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EY GENERAL
Honorable Robert S. Calvert Opinion Ro. (c-346)
Comptrollerof Pub1,icAccounts
Capitol Station Re: Whether under stated facts
Austin, Texas a "lessor" of motor vehi-
cles propelled with special
fuels which are leased to
and operated entirely by the
"lessee" or his drivers in
interstate commerce may be
construed to be the "user"
of the special fuels de-
livered to such vehicles or
imported in the fuel supply
tanks of the motor vehicles
and consumed on the Texas
Dear Mr. Calve&: highways.
We quote the following excerpts from your letter requesting
the opinion of this office on the above captionedmatter:
"A number of truck leasing companies are engaged
in the business of leasing commercial trucks and trailers
owned by said companies to carriers for use in interstate
commerce. The truck owner or 'lessor' enters into con-
tract with the 'lessee'under which said lessor agrees to
furnish everythingnecessary to the proper operation and
maintenance of the vehicles including the special fuels
consumed in the operation of said motor vehicles. Under
the agreement the lessor delivers the fuel to the vehi-
cles from various bulk storages maintained by said lessor
whenever possible and agrees to reimburse the lessee for
the cost of any special fuels necessary for the lessee to
purchase elsewhere.
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. .
Honorable Robert S. Calvert,,Page2 Opinion No. (C-346)
"The lessors of such vehicles urge that the
furnishingof special fuels from lessor’s storage to
leased vehicles owned by the lessor or reimbursement
to the lessee fom cost of fuel purchased else-
where qualifies the lessor as user of the fuel as the
term )userl is defined and that said lessors should
be authorized to furnish bond and secure user-import
permits to report and pay taxes accruing on special
fuels used in such leased vehicles and to claim refund
of the tax paid on special fuels purchased in Texas and
used in such vehicles in other States. In fact, some
of the lessors acting under the above impressionhave
filed applicationsand secured user-importpermits
under which they have filed refund claims for tax paid
special fuels used in such leased vehicles in other
States.
“For ready:reference, it appears that it will
be necessary to examine the following provisions of
the special fuels tax law - Chapter 10, Title 122A,
Taxation-GeneralI
'Article 10.03(l) imposes the tax
upon the use of special fuels for the
propulsion of motor vehicles upon the
public highways of this State.
‘Article 10.03(3) requires the
supplier to collect the tax on all
special fuels delivered to non-bonded
users - who are classifiedby Article
10.11 (1f as persons who purchase special
fuels predominantlyfor delivery into
fuel supply tanks of motor vehicles owned
or operated by said user.)
'Article10.03(5) requires every user
to report and pay taxes to the State on all
special fuels imported in fuel supply tanks
or motor vehicles owned or operated by said
users (who are classifiedas bonded user-
importers by Article 10.11(l).)
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Honorable Robert S. Calvert, Page 3 Opinion No. (C- 346)
tArticle10.02(8) defines 'user' as
follows:
“(8) 'user' means and includes
every person who delivers any special
fuels into the fuel supply tanks of
motor vehicles owned or operated by
him. 'User* also means any person
who imports special fuels into this
State in the fuel supply tanks of
motor vehicles owned or operated by
him."
'Article 10.07. Tax Liability on Leased
Motor Vehicles. "Any user who as lessee, in
furtheranceof his business, enters into a
lease or contract or other arrangementwith
another person for the operation of a motor
vehicle, the operation of which will create
a liability for the tax herein imposed, shall
be deem to be the operator of said motor
vehicle and shall report and pay the tax
accruing by reason of the use under such lease
or contract. This provision shall not be
construed as relieving any lessor or person
acting as a user from the payment of the tax
herein imposed in cases where the lessee is
not qualified as a licensed and bonded user
as required herein. Nothing herein shall be
construed as requiring the filing of more than
one (1) report covering a given special fuel
use operation or as,requiringthe payment of
the tax herein imposed more than once on the
same special fuels." (Note: See Comptroller
Rule and Regulation No. VII, in reference to
Article 10.07 attached.)
