Untitled Texas Attorney General Opinion ( 1941 )

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XAS
Honorable George H. Sheppard
Comptroller of Public Accounts
Austin, Texas
Dear Sir: Opinion No. O-3625
Re: Date of accrual and method of
computation under Article V,
House Bill No. 8, 47th Legisla,Lu,re,
of new occupation taxes, levied
upon persons or corporations own-
ing or operating certain utility
plants in incorporated towns or
cities of more than one thousand
inhabitants and less than two
thousand, five hundred inbabitan,ts,
and additional such taxes in in,-
corporated cities or towns of
higher population brackets; (b)
liability for such taxes of per-
sons or corporations owning or
operating utility compan,ies in
incorporated towns or cities of
exactly one thousand inbabitsnts.
Your letter of May 28, 1941, submits for ow opinion the following
questions which we quote therefrom:
“Article No. 5 of House Bill No. 8 of the Forty-seventh Legis-
lature amends Article 7060 Rawle C. S. 1925 by providing that the par-
ties or concerns shall make quarterly, on the first day of January,
April, July and October of each year, a report to the ComptrolLer
of Public Accounts, showing the gross amount received from such
business done in each incorporated city or town in this State in the
payment of charges for such gas, electric lights, electric power, or
water for the quarter next preceding; provides for a tax of .44% on
gross receipts of gas, water, light and power companies in towns of
more than 1,000 inhabitants and less than 2500 population; another
Honorable George H. Sheppard, page 2, O-3625
bracket on receipts from towns of over 2500 and less than 10,000
population; and, a bracket of over 10,000 population. This bill
became effective as of May 1, 1941.
“I will appreciate your opinion on the following questions:
“1. Will the tax on receipts from the towns in the smaller
bracket, which is new, for the months of May and June
be computed on 2/3 of the receipts for the quarter end-
ing March 31, 1941, (2/3 of the first quarter is used for
the reason that May and June would be 2/3 of the quar-
ter beginning April 1st).
“2. Tax on receipts from the towns in the two upper bra~c-
kets was paid for in tax payment for the quarter begin-
ning April 1st. Will the increased tax rate apply on
such receipts to the towns in the upper brackets for
the months of May and June 7
“‘3. Will the receipts from the operations in towns of an even
1,000 and 2500 population be taxable ? (You will note the
law reads as to tawns over 1,000 to 2500 and again over
2500 to lO,OOO),”
The act above cited P.evies an occupation tax, based upon gross re-
ceipts, upon the described public utility companies or plants located in
incorporated towns or cities of more than one thousand inhabitants and
less than two thousand fix~e hum.dred inhabitants, at the rate of -44 of one
per cent of its gross receipts for the preceding quarter. This tax is a
new levy as the tax levied by Article 7060, Revised Civil Statutes, prior
to its amen.dment by the act under consideration, did not levy a tax in
cities or towns containing Iess than two thousand five hundred inhabitants.
Additionally, the act of the 47th Legi.slature now before us, increased the
rate of taxation in incorporated towns or cities located in the same popu-
lation brackets as the amended act.
Thus, while strictly speaking, the amending act levied a new tax
and increased an existing tax, for all practical purposes and within the
contemplation of the legal principles hereinafter discussed, both phases
of this tax levy will be considered together. The only distinction which
may be pointed to is that the companies, now for the first time made
subject to a tax, would not have filed the preceding quarterly report of
Honorable George H. Sheppard, page 3, O-3625
gross receipts, upon which the tax is computed, while companies here-
tofore subject to a lower tax, would nevertheless have filed such quar-
terly report. But the controlling issue here is whether or not in each
instance, that is as to the new taxes as well as to the additional taxes,
such,taa levies become due and payable upon the effective date of the
act, i.e., May 1. 1941, or upon the first day of the first sqtire quarter
to succeed said effective date, namely, July 1, 1941. This question be-
ing determined, the mere method of computing and calculating the tax
will easily follow therefrom.
Upon this question it may be generally stated that the power of im-
posing an excise tax is not exhauSted when once exercised, but the tax
may be increased during the year if exigencies demand increased ex-
penditures. The tax may be increased at any time before-the expiration
of the period for the enforcement of the tax, although the tax as first
fixed has been paid. 37 C. J. 189 (Licenses, Section 40), Cooley on
“Taxation”, Vol. 4, Section 1715 (4th Ed.); Patton v. Brady, 184 U.S.
