Untitled Texas Attorney General Opinion

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.’ -1564- -6.. , \ 1’ 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 -1565- 1 c ^. 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. -1566- .O . 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. -1567- c ‘ . l .~ , f 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 -. . 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