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Honorable Robert S. Calvert Opinion
Comntroller of Public Accounts
Capitol Station RE: Whether a foreign
Austin, Texas co-operative mar-
keting association
incorporated in a
fo'reignstate is re-
uired to deposit
500 as required by
st
Article 12.03, Title
122A, Taxation-Gen-
eral, V.C.S., and if
a sum so paid can be
refunded by the Comp-
Dear Mr. Calvert: troller
By your recent letter, you request our opinion as to
whether Article 12.06, Title 122A, Taxation-General, Ver-
non's Civil Statutes (as amended by Acts 1969, 61st Leg.
Ch. 801, p. 2366), requires that $500.00 be deposited by a
foreign cooperative marketing association licensed'to trans-
act business in this State, and if so paid, doiyou have the
authority to refund the same?
Agricultural co-operative marketing associations are
governed by the provisions of Articles 5737-5750, inclu-
sive, Vernon's Civil Statutes, and foreign co-operative
marketing associations are permitted to transact business
in this State by the express provisions of Article 5763,
supra, which provides as follows:
"The provision6 of the general corporation
laws of this State, and all powers and rights'there-
under shall apply to associations organized here-
under extent when in conflict wlth the nrovisions
of this chapter. Provided, however, that an co-
operative marketing association incor*r
ora e
the laws of any other State may apply for and be
granted a permit to do business in this State end
pay the same filing fee as required of domestic
corporations oSganized for a similar purpose.
Provided. further. that such foreian coonerative
marketing associations shall not be required to have
a paid-up capital or sny portion of the capital paid-up
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. . .
Honorable Robert S. Calvert, page 2 (M- 579
in order to be entitled to such permit". (Rm-
phasis added.)
Article 5764, supra, dealing with marketing associa-
tions organized under Chapter 8, Title 93, Vernon's Civil
Statutes, requires an annual license fee of ten dollars,
a filing fee of ten dollars, and two dollars and fifty
cents for any amendments to their charter, and further
provides that such associations shall be exempt ,fromall
franchise or license taxes. Under Article 12.01 et seq,
Title 122a,~Taxation-General, a foreign corporation quali-
fying for business in Texas Is liable only for franchise
taxes in the same manner and on the same basis as a domes-
2;; corporation. 14 Tex.Jur.2d 761, Corporations, Sec.
To require a foreign marketing association to pay
franchise taxes when a domestic marketing association is
exempt from franchise tax would be a violation of our
Federal and State Constitutions. U. S. Constitution,
Fourteenth Amendment, Section I; Article VIII, Section
2, Texas Constitution. The foreign marketing association
which is the subject of your inquiry has apparently al-
ready obtained a permit to do business and otherwise com-
plied with all state regulations governing the trsnsac-
tion of business within the State. Under these facts,
the imposition of a franchise tax upon such foreign cor-
porations alone and exemption of all such domestic cor-
porations would be discriminatory and unconstitutional.
Southern R. Co. v. Green, 216 u.;S.400 (1909); 77 A.L.R.
1494; 14 Tex.Jur.2d 667, Corporations, Sec. 574.
From,the above statutory provisions, and our inter-
pretation thereof, a foreign co-operative marketing asso-
ciation whose charter and permit provisions meet the re-
quirements of Articles 5737-5764 need only show its
articles of incorporation in a foreign state, pay the
required fees as set forth in Article 5764, and secure
a permit from the Secretary of State in order to be
authorized to do business in Texas; subject only to the
provisions of Article 12.06, supra, if they are applicable.
Article 12.06 of said Title 122A, as amended, provides
as follows:
"All foreign corporations applying for a cer-
tificate of authority to do business, shall at the
time of filing its application deposit with the
Comptroller of Public Accounts the sum of Five
Hundred Dollars ($500) which sum shall be deposi-
ted in a trust fund to be held by the Comptroller
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. .
