Court Opinion

ID: 4137434
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:24:50.356936+00
Date Added: 2024-06-11T14:36:09.828319
License: Public Domain

AerSTlN        11.   Tl!txTAS
PRICE   DANIEL
ATTORNEY GENERA,.
                                                 November           81 1951

          Hon. John Ben Shepperd                              Opinion        No.   V-1339
          secretary    of state
          Austin,   Texas                                     Re:     Liability      of a dissolved      for-
                                                                      eign corporation         which applied
                                                                      for surrender         of its Texas
                                                                      permit      after  the effective       date
                                                                      of H.B.      285, Acts    52nd Leg.,
                                                                       195 1, for additional        franchise
                                                                      taxes     levied   under    this bill,
          Dear      Mr.   Shepperd:                                   and related       question.

                            Your       letter    requesting         our      opinion    relative      to the above
          captioned       matter       reads     as follows:

                            “Article     7084, V.C.S.    of Texas,    provides       that
                    “every    corporation     heretofore     or hereafter     chartered
                    or authorized       to do business     in Texas    D * 9 shall,     on br
                    before    May first    of each year,     pay in advance       to the
                    Secretary      of State a franchise      tax for the year       follow-
                    ing, ~ ~ ~ ’

                              “‘We have a foreign             corporation          that paid the
                    franchise       tax fm? the period            beginning         May     1, 1951, at
                    the rate then in effect.              The Fifty-second               Legislature
                    amended        Article      7084 by increasing              the normal          rate
                    from     $1.00      to $1.25       per $1,000       of taxable          capital,
                    which     became        effective     September          1, 1951.         Your      of-
                    fice has heretofore             ruled     in opinion        no. V-1264         that
                    allcorporations             wouId be required             to pay additional
                    tax at the rate of 25 cents                for the period           September           1,
                     1951 to April         30, 1952, both dates            inclusive.           The for-
                    eign corporation            submitted        an application           to surrender
                    its permit        a few days after           September           1 whereupon           this
                    office    made demand             for the additional            franchise        tax
                    computed         in accordance         with the formula              outlined       in
                    Opinion      V-1264.         The application          for surrender             is be-
                    ing held in suspense               pending     settlement.           In this con-
                    nection      Article      7093, amended           Acts      1949, 51st Legis-
                    lature,     p0 975, ch. 536, 89, provides                    that a foreign          cor-
                    poration      may surrender             its permit         “provided,        however,
                    that prior        to the surrender           of such permit            such corpo-
                     rations     shall have paid in full all franchise                       taxes     and
                    penalties       owedby        suchcorporation            to the State of Texas.’
Hon.   John   Ben     Shepperd,        Page     2 (V-1339)

                 “The     corporation      is disclaiming         additional     tax
       liability    by reason       of having     legally    dissolved       in the
       State of domicile          on August      24, 1951, which         is prior
       to the effective         date of H. B. 285, 52nd Legislature.
       It is cited      there    was no corporate          entity    on Septem-
       ber     1, 1951 against        which   franchise      tax could accrue.
       A photostatic         copy of the purported           Certificate       of Dis-
       solution     issued      by the secretary         of state of the State
       of De1awar.e         has been     submitted      to us as evidence.           The
       same      question      is involved     where     a foreign      corporation
       dissolves       in its home      state    prior    to May 1 of any year
       and submits          an application      to surrender         its permit      to
       do business         in Texas     after   May     1.

                “In    the first      situation,   would   the corporation                 owe
       additional       franchise        tax accruing    under H. B. 285?

                “In the second    situation,    would    any franchise     tax
       accrue     against  the dissolved     foreign     corporation    on
       May    1, if such corporation’s.      application      for a surren-
       der of its permit      was received      after    May    l?”