'Article 10.08. Optional Computationof
Tax. "In the event the tax herein imposed on
special fuels imported into this State in the
fuel supply.tanksof motor vehicles. . .can be
more accurately determined on a mileage basis
(that is by determiningand using the total
number of miles traveled and the total gallons
of fuel consumed), or in case it is more
practicableto so determine the tax, the Comp-
troller is hereby authorized to approve and
adopt such basis." (Note: the mileage basis-
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Honorable Robert S. Calvert, Page 4 Opinion No. (C-346)
average miles per gallons - was necessarily
adopted as the most accurate method of computing
the tax due or refundable on s ecial fuels used
in interstatevehicular travelP .
'Article 10.14 provides that, '. . .any
licensed user who shall have paid said tax
upon any fuel which has been used by such user
for any purpose other than propelling a motor
vehicle upon the public highways, may file
claim for a refund of the tax or taxes so
paid. . . .'
1. . .,
"The Comptroller'sinterpretationof the law under
discussion is set out in Rule and Regulation No, VII,
attached hereto. The ruling did not take into con-
siderationthe claims now'advancedby the lessors that
they would deliver most of the special fuels consumed
in said leased vehicles from their own storage facilities
or would contract with retail dealers to make such de-
liveries for the lessor's account into the fuel supply
tanks of the leased motor vehicles which are owned by
said lessors - though operated by the lessees.
11
. . .II
Ruling No. VII is headed as follows:
"Construingthe Law as it applies to:
TAX LIABILITY OF A LESSEE ON
SPECIAL FUELS IMPORTEB AND USED ON
THE HIGHWAY IN LEASED MOTOR VEHICLES."
This ruling was adopted September 1, 1961 and filed with
the Secretary of State November 15, 1961.
In quoting the statutory definition of 'user"'as it applies
to user-importers- the ruling underscored "or operated" in the
phrase "motor vehicles owned or operated. . *'
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Honorable Robert S. Calvert, Page 5 Opinion No. (C- 346)
We quote the following excerpt from the ruling:
"Therefore,a person who actually imports the
special fuels in motor vehicles operated exclusively
by himself, or by his employee drivers, becomes the
'user' of the fuel, as user is defined; and is re-
quired by Article 10.03(5), above cited, to report
and pay the tax on each gallon of special fuels so
imported and used or consumed in the operation of
such motor vehicles upon the Texas Highways, and
regardless of whether such motor vehicles are
owned by him or are leased from another person.
"The fact that a lessor of motor vehicles enters
into a private contract or agreement with the lessee
to pay for or furnish the special fuels used in the
operation of the leased motor vehicles, or to reim-
burse said lessee for the cost of such fuel, would
not change or alter the status of the lessee as the
statutory luser* of the fuel consumed in the operation
of said leased motor vehicles; nor could such agree-
ment be construed as constitutingor qualifying the
lessor as the user of special fuels consumed in motor
vehicles which said lessor does not operate or direct
the course of operationsin any manner.
"However,the Legislatureobviously recognized
that there are cases where a lessor contracts or
agrees to lease to a lessee motor vehicles to be
operated by the lessor, or by drivers furnished
by the lessor, in which the lessor will purchase
or furnish the special fuels used but will operate
such leased motor vehicles entirely under the
direction and control of the lessee, which would
present a legal question as to whether the lessor
operating his leased motor vehicles, or the lessee
directing and controllingthe course of operations,
or both, would come within the statutory definition
of aluserl. The Legislatureresolved the question
by fixing the legal incidence of the tax liability
and its payment to the State upon the lessee of
such motor vehicles by the enactment of Article
10.07 which reads as follows:
11
. . .rQuoted, supra, at page 37
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Honorable Robert S. Calvert, Page 6 Opinion No. (c-346)
"The above article does,not relieve a 'lessee'from
securing the bonded user-dmporpermit required to import
and use special fuels in leased vehicles operated by him
or under his direction and control, nor does it relieve
him from liability for the tax imposed, or of the penalties
or impoundmentprescribed for operating without a permit.
But if a 'lessor'acts as .auser of special fuels imported
in vehicles leased~a~e%~v oneratina said vehicles
for and under the direction of such-lessee,he must make
certain that said lessee is licensed as a user-importer
to be relieved of liability for the tax. The use tax is
secured by a preferred lien upon each vehicle in which the
taxable fuel is used - regardless of ownership of the
vehicle. Johnson-Burnhamv. State 95 S.W.2d 144."
You have submitted three questions for our consideration.
