OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

6l.D 0. MANN 

I”.. .*“s..L 

Januaxy Z7, 1939 

Hon. Ooorge R. Sheppard 

Comptroller of Fublio Aooount8 

Austin, Tous 

Dear I&. Sheppard: 

-. 

.' \ '.\ 

in the letter froa the law firpl 

t0 JOUr latter, &XW 88 tOiiOWCtt 

OS a Vualners Building Campaigna 

by The Peooa Entuprl~e and ooopuatltig amrohanta in the town OS Peoos. Aa rooltad 

in the opinion of the Attorney General rrferred to, 

the prlmory purpose of the oampaign wag to stimulate 

buslnees and to provide employment for a number of 

foone ladlea. The plan was worked out on a oommlsalon 

basis with extra remuneration in the form of an euto- 
Hon. Ceocpe H. Sheppard, January 27, 1939, Dupe 2 

, 

mobile presented to the young lady in the oampni~n 

:$ho made the moat sales. 

'The salesladies employed in the enterprise 

sold ooupon books upon which there we8 printed the 

name of one of the oooperatlng msrobonts. The 

book4 were in vnrlous denomlnatlons and were sold 

for the full face amounts thereof, the books being 

aoceptable at full value to the msrohont whose name 

wes prlnteC thereon. The 41rls oountsr-slcned the 

books and delivered them to the purohoser, made a 

note on the stub and reported the sele to The Peoos 

Rnterprlse and made due aooountlng of ths monies 

received. Upon report belnp made at deslcnated 

intervals, The Feoos Enterprise in turn pold to the 

young lady maklnp ths ssls a desleneted oommlsslon 

or the monies oolleotea. Then of the funds so rscelved an amount was deducted to assist In paying 

the sxpenses of the oampalw, and the balanoe renalni~ was paid to the respective oooperatlng merohants. Then as the oampaien olosed, the girl who 

had sold the largest amount of ooupon books reoelved 

an automoblls, in addition to oosh oommlsslons already paid. 

*In the a~re.m.nt entered Into betwesen The Peoos 

Enterprise and the respeotlvs oooperatlne msrohanlts 

It was rsolted that ths elrls engaged in the sale of 

the ooupon books were entered in a Wpopularlty" oontest; however, the award of the automobile was not 

baaed on "popularitya* rather it was bared upon the 

industry of the lndlvldual partlolpant. Ho votes 

were oast by any persons. It a prospeotlve oustomer 

desired to favor a rrlcna'or.ao~ualntanos, he or she 

mlfht make purehase of a desiwated amount of ooupon 

books from the young lady in question; however, on 

aaoh sale the tlrl making the sale had paid fo her 

a derlnit. oommlsslon, and then, at the end of the 

oontest, the youn(! lady maklne the largest sales of 

ooupon books had present~~d to her an automobile In 

addition to the amount or oommla~lons theretofore paid 

to.her in oosh. 

"During ths entire oontest the young ladles enter- \ 

ed were oarrled on the payrolls of the oompany (LO em- 
Hon. Caorpe H. Fiheppnrd, JAnuary 27, 1939, Page 3 

ployees and due payment was made of social seourity tax on eaoh of the young ladles. In other 

words, The PeooA Enterprise treoted the salesladies as its employees And accounted for soolal 

security tax, And on the award of the automobile 

accounted ror the value of the same by payment of 

the proper Amount of social security tax on its 

said value." 

Y;e dlreot your attention to Article 7M71 (a). In 

this portion of the statute you will note thet every puson, 

firm or corporation oonauctlng a theater, plaoe of amusement, 

or any bualnsse enterprise In oonneotlon with the operation 

of whloh a prize In the form of money or something of value 

14 offered or flven to on. or more patrons of suoh theater, 

plaoe or amusement or plaoe of buslnese and not plven to all 

patrons thereof paylap the some OhArge for Any woh service, 

oommodity or entertainment will be required to pay 20$ of 

the value of said prlw or Flit as provided in seotion (b) 

or said Article. 

Xt Is the opinion ot this Departient, and you are 

so advised, that under ths faots sutaltted with your lnqulq, 

no tax would be due the State beoause eaoh of the persons 

selling the ooupon books was oarrled on the payrolls of The 

Peoos Enterprise as an employee and was not a patron as would 

bs affeotecl by the provisions OS Artlole 70471, Revised Civil 

Statutes of Texas. The automobile that WAS &iven to the employss sslllng the largest numbsr of ooupon books, ln the 

opinion al this Department, would not be olasssd as a prize 

bat, on the other hand, would be a bonus and/or sxtra oompeneatlon for suvlces randered by the employee. 

Yours very truly 

ATTORREY cSXKXL OF TKXAS