 

Very truly yours, 

WILL WILSON 

Attorney General of Texas 

MHB,Jr:si 

APPROVED: 

OPINION COMMITTEE 

W. V. Geppert, Chairman 

Robert A. Rowland 

C. Dean Davis 

Richards Wells 

Houghton Brownlee, Jr. 

Au--- /a-. 

BY 

Marvin H. Brown, Jr. 

Assistant 

REVIEWED FOR THE ATTORNEY GENERAL 

By: Leonard Passmore