E
OF XAS
L?aSrnN ‘11, TEXAS
June 13, 1960
Honorable Robert S. Calvert Opinion No. W-845
Comptroller of Public Accounts
Capitol Building Re: Questions concerning the
Austin, Texas permit provisions of the
Soeclal Fuels Tax Law.
Art. 10.11(l) chapter 10,
Ii. B. 11, 3rd C. S. 56th
Leg.., as it pertains to
Dear Mr. Calvert: “User Permits"
.You have requested an opinion on two questlona con-
cerning the Special Fuels Tax Law;(Art. 10.11(l) Chapter 10,
Ii. B. 11, 3rd C. S. 56th Leg.). ‘iYour first question is
whether a “user” who maintains a fuel storage In Texas and
purchases special fuels in bulk, quantities predominantly for
delivery into the fuel .supply tanks of hi8 motor vehicles,
and who also operates a ~number of the motor vehicles in
interstate commerce, nece.ssitatlng the importation of special
fuels in the fuel supply tanks of such vehicles, is required
to obtain a non-bonded user permit as well as a bonded user
import permit.
Answering this question requires a brief examlna-
tlon of the purpose and scope of the Special Fuels Tax Act.
Article 10.03 of the Act Imposes a tax upon the use of spec-
ial fuels for the propulsion of motor vehicles upon the
public highways of this State. Revisions of the Act enacted
by the Third Called Session of the 56th Legislature were de-
signed to remove the collection of the tax from the service
station level to the wholesale supply level. Ninety per cent
or more of the special fuels sold in Texas are used for non-
highway purposes. Since the tax Is laid only on fuels uSed
for highway purposes, the collection system Is aimed at re-
ducing to a minimum the amount q tax refunding. This is
accomplished through a System of permit controls. This system:
operates as follows: A wholesale supplier Is required
(1) to collect the tax on all deliveries to licensed non-
bonded retail dealers and bulk user8 (such as truck and bus
lines) whose purchasers are predominantly for delivery into,
the fuel supply tanks of motor vehicles; (2) to sell tax free
to licensed and bonded retail dealers and bulk users whose
purchases are predominantly for non-highway use, and who are
required to pay taxes directly to the State only on the fuel
Honorable Robert S. Calvert, page 2 Opinion No. W-845
sold and/or delivered into fuel supply tanks of motor
vehicles; and (3) to sell tax free to exclusive non-highway
consumers who furnish a signed statement that none of the
special fuels so purchased will be delivered into fuel tanks
of motor vehicles.
”User” , as contemplated by the Act, means every
person who delivers any special fuels into the supply tanks
of motor vehicles owned or operated by him, and any person
who imports special fuels into this State in the fuel sup-
ply tanks of motor vehicles owned or operated by him.
Article 10.11(l) provides, in so far as pertinent:
“Upon approval of an application and approval
of bond if a bond is required, the Comptroller
shall Issue to the applicant a permit authorizing
him to engage in the kind of business or other
operations or to perform the functions set out in
and authorized by the class of permit so issued . . .
Such permit shall be of the kind and classifi-
cations as set out herein below:
. . . .
“NON-BONDED
USER PERMITS.
‘Authorizing persons whose purchases of special
fuels are predominantly for delivery by them into
the fuel supply tanks of motor vehicles owned or
operated by them to act as users.
”RONDEDUSERPERMITS.
“Authorizing persons whose purchases of special
fuels are not predominantly for delivery by them into
the fuel supply tanks of motor vehicles owned or op-
erated by them to act as users.
“BONDEDUSER IMPORTPERMITS.
“Authorizing persons who import special fuels
into this State in the fuel tanks of; motor vehicles
owned or operated by them to act as users.”
A wholesale suppli;er may sell only to those holding
permits as bonded or non-bonded users or dealers. He is re-
quired by Article 10.03(3) to collect the tax on each gallon
of special fuels dellvered to non-bonded users. No provision
of the law requires or authorizes the supplier to collect the
Honorable Robert S. Calvert, Page 3 Opinion No. WW-845
tax from any bonded user, or any person operating only in the
capacity of a ,bonded user.
A bonded user import permit authorizes the holder
to import special fuels in the fuel supply tanks of his motor
vehicles. Article 10.03(5) requires him to report and pay
the tax to the State on each gallon so Imported and con-
sumed in the operation of, the vehicles upon the Texas high-
ways. However, Article 10.13(5) appears to limit the
reporting required to be made by the user-importer to special
fuels used In interstate vehicles only, and not -that used
in vehicles operated entirely In intrastate commerce.
Article 10.11(l) authorizes a supplier to operate
aa a dealer or user without securing a separate permit, and
authorizes a licensed dealer to operate as a user without
obtaining a separate permit. No comparable provision author-
izes a bonded user-importer to., act a8 a non-bonded user with-
out obtaining a separate Permit.
For the foregoing reasons, It is ‘cle,ar that If a
user is maintaining storage tanks in Texas and purchasing
special fuels from suppliers In bulk quantities predominantly
for delivery Into fuel supply tanks of his motor vehicles
(thereby qualifying him as a non-bonded user), and ,ls also
operating a number of motor vehicles in interstate commerce
(which requires him to secure a bonded user-import permit),
such user is required to obtain both a non-bonded user permit
and a bonded user import permit.
