Honorable Geo.

Comptroller of Austin, Texas H. Sheppard

Public Accounts

Dear Mr. Sheppard: Opinion No. 

### 054OC Re: Construction of Senate Bill No. 2,Acts Regular Session 48th Legislature. This will acknowledge receipt of your letter of June lsth, requesting the opinion of this Department as to whether Senate Bill No. 2,Acts of the 48th Legislature, authorizes and requires all officers and employees of this State and its agencies, instrumentalities, political subdivisicqs, andmunicipalities to comply with thewithholdingprovisions of the "Current Tax Payment Act

### of’_1943.”

Senate Bill No. 2 reads as follows:
"AnACT requiring all officers and employees of the State, its agencies, instrumentalities, political subdivisions andmunicipalities, having con-. trol over thepayment of any salaries orwages topublic officers or employees, to comply with the provisions of the Federal Revenue *ct of 1942 reouiring the withholding cf the five per cent (s$)F d

e era1Victory Income Tax from wages paid public officers and employees so lorgas the United States ofAmerica is atwar with Germany, Japan or Italy; anddeclaring an emergency.
"BE IT ENACTED BY THE LEGISLATURE CF THE STATE CF TEXAS "Section 1. For theduration of the present war, all officers and employees of this State and its agencies, instrumentalities, political subdivisions and municipalities, having control over the payment cf any salariesor wages topublic or'ficersor employeee, arehereby authorized and required to comply with the. ‘

. \

Honorable Geo. H. Sheppard -page i?O-5408

provisions of the tiedera Internal Revenue Act of 1942, reuiring-the withholding of the five per cent (50)Federal Victory Income Tax from

7 wages paid public officers and employees. Any expenses involved in complying with the ;;rovisions of this lawmay be paid from existing or future appropriations. Theprovislcns ci‘this Act shallbe in force and effect only so long as theUnited States ofAmerica is atwar with Germany, Japan or Italy.

"Sec. 2. The fact that there isdoubt as to the authority of the Federal Government tc impose duties on State officers and employees, as such, without the consent of the State, and the State of Texas being desirous of cooperating to the fullest degree'with the Federal Government in its effort to collect taxes to finance the war effort, creates an emergency and an imperative public necessity that the CcnstitutionalRule requiring bills tobe read on three severaldays in each House he suspended, and said Rule ishereby suspended, and that this Act shall take effect,from and after itspassage, soldit is so enacted."
We quote the following paragraph from your letter:
"The Congress has recently enacted what is commonly referred to as the 'Current T&u Payment Act of 

### 1943,'which provides fcr the current collection of income taxes on individuals ,whichare already imposed by the Internal :icvcnueCode. No new taxes are imposed by thisAct nor are any old ones removed. This Act will effect the collection of tax as income asearned. The 'Current Tax Payment Act of 

### 1943'changes themethod in collecting Federal Victory Income Taxes and, in effect, substitutes therefor the currc~:i;j:ayment of income taxes."
We think it clear that the reference in S. B.No. 2 to theprovisions of the Federal Internal Revenue Act of 1942 was not intended to restrict the application of the policy adopted by the Legislature of co-operation with the Federal Government in the collection of taxes during C.' 3 L::--i ’

. Honorable Geo. H. Sheppard -page 3 0-5408

istence of thepresent war, to the provisions of that particular enactment, Rather, the reference to the Federal Internal Revenue Act of 1942 was merely for the purpose of identification of thepolicy enacted by theFederal Congress with respect towithholding taxes fromwages paid public officers and employees, with which policy the Legislature of this State determined, by 9.B. No. 2, to co-operate.

This, we think, ismade clear by observing that the State could have legitimate concern onlywith the question whether itspublic officers and employees, ns such, should be required to assume the obligation tothe Federal Government ofwithholding from salaries or wages paid topublic officials and employees taxes on income due to the Federal Government under the laws promulgated by the Congress of theUnited States, Other provisions of the law could not legitimately ccncern the State as such, for the State's action or non-action could not reduce the liability of the officers and employees of the State to the Federal Government for inccme taxes due cn salaries orwages earned by them, nor could the State, 'byaction or non-action, in anywise impede orrestrict the operation of provisions of the Federal Taxing Act affecting public officers and employees in their Eapacity asprivate citizens,

These observations make it plain that the only object orpurpose of thepassage of 9. B. No. 2was togive the consent of the State that theFederal Government might impose the duty on State officers and employees as such to withhold, at the source, from salaries andwages paid to public officers and employees, income taxes assessed by the Federal Government, That this is the true object andpurpose of the enactment is emphasized by the recitations of the emergency clause,,incorporated in Section 2 of the enactment.