Honorable Robert Si Calvert, page 3 (M-576)
of Public Accounts during the time the foreign
corporation is engaged in doing business in this
State. This deposit shall insure a foreign cor-
poration's payment of all filing fees, filing
all franchise tax reports and payment of fran-
chise taxes, penalties and interest due this
State according to the provisions of this Chap-
ter. In the event a foreign corporation has
ceased doing business in Texas prior to the
forfeiture of the corporationts Certificate
of Authority, and can demonstrate that all
franchise tax reports, franchise taxes and
penalties have been filed and paid, such de-
posit or balance thereof, if any, shall be
returned by the Comptroller of Public Accounts
to the legal agent of such foreign corporation
in this State, designated in conformity with
Article 12.11 of this Chapter.
"Whenever a corporation's Certificate of
Authority to do business in this State be for-
feited as provided in this Chapter, the entire
amount of said deposit shall likewise be for-
feited.
"The forfeiture of said deposit shall not
bar the State's full recovery of the amount of
franchise tax due; however, upon proof by such
corporation of the actual amount of such fran-
chise taxes due, and upon the filing of all
delinquent tax reports, any amount of said
deposit in excess of such franchise tax, in-
cluding penalty and:interest, shall be refun-
ded."
The language of the statute clearly shows that the
condition of such deposit is the'payment of all fees
and/or franchise taxes to become due and owing under said
Chapter to the State by the foreign corporation seeking
authorization to do business in this State.
It seems logical that if the corporation seeking
admittance to this State is exempt from franchise taxes
by statute, or exempt from the payment of franchise taxes
by the proper statutory construction of the pertinent
statutes and the Federal and State Constitutions, and
that the necessary filing and license fees were paid at
the time of filing, that such corporation would not be
required to deposit the $500.00 as set forth in Section
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Honorable Robert S. Calvert, page 4 (M-576)
2 of Article 12.06, supra.
Having paid Five Hundred Dollars under protest, we are
of the opinion that~the reasoning set forth in the case of
Austin National Bank v. Sheppard, 123 Tex. 272, 71 S. W. 2d
242 (1934), constitutes sufficient basis for the Comptroller
to refund the Five Hundred Dollars under question. (See
page 246 of the case.)
In addition to the above authority, Article 1.1l.Aof
said Title 122A empowers the Comptroller to refund certain
taxes and licenses therein enumerated upon determination
that any person, firm or corporation has through mistake
of law or fact overpaid the amount due the State. This
office has heretofore in its Opinion No. M-140, dated
October 2, 1967, reiterated the reasoning set forth In
the Austin National Bank opinion.
In view of the foregoing and to the extent of any
conflict with this opinion, the holding in former Attor-
ney General Opinion O-6045 (1944) that such a kind of
agricultural marketing association as is under considera-
tion in this present opinion is not exempt from the
franchise tax is overruled. We have held (supra) that
Article 5764 should be given an interpretation which
would uphold rather than void it on the constitutional
grounds above considered.
SUMMARY
A foreign co-operative marketing
;;I;Elation, incorporated in a foreign
whose charter provisions meet the
requiiements of Articles 5737-5764, Ver-
non's Civil Statutes, is not required to
deposit the Five Hundred Dollars as set
forth in Article 12.06, Title 122A, Taxa-
tion-General, Vernon's Civil Statutes,
as a condition to secure a permit to do
business in Texas, and a sum so paid
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. ._-
Honorable Robert S. Calvert, page 5 (M-576)
under protest to acquire a permit to do
business in this State may be refunded
by the Corntroller. Attorney General
045 (1944) is overruled to
Opinion 0-if
the extent of any conflict with this
opinion.
neral of Texas
Prepared by Gordon C. Cass
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Acting Co-Chairman
Jim Broadhurst
Robert Davis
Sally Phillips
Ed Esquivel
~MEADE F. GRIFFIN
Staff Legal Assistsnt
ALF'RED WALKER
Executive Assistant
NOL4 WHITE
First Assistant
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