April 6, 1971
Honorable Robert S. Cslvert Opinion No. M-829
comptroller of Public Accounts
State Finance Building Re: Construction of Article
Austin, Texas 12.02(l)(b)(l), Texas
Franchlw Tax Act., con-
cerning inclueion of
certain eales under “grose
receipts from buelnear done
in Texas,” and effeot upon
Attorney Oeneralta Opinion
Dear Mr. Calvert: ~~-1503 (1962).
In’ our recent opinion ,request you ask if Article 12.02
(l)(b)(lj, Title 122A,, Taxation-General, Vernon’s Civil Statutes,
aa amended In 1969, changes the result .reached In Attorney Oeneral
Opinion NO. W-1503 (1962). In that opinion the question wait
whether kecelpts from sales of .petroleum products rafined in Texas
and sold and shipped to out-of-state purchesers, with. passage of
Title F.O.B. the loading points at Corpus Christ1 and Port Isabel,
,were receipts from business done in Texas. The conclusion was
reached. that such reoeipts were not receipt8 from buelneee done In
Texae under this Article 12.02 which then read, in part, a8 followe:
“For the purpose of ihis Article, the term
‘gross receipts from Its business done in
Texas” shal~l Include:
“(e) Seles of tangible personal property
located within Texas at the time of the
receipt of or’ approprlatlon to the orders where
shipment is made to points within this State,”
Article 12.02, es amended in 1969, reads In Its pertinent
part a8 follows:
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Honorable Roljert 8. Celvert, page 2 (n- 829)
“(1) (‘e) Each corporation liable for payment
of 8 frenchlee tax shell detennlne the portion
of its entire texeble capital taxable by the
State of Texas by multiplying same by en
sllocstion percentege which shell be thee percentage
reletlonshlp which the gross receipt8 from
its bualness done In Texas bear to the total gross
raoelpta of the corporstlon from Its entire
business.
“(b) For the purpose of this Article, the
term ‘gross receipts from Its business done In
Texas’ shell Include:
“(I) sales of tanglb~le personal property
when the property Is delivered or shipped
to e purchaser within this State, regardless of
the F.O.B. point or other conditions of
the sale, reduced by the deduction, If
applicable, allowable under,Subsectlon (c)
of this Section (1); . . .I’.
Article 12.02(1)(b)(I) now provides that receipts from
sales of tangible personal property ere Included where dellve
IS made to e purchseer within this state regardless of d
it Th ti h I h th d 11 h been mMle 01
meum ~r%%s”~hl~~~d i.z.i. Tied&‘;%t’to purchasers
outside 6f Texas. It IS the opinion of this office thet such
products shipped F.O.B. shipping point do not constitute dellveq
to a purchaser within this state under Article ‘12.02(l)(b)(l),
as the provision clearly contemplates that the F.O.B. point
shall not control and that the point where the purcheser actually
takes poasesslon of the property shall be the place of dellverx
t’or purposes of this statute.
It should be here noted thet the reesonilig of Opinion No.
W-1503, supra, no longer applies to Article 12.02, since that
statute as emended clearly covers both lntra end Interstate
business to the extent thereln provided. Sales of tangible
personal property delivered in Texas are considered business
done In Texas even though such sales ere made 1~ Interstate
commerce. Therefore, It Is the point of actual delivery rather
than the point of origin that controls the question of whether
the receipts from sales of tenglble personal property are con-
sidered receipts from business done in Texas.
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Honoreble Robert S. Calvert, page 3 (M-829)
SUMMARY
Petroleum products ahlpped to out of state purchasers
from polnta within this State with F.O.B. loading points
within Texes, do not constitute receipts from business
done In Tejtas under Article 12.92, Title 122A, Taxatlon-
General, V.C.S. because under the amended statute the
physical possession, which Is the controlling factor, occurs
outside Texas. However, ~seles of such tangible pro;erty
delivered to Texas ere considered buslnaea done In Texes
even though such sales ere made in Interstate dommerce.
Therefore, the reaaonln or basis of Attorney Oeneral
Opinion No. ww-1503 (1922) 1a no longer valid or applicable
although the result therein reached Is not changed.
Yours very truly,
CRAWFORD C. MARTIN
Attorney General
ma> First Assletent
Prepared by Wardlow Lane
Assistant Attorney General
APPROVED:
OPINIONCOMMITTEE
Kerns Teylor, Chairman
W. E. Allen, Co-Chalrmsn
S. J. Aronaon
Ivan Wllllama
John Reese
James Mabry
KEADEF. GRIFFIN
Staff Lagal Assistant
ALFRED WALKER
Executive Assistant
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