Honorable Robert S. Calvert OpInlon Ho. (C-328)
Comptroller of Public Accounts
Austin, Texas Re: Whether Article 10.03(3)
V.C.S. requires a supplier
to collect the tax on all
special. fuels delivered to
statutorily defined dealers
or users who are not bonded,
or whether it requires the
supplier to collect the tax
only on deliveries made to
dealers and users who are
acting in the capacity of
non-bonded dealers or non-
bonded users as classlfled
by Article 30.11(l), V.C.S.
Dear Mr. Calvert: and related questions.
We quote your letter requesting the opinion of this
office on the above captioned matter:
‘we desire the opinion of your office as to
the following questions lnv6lvlng the sales of
special fuels to *users’ as that term Is defined.
“‘User’, as defined by Article 10.02(8),
‘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 ape~clal
fuels into ~thls State in fuel supply tanks of
motor vehicles owned or operated by him. f
” *Supplier I, as defined by Article 10.02(6),
‘means any person who delivers special tie16 to
dealers or users (Including locations of the
supplier) for redelivery by them Into the fuel
supply tanks of motor vehicles.’
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Honorable Robert S. Culvert, Page 2 Oplnlon No. (C-328)
“Article 10.03(3), provides that, ‘Every
supplier shall collect the tax, at the rate
Imposed, on each gallon of special fuels de-
livered to nonrbonded dealers or users and shall
report and pay to this State the tax so
collected. . . .I
“Article 10.06, provides in part as follows:
‘Except In the case of tax-paid dellverles into
the fuel supply tanks of motor vehicles, It Is
unlawful to make bulk sales of special fuels
to any person who (1) iS not licensed as a
supplier, or (2) Is not licensed as a dealer
.or user of special Reels, or (3) does not
furnish a signed statement that none of the
special fuels purchased will be delivered by
him or permitted by him to be delivered Into
the fuel supply tanks, of motor .vehlcles. @
“Article 10.09, provides that, ‘Every
person defined herein as a stippller, dealer or
user shall secure from the Comptroller. the kind
sclass of permit required herein to act in
such capacities or to perform such functions.’
“Intrastate ‘users’ with whom we are coti-
cerned here are classified In Article 10.11(l)
as follows:
‘NonGonded Users are persons
whose purchaseoofclal fuels are
predominantly for delivery by them
Into the fuel supply tanks of motor
vehicles owned. or operated by them.
‘Bonded Users are persons whose
purchaEG?T ZiGETa fuels are not
predominantly for delivery by them
Into the fuel supply tanks of motor
vehicles owned or pperated by them. t
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Honorable Robert S. Calvert, Page 3 Opinion NO. (c-328)
"This office has before It two audits made from
the records
. of
._ bonded
_. suppliers
. of special fuels which
Show that 8816 auppllers have sold special fuels tax
free In large quantities to persons who were operating
In the capacity of bonded users, as classlfled above,
but such persons Were not licensed or dld not hold
permits as bonded'ussrs, which would have enabled them
to purchase special fuels tax free.
"In one case,, the supplier entered into an
arrangement with the user to consis the special fuels
l to him and, after the fuel was used, he collected the
tax from the user only on the fuel that said user was
presumed to have delivered into the fuel supply tanks
of his motor vehicles for use on the highway - which
was not supported by records which a user is required
to keep.
"In the other case, the supplldr merely sold
and delivered the special fuels tax free to a user
whom he thought was llcen,eed as a bonded user and
was reporting and paying the tax on the highway
use as a bonded user Is required to do by Article
10.13(4).
"Sinde Article 10.03(3), quoted above, places '
the collection of the tax by the supplier upon each
gallon of special fuels delivered to non-bonded users,
this office has construed the law to mean that the
supplier bust collect the tax on all deliveries made
to any person operating in the capacity of a non-
bonded user as classified by Article 10.11 - which, If
correctly oonstrue would require collection of the
tax on special fue 9 s dellvered to a non-bonded user
by consignment or otherwise.
"In these cases, the suppliers sold and delivered
special fuels to users who were operating In the capacity
of banded users as classlf$ed by Article 10.11, but who
were not licensed as bonded users, which made the sales
unlawful under the terms of Article 10.06, above cited.