Your next question concerns the provisions of
Article 10.08, which provides as follows:
“OPTIONALCOMPHTATION
OF TAX.
“In the event the tax herein imposed on special
fuels imported into this State in the fuel supply
tanks of motor vehicles and the tax on”:special
fuels used In mototi vehicles iowned or’%perated by
licensed supplier or other persons acting as users
can be more accurately determined on a mileage
basis (that IS by determining and using the total
number of miles traveled and the total gallons of
fuel~consumsd), or In ease It is more practicable
to so determine the tax, the Comptroller is hereby
authorized to approve and adopt such basis.”
Honorable Robert S. Calvert, ,Page 4 Opinion No. WW-845
In reference to the foregoing provision, you ad-
vise:
“The Comptroller has construed the above Article
10.08 to be, and clearly Intended by the
Legislature to be, an exception to Article 10.03-(5)
providing that the tax shall be paid to the State
on each gallon delivered by a user into the fuel
supply tanks of motor vehicles, and to Article 10.14-
(3) penalizing the filing of a claim for tax refund
on any special fuels delivered into fuel supply
tanks of motor vehicles. And that upon adoption
by the Comptroller of the mileage basis authorized
in Article 10.08 for determining the amount of tax
due Texas on special fuels delivered into motor
vehicles in Texas and thereafter used partly on the
Texas hlghwa s and partly In other States, the said
Article 10.0 ii will supersede and control over the
other Articles cited herein.”
Article 10.08 authorizes the Comptroller to measure
the tax due from a given user on a mileage basis if that sys-
tem is more practicable and will more accurately determine
the amount’of tax due. In case the Comptroller elects to
use this procedure, the provisions of Article 10.03(5) that
the tax Is to be paid on each gallon delivered by a user Into
the fuel supply tanks of motor vehicles is superseded.
In cases where a user has paid taxes upon special
fuels delivered into fuel supply tanks which travel in ln-
terstate commerce, an anomalous situation arises. Article
10.14 authorizes a refund of taxes paid on special fuels
consumed In non-highway use. However s Section (3) of Article
10.14 specifically provides that any dealer or user who files
a claim for refund of the tax paid on any special fuel
delivered into the fuel supply tank of’s motor vehicle shall
forfeit the right to the entire amount of the refund claim
filed. The Act imposes a tax only upon special fuels used
on Texas’ highways, therefore It is apparent that gas used on
hlghways~ of other states is used for a “‘non-,hlghway” purpose
within the meaning of the refund provision. Consequently,
to give effect to the plainintent of the Legislature that
a user Is entitled to a refund on all special fuels used for
non-highway purposes requires thatxctlon (3) of Article
10.14 be disregarded to the extent that it Indicates that no
refund may be had for taxes paid on special fuels subsequently
used,in motor vehicles on highways of other ‘states. A user
is entitled to a refund of taxes paid on special fuels used
In motor vehicles out of state and may make application
Honorable Robert S. .Calvert, Page 5 Opinion $0. ~~-845
therefore In the form prescribed by Artiole 10.14. However,
this’ does not mean that Article 10.08, when invoked by the
Comptroller, supersedes any of the provision8 of Article
10.14, for the right to refund exists regardlees of whether
the amount of tax due is figured on a mileage basis, ors in
some manner, by the amount of gallons actually used on
Texas highways. (In this regard, It should be noted that
the mileage formula for computing the tax may be used only
where It will most accurately and practioally reflect the
actual amount of gallons used for highway purposes. Where a
certain number of gallons are delivered to a user, all of
which are used on Texas highways, the tsx must be collected
on each such gallon; in such a case, the Comptroller has no
discretion to employ the mileage formula.)
SUMMARY
A specLa1 fuels “u8er” who .i8 maintaining storage
tanks In Texas and purchasing special fuels from suppliers
in bulk quantities predominantly for delfvery into fuel
supply tank8 of his motor vehicles, and.18 also operating
a number of the motor vehicle8 In Interstate commeroe,
necessitating Importation of,,epecial fuels in the fuel sup-
ply tank8 of such vehicles, Is r’equired to obtain both a
non-bonded user permit and bonded user import permit.
Article 10.08 of,the Special .?uel8 Tq Act, when
Invoked by the Comptroller , supersedes the provision of
Article 10.03 (5) that the u8er pay the tax on eaah gallon
of special fuels delivered into the fuel supply tanks of
his motor vehicle. Article 10.14(3) does not prevent a U8er
from seauring a refund of taxes paid oti ,Bpeci,al fuels
delivered into the fuel supply tank8 of motor vehicle8 and
used on the highways of other states.
Very truly yours,
WILL WILSOR
Attorriey General OS Texas
APPROVED: RYw-4Lt
RMck N. Pricer
’
OPIMIGNCOMMITTEE: Assistant
W. V. Geppert, Chairman JNP:jp
J. Arthur Sandlin
Riley *Eugene Fletcher
Phoclons Park, II REVIEWEDFOR THE ATTORNEY
GENERAL
Marvin Ii. Brown, Jr. By: Leonard Passmore