608, 46 L. Ed. 713, 22 S. Ct. 493; Williams v. City of Waynesboro~,
111 S.E. 47; American Tobacco Co. v. Danville, 99 S.E. 733; State
v. Galveston, H. & S. A. Ry. Co., 97 S.W. 71; Texas Company v.
Stephens et al., 100 Tex. 628, 103 S.W. 481.
But while the general principle of taxation announced by the author-
ities cited cannot be controverted it may be speciously argued that such
recognized principle has no applicatian to the instant act because same
specifically provides that the person or corporation subject thereto
“shall make quarterly, on the first day of January, April, July, and
October of each year, a report to the Comptroller”, showing the gross
amount received from such business for the quarter next preceding and
“at the time of making said report . . . shall pay to the Treasurer of
this State an occupation tax for the quarter beginning on said dates.”
. . . ; hence, the act not becoming effective on the first day of the cur-
rent quarter, i.e., April 1. 1941, it was intended by the Legislature that
no report and tax payments would be required until the first day of the
quarter next succeeding the effective date of the act, which would be
July 1, 1941.
Although this distinction of the instant act from the tax measures
involved in the cases supporting the above rule, may, at first view, ap-
pear valid, we submit that the decision of the Supreme Court of Texas in
the case of Texas Company v. Stephens, et al, supra, will upon close
analysis and comparison of the tax measure under consideration therein
- .
Honorable George H. Sheppard, page 4, O-3625
with the Instant act, convincingly refute and negate this distinction and
argument. Insofar as pertinent here, this decision involved the effec-
tive date of Chapter 148, page 358, Acts, Regular Session, 29th, Legis-
lature, generally called the “Kennedy Bill”, especially Se,ctions 9, 11,
12 and 13 thereof; levying certain occupational excises.
Section 9 of the cited Act, levying a tax on an annual basis of two
per cent of gross receipts, upon the busines,s of selling at,wholes,ale,
oil and other allied produ’cts, provided that said tax “shall be paid to
the State Treasurer quarterly, and every such person, agent, associa-
tion of persons or corporation so owning, controlling or managing such
business shall, on or before the 1st day of April, and quarterly there-
after, report to the Comptroller under oath of the ,president, treasurer,
superintendent or some other officer of said corporation or association
or some duly authorized agent thereof, the amount received by them from
such business in this State.”
I
Section 11 of the Act levied an occupational excise upon.the business
of leasing, renting, operating, hiring or charging mileage for the use of vari-
ous classes of cars, including tank cars , and provided-that the person or co’r-
poration so engaged ‘“shall on or before the 1st day of April and quarterly
thereafter, through its superintendent or other chief officer, or authorized
agent, file with the Comptroller of Public Accounts, a report, under oath,
showing the amount of gross receipts from such rentals or mileage or other
sources of revenue, for the preceding three months, Andyshall pay a tax of
two per cent on their gross receipts from all rentals or mileage or other
sources of revenue received from any railway companies or other persons
or from all other sources within this State.”
Sections 12 and 13 of the Act, levying, respectively, occupation taxes
upon the businesses of operating pipelines and produc,ing oil, are even more
comparable, as regards the accrual, by quarter, of the taxes levied, to the
instant act than are the preceding sections. Both Section 12 and 13 ‘were
s,ubstantialLy identical in this regard, providing that each person or c,orpora-
tion engaged in such business “shall on or before the 1st day of April of each
and every year, and quarterly thereafter, through its superintendent, presi-
dent, secretary or other authorized agent, fiLe with the Comptroller a report
under oath, showing the amount of’gross receipts . . . during the three months
next preceding; said . . . companies, at the time of filing the required report
shall pay to the Treasurer of the State of Texas” the stated tax.
