Untitled Texas Attorney General Opinion

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