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Honorable Robert S. Calvert, Page 4 Opinion No. (c-328)
"Our questions are therefore as follows: Does
Article 10.03(3),cited above, require a supplier to
collect the tax on all special fuels delivered to
statutorily defined dealers or users who are not
bonded, or does It require the sler to collect
the tax only on deliveries made to dealers and users
who are acting In the capacity of non-bonded de-
or non-bonded users as classified by Artlcle.10.11(1)
of the law?
"If you answer that said supplier Is required
to collect the tax only on deliveries made to users
acting In the capacity of non-bonded dealers and users
as classlfled by the said Article 10.11, then, will
making of bulk sales of, special fuels to persons acting
In the capacity of bonded dealers and users who are not
so licensed as bonded dealers or bonded users make the
suppller liable for collection and payment of the tax
to the State on such unlawful deliveries? Or, will
such supplier merely be liable to punishment under the
civil and criminal penalties of the law for such sales?"
Article 10.03(3)places a mandatory duty upon every
supplier to collect the tax on each gallon of specialfuels
delivered to non-bonded dealers or non-bonded users and to
report and pay to the State~the tax so collected. We are
therefore In accord with your construction that the supplier
must collect the tax whether the special fuels were delivered
to the non-bonded user or non-bonded dealer by consignment
or otherwise.
We are further of the opinion that the tax must be
collected even when said dealers and users were acting In
the capacity of bonded dealers and bonded users but had not
been properly licensed. This for the reason that said dealers
and users were In fact non-bonded since they were not properly
licensed.
Since' the suppliers in the cases under consideration
have falled‘to perform the mandatory duty of collection Imposed
by Article 10.03 and since the sales-were therefore unlawful
under Article 10.06, we think the suppliers are liable to the
State for the amount of taxes due at the time of said deliveries.
We are not here concerned -with any possible recourse they may
have against the parties to whom the unlawful deliveries were
made.
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Honorable Robert S. Calvert, Page 5 Oplnon No. (C-328)
Article 10.18 provides, In part, as follows:
"(1) If any person affected by this Chapter
shall fall or ref’use to comply with any provision
of this Chapter or shall violate the same, or shall
fall or refuse to comply with any rule and regulation
promulgated hereunder by the Comptroller or shall
violate the same, he shall forfeit to the State of
Wxas as a penalty the sum of not less that Twenty-
five Dollars ($25) nor more than Five Hundred Dollars
($500). . . .Provlded that In addition to such pen-
altles, If any supplier, dealer or user does not make
remittance for any taxes collected, or pay any taxes
due the State of Texas by sald supplier, dealer or
user, within the time prescribed by law said supplier,
dealer or user shall upon the first offense forfeit
two per cent (2s) of the amount due; and If said taxes
are not paid within ten (lO)days from the date of
notice in wt&tlng by the Comptroller that any taxes
have not been reported and paid, an additional eight
per cent (8%) shall be forfeited; provided that upon
each subsequent offense during any calendar year of
falling to remit taxes collected or due the State
within the tlme prescribed by law, such supplier,
dealer or user shall forfeit twenty-five per cent
(25%) of the amount due. All past due taxes and
penalties shall draw Interest at six per cent (6%)
per annum.
11. . . II
The suppliers are likewise subject to the penalties
provided by the provisions above quoted.
Article lo.23 provides penalties In those cases In which
the taxes have been collected but willfully not paid to the
State. Its provislons.are therefore not applicable here.
SUMMARY
-------
Every supplier must collect the tax on
all special fuels delivered to non-bonded dealers
or non-bonded users and pay to the State the tax
collected. The tax must be collected whether de-
livery was by consignment or otherwise and even In
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Honorable Robert 9. Calvept, Page 6 Opinion No. (C-328)
cases when said dealsrs and users were acting
In the capacity of bonded dealers and bonded
users but had not been properly lioensed.
Suppliers who fall to collect taxes due the State
are liable to the State therefor and are likewise
subject to the penalties Imposed by Artlole 10.18,
V.C.S.
Yours very truly, ,‘,
:.
WAOOONER CARR
Attorney Qeneral of Texas
APPROVED:
OPINIONCOMMITTEE
W. V. Qeppert, Chairman
Arthur Saridlin
Roy Johnson
J3 H. . Broadhur’st
APPROVED FOR,THEATTORNEY GENERAL
B;y: Roger Tyler