Court Opinion

ID: 4136173
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:10:39.44519+00
Date Added: 2024-06-11T13:12:17.422756
License: Public Domain

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 cor-
                            poration 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 corpora-
tion'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 Fifty-
sixth 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 fran-
          chise tax provided for in this Chapter when
          the same shall become due and payable under
          the provisions of this Chapter, shall there-
          upon 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 corpora-
         tion 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 corpora-
         tion the words, ‘right to do business for-
         feited' 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 fran-
chise taxes were the responslblllty of the office of the
Secretary of State. The Third Called Session of the Fifty-
sixth 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 exami-
         nation 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..." (Under-
         scoring added.)
          Likewise, 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 Secre-
         tar of State that any domestic corporation
         1"        t to do business has been previously
         forfeited by that officer, and which corpora-
         tion has failed and refused to have its right
         to do business revived pursuant to the pro-
         visions 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 busi-
         ness, and which corporation has no assets from
         which a judgment for the franchise tax, penal-
         ties, 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." (Underscoring
          added..
                )
          Article 12.22, the last paragraph of the Act
provides as follows:
                   "When administration of the fran-
          chise 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 ad-
minister 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 fran-
            chise tax report and is delinquent in the pay-
            ment of franchise taxes.
                               Very truly yours,
                               WILL WILSON
                               Attorney General of Texas

                                      Au---      /a-.
                               BY
                                    Marvin H. Brown, Jr.
MHB,Jr:si                           Assistant

APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Robert A. Rowland
C. Dean Davis
RichardsWells
Houghton Brownlee, Jr.
REVIEWED FOR THE ATTORNEY GENERAL
By:   Leonard Passmore