The first of which reads as follows:
"Where the owner and lessor of motor vehicles
leased to and operated by interstatecarriers will
furnish and deliver into the fuel supply tanks of
such motor vehicles most of the special fuels con-
sumed therein from storage facilities of the lessor
or from dealer-stationsunder contract to make such
delivers for the account of the lessor, then, in
such cases, may the lessor be construed to be the
luser' of such specialfuelsas the term 'user' is
defined, and thereby be licensed as a user and user-
importer liable for the tax due and authorized to
file claims for refund when refunds are due?"
We have concluded that under the submitted facts the lessor
is a "user" within the meaning of the Special F'uelsTax Iaw.
Article 10.02(S) makes ownership as well as operation a criterion
of a "user".'Article~lO.OY;after declaring that a tax liability
on leased motor vehicles may attach to a lessee user under a
contract, expressly states that thl.sprovision of the statute
is not to be conr&i%+ued
aw-relieing azSylessor or~person~acting
as a user from the payment of the tax imposed in cases where
the lessee is not qualified as a licensed and bonded user.
Under the facts stated to us, the lessee is not qualified as a
licensed and bonded user. Therefore, necessarily the burden
of reporting and paying the tax must fall upon the lessor who
is also entitled to make applicationsfor refunds if any.
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Honorable Robert S. Calvert, Page 7 Opinion No. (C- 346)
Article 10.03(5) contains the following provision:
"Every user shall report and pay to this State
the t&x,.&t the rate imposed, on each gallon of
special fuels delivered by him into the fuel supply
tanks of motor vehicles unless said tax has been
paid to a licensed supplier."
The lessor in the instant case delivers most of the special fuels
involved into the leased vehicles from its own storage facilities.
In this instances the tax has been paid to the supplier. When
delivery is not so ma&the lessor controls and directs the supply
of fuel by written agreementswith retail suppliers,both within
and without the state, and pays the taxes due. With re ard to
special fuels imported into this state, Article 10.03(5e;desig-
nates ownership or, in the alternative,operation as a criterion
of texability.
As you have pointed out, Article 10.03(l) imposes a tax
upon the use of special fuels for the propulsion of motor
vehicles upon the public highways of this State. We think that
the lessor in the case under considerationis, in fact, engaged
in a business which in large part, is dependent upon and directly
connected with the use of special fuels for the propulsion of
motor vehicles upon the public highways of,this State. We think
that said fuels, which are owned by the lessor, are used by him
in his business for the taxable purpose of propellingmotor
vehicles upon the highways of this State ragardless of the fact
that a third person,,the lessee, furnishes the drivers of said
vehicles and has no interest in the operation of the lessorqs
business.
Since we have determined that the lessor is a "user" within
the meaning of the Special Fuels Tax Law, he may file claim for
refunds under the provision of Article 10.14 in those instances
in which the special fuels have been used for propelling the
motor vehicles upon public highways other than those of this
State. The exhibits you have furnished. us show that claims for
such refunds are based upon trip reports, state line crossing
reports, delivery receipts for ,fuelreceived from lessor or his
appointed agent or similar documents or declarations. One of
the foms furnished us constitutesa recap of miles traveled
and gallons of fuel purchased, by state, for each truck by
month.
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Honorable Robert S. Calvert, Page 8 Opinion No. (C-36)
Since we have concluded that the lessor is a "user"
within the meaning of the Special Fuels Tax Law, he may be
licensed as a non-bondeduser and accorded a bonded user
import permit. We do not reach your second two questions
which were predicatedupon a negative answer to your
first one.
SUMMARY
-e--m--
Under stated facts, a lessor $f motor vehicles
propelled with special fuels is a user" within the
meaning of the Special Rae18 Tax Law and may be
licensed as a non-bondeduser and bonded user-im-
porter even though the leased motor vehicles are
operated entirely by the lessee or his drivers.
The lessor in question is liable for all special
fuels taxes and is authorized to file claim for
refunds when refunds are due.
Yours very truly,
WAGGONER CARR
Attorney General of Texas
MMcGP:sjl
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Arthur Sandlin
Cecil C. Rotsch
Roy Johnson
Robert Lemens
APPROVED FOR THE ATTORHEY GENERAL
By: Roger Tyler
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