Honorable George H. Sheppard, page 5, O-3625
This Act became effective April 17, 1905, on a date too late for the
companies effected thereby to report and pay the taxes levied, on the first
day of the quarter April 1, 1905, just as in the instant question, the effec-
tive date of the Act was May 1, 1941, which was a date subsequent to the
first day of the quarter beginning April 1, 1941, on which date a report was
required to be made and a tax paid. Under each of the acts now under com-
parison another report and tax payment was expressly required upon the
first day of July of the respective years. But with reference to the conten-
tion of the taxpayer that no tax was due and owing until said first day of
July, 1905, under these four sections of the “Kennedy Bill”, the Supreme
Court of Texas, in the cited case, ruled adversely as follows:
‘The contention that the Kennedy bill did not take effect
before July 1, 1905, so as to impose liability for the taxes
for such part of the preceding quarter as elapsed after
April 17th of that year cannot be sustained. The bill was
passed with the emergency clause and by the requisite vote
to put in force upon its passage and, having been approved
o,n April 17th. it went into effect at once as a law, Of course,
it is true, as contended, that the time when taxes became due
under it is to be ascertained from the intention manifested by
its provision. It fixes the first quarter as beginning April lst,
but, its passage through the legislature having been delayed
until that time had passed, it could not operate during the in-
terval from April 1st to April 17th. The intention was clearly
manifested, however, by its history and by the emergency
clause, that it should become effective as a revenue producing
measure as soon as it could be enacted, and there is nothing in
the facts stated to prevent that intention from controlling.“. ‘,
The instant measure, like the “Kennedy Bill,” was passed with the
emergency clause and by the requisite vote to make it effective immediately
upon its passage and approval; and, similarly, we think the intention was mani-
fest from the legislative history of this Act, and the social security program
which it was designed to relieve, instanter, and the contemporaneous temper
of the times, that the Legislature intended that the revenues expected to be de-
rived from this measure levying new and additional taxes, should begin to flow
into the State Treasury immediately upon the effective date of the act, towit,
May 1, 1941.
It is a corollary from this conclusion that the occupation taxes due
and owing from the subject companies on May 1, 1941, would be computed on
Honorable George H. Sheppard, page 6, O-3625
the basis of two-thirds of the gross receipts for the preceding quarter (the
quarter ending March 31, 1941), at the rate of taxation fixed in the Act, be-
cause only two-thirds of the current quarter remained after the Act became
effective (May and June). The utility companies located in incorporated
cities or towns of more than one thous.and inhabitants and less than two thou-
sand, five hundred inhabitants will be, it is true, for the first time required
to file a report of their gross receipts for the preceding quarter ending
March 31, 1941. But if our~conclusion is tenable that such companies may
be lawfully required to pay a new tax as of May 1, 1941, we can find no legal
obstacle to requiring that such report of gross receipts for the preceding
quarter be filed now, in order that the tax may be properly computed. We
think such result would necessarily follow from the principles and authori-
ties above discussed.
As regards the owners or operators of those utility plants in in-
corporated cities or towns of the higher population brackets, against whom
a higher tax has been levied, such tax will, of course, be computed on the
basis of the report of gross receipts for the preceding quarter (ending
March 31, 1941). which such persons or corporations have, presumpt.i.vely,
already filed.
Answering your third question, we are reluctantly but inescapably
constrained to advise you that incorporated cities or towns, containing ex-
actly one thousand inhabitants, no more and no less, do not fall within the
taxable population brackets fixed by ArticIe V, House Bill No. 8, 47th Legis-
lature, and consequently an individual, company, corporation or association
owning, operating, managing or controlIing any gas, electric light, e1ectri.c
power or water works, or wster and light plants, located within such incor-
porated town or city, would not be subject to the occupation, tax levi.ed there-
by.
TheAct provides that the described individual, company, corpora-
tion or association ‘“at the time of making said report for any such incorpor-
ated town or city of more than one thousand inhabitants and less than two
thousand, five hundred inhabitants, .according to the last Federal Census next
preceding the filing of said report, shall paydai the Treasurer of this State an
occupation tax,” etc. .r-- _
It will be noted that this first popu.lation bracket does not begin
with an incorporated city or town of one thousand inhabitants or more, but,
Honorable George H. Sheppard, page 7, O-3625
on the contrary, expressly refers to an incorporated city or town of more
than one thousand inhabitants. Therefore, from the plain English of the
matter. an incorporated city or town of one thousand inhabitants or less
would not be covered by the A,ct.
With reference to cities and towns of exactly two thousand,
five hundred inhabitants, embraced in your third question, we are advised
that although certain towns and cities exist having exactly two thousand,
five hundred inhabitants, none of such towns or cities are incorporated,
and hence do not fall within the purview of the statute here involved. Hence,
we would not at this time attempt to answer this phase of your inquiry.
Trusting the foregoing fully answers your inquiries, we are
Yours very truly
ATTORNEY GENERALOF TEXAS
BY
Pat M. Neff, Jr.
Assistant
FIRST ASSISTANT
ATTORNEY GENERAL
APPROVED
OPINION
t?!$za.
Chairman