              Subdivision      (1) of Article    7084, V.C.S.,                   before  its a-
mendment    by House      Bill   285, Acts    52nd Leg.,  R.S.                   1951, ch. 402,
p. 695, read as follows:

                “(1)     Except     as herein         provided,         every     domestic
       and foreign        corporation         heretofore          or hereafter         char-
       tered   or authorized           to do business            in Texas,        or doing
       business       in Texas,       shall,    on or before            May first       of
       each year,        pay in advance           to the Secretary             of State a
       franchise       tax for the year           following,        based      upon that
       proportion        of the outstanding             capital     stock,      surplus
       and undivided         profits,      plus the amount              of outstanding
       bonds,     notes and debentures                (outstanding          bonds,     notes
       and debentures           shall    include       all written        evidences        of
       indebtedness         which bear         a maturity          date of one (1)
       year   or more        from     date of issue,            and all such instru-
       ments     which     bear    a maturity          date of less          than one (1)
       year   from      date of issue         which       represent        indebtedness
       which    has remained            continuously           outstanding         for a
       period     of one (1) year          or more         from     date of inception
       whether       or not said indebtedness                  has been renewed              or
       extended       by the issuance           of other        evidences        of the
       same     indebtedness          to the same           or other       parties,     and
       it is further       provided       that this term            shall not include
       instruments         which have been previously                      classified      as
       surplus),       as the gross         receipts        from     its business         done
       in Texas       bears     to the total gross             receipts       of the cor-
Han;   John   Ben    Shepperd,        Page    3 (V-1339)

        poration    from     its entire     business,     which     tax shall be
        computed      on the basis       of One Dollar        ($1)   per One
        Thousand      Dollars     ($1,000)      or fractional      part thereof,
        provided,     that such tax shall not be less than Twenty
        Dollars    ($20)    in the case of any corporation,               includ-
        ing those without        capital     stock,    and provided      further
        that the tax shall       in no case be computed              on a sum
        less   than the assessed         value,     for State ad valorem
        tax purposes,       of the property         owned   by the corpora-
        tion in this State.        Capital     stock    as applied     to corpo-
        rations    without     capital    stock shall mean         the net as-
        sets.”

               The above           section  as amended     by House   Bill 285 reads
exactly   as it did before           the amendment,    with the exception    that the
$1 .OO rate was raised             to $1.25  and the minimum      tax was raised
from    $20 to $25.

                 House     Bill     285 expressly        provides      that it shall take
effect   and be in force          from     and after    the first     day of September,
A.D.   1951,     It is settled        law in this State that a legislative              enact-
ment speaks        from    the     date that it becomes          effective.      You will
note that Article        7084,      V.C.S.,    purports     to levy a franchise          tax on-
ly against     corporations,           both domestic       and foreign.        As the corpo-
ration   in question      was      dissolved     in the state of its domicile             on Au-
gust 24, 1951, it follows              that it was not a corporation,            either    do-
mestic    or foreign,       on    September       1, 1951, the effective          date of the
act.   You are therefore             advised    that the dissolved          cof poration      in
question     does not owe          any additional      franchise       tax levied     under
House    Bill   285.

                 For   the same     reason   you are advised   that if a foreign
corporation      is dissolved     in the state of its domicile    prior   to May 1,
such corporation         would  not owe a franchise     tax in Texas    for the
following    year    beginning   on May 1, even though the corporation’s
application     for a surrender       of its permit  was received     in the Sec-
retary    of State’s    office after    May   1.

                                       SUMMARY

                If a foreign    corporatio,n     was dissolved       in the
        state of its domicile       prior    to September       1, 195 1, such
        corporation     does not, owe any additional           franchise      tax
        levied    under House      Bill 285, Acts      52nd L,eg,,    R.S. 1951,
        ch. 402, p, 695, even though its application               for surren-
        der of permit      is received      in the Secretary       of State’s
        office   after  September       1, 1951     If a foreign     corpora-
        tion is dissolved      in the state     of its domicile      prior    to
Hon.   John    Ben   Shepperd,   Page    4 (V-1339)

        May 1, such corporation         will  not owe a franchise         tax
        in Texas    for the following     year    beginning      May   1, even
        though   its application    for surrender         of permit   is re-
        ceived   in the Secretary      of State’s    office   after  May    1.

                                                       Yours      very   truly,

                                                        PRICE       DANIEL
                                                       Attorney      General

APPROVED:
                                                           W.     V. Geppert
Everett     Hutchinson                                            Assistant
Executive     Assistant

Charles    D. Mathews
First   Assistant

WVG/mwb