To reach any other conclusion we must attribute to the Legislature the intent to do-operate with the Federal i, Government only in the collection of the "Victory" Income "ax in the amount of fiveper cent, iif! more a& no less,as such tax isprovided fnn the Internalxenue Kt of 1942, and in no other act of the Congress, Such construction would F

--- Fire theholding that, if the Congress, inthe Internal Revenue Act of 1943$ should reduce theVictory Income Tax to one per cent or raise it to seven per cent, the legislative clsent given inS. B.No, mshould not apply, Togive theAct such anarrow and literalistic interpretation is to observe the form and ignore the substance,: Rather, ryethink',the i4ct’ L

.
Honorable Geo. H. Sheppard -page 4 O-5408

evinces a legislative intent togive its consent that the Congress, during thewar, may require officers and employees of this State and its instrumentalities having control as such ever the payment of salaries andwages towithhold from such wages and salaries Federal income taxes assessed therecn against the persons towhom thewages or salaries are due.

Since the chief effect of the Current T,axPayment Act of 

### 1943'toapply thewithholdin; provisions of the Federal Internal Revenue Act of 1942 not only to the Federal Victory Income Tax, but also to taxes on incoce ,zenerally, you are advised that, in the opinion of this del,artnent,S. B. No. 2. required all officers and employees of this State, its agencies, instrumentalities, political subdivisions, and municipalities, to comply with the withholding prcvisio?s of the Current Tax Payment Act of 

### 1943* Very truly yours
ATTORNEY GENERAL OF TEXAS

BY R. W. Fairchild RWF-MR/X/pam APPROVED July 1, 

### 1943 GERALD C.MANN ATTORNEY GENERAL OF TEXASr

IT:P:T:2

RFD-5 

### o-5408 Treasury Department EY$:":9$;
Collector Post Office Box 1150 Austin, Texas

Reference ismade toyour letter dated February 

### 18, 1947,transmitting a letter dated February 11, 

### 1947from Charles B. Mbcre, State Representative of,.the

### 87thLegislative District of 'fexas, concerning the withholding ofFederal Income Tax on &Cl.00 per day received by Members ofthe State Senate and 'louseof "epresenta, tivesi,jwhile

attending sessions of the State Legislature atAustin, Texas. r. Moore inquires W-War or not theper diem of $10.00 per day is subject to withholding tax.

The per diem in question is authorized byArticle III, Secti .on24 of the Constitution of Texas, DJ -em." entitled *Uleage and Per This article authorizes, inaddition tomileage, the toAembers of the Legislature of aper diem ofnot exceeding iayment 10.00 per day for the ,first120 days of each session and after that no exceeding $5.00 per da::for the rema??!gr of the session.

While the article referred to does not specifically state the $10.00 per diem tobe in lieu of subsistence, it ap:ears that it was intended to compensate legislators for expenses incurred while attneding sessions of the Legislature inAustin, Texas.

Accordingly, this cffice holdsthat the per diem allowance paid under theprovisions ofArticle III, Section 24 of the Gonstitution ofTexas, entitled "Mileage and Per Diem" does not ccnstitute "wages" within themeaning of section 

### 1621of the Internal Revenue Code and isnot subject towithholding of Federal income tax at source under section 

### 1622of the Code.

Theper idem allowance should, however, be included ingross income for Federal income tax purposeg. In computing net income, such part of the allowance as is expenued in connection withthe performance of official duties may be taken as adeduction under Section 23(a)(l)(A) of the Internal Revenue Code.
(Signed) E. L.McLarney Deputy Commiss$oner. 

### O-5408

FBP:sc///PAM 

### March7,1947

Honorable Charles 3. Moore House ofRepresentatives State Capitol Austin, Texas
Dear Mr. Moore: Reference ismade toyour letter of the 11thultimo, addressed tome concerning the taxability of the $10.00 per day.received by Members of the Legislature asper diem while attending the State Legislature, with special reference as towhether this $10.00 is subject to withholding tax,
You are advised that I submitted this question to the "egal Department of theBureau of Internal Revenue at Washington, D. C. for an opigion. I am enclosing you a copy of the decision dated March4, 

### 1947. You will note that this opinion holds yhat the $10.00 per diem isnot subject towithholding tax. You will also note in the lastparagraph of this opinion that the ruling holds that the $lO.OO:*sh~iUdbe included in gross income forb'ederalIncome Tax purposes and that deductions may be taken in connection withperformance of official duties asprovided in section 23 (a) (l)(A) of the Internal Revenue Code,
A copy of this letter and a copy of the ruling isbeing furnished toHonorable Price paniels, Attorney General ofTexas, and "onoPable George H, Sheppard, Comptroller of Public Accounts, that these officials may be guided accordingly. Very truly yours, (Signed)
Frank Scofield, Collector
Encl. 1 cc/Honorable Price Daniels Honorable George H. Sheppard c