Untitled Texas Attorney General Opinion

‘. Hon. E. J. Elam Opinion NO. ~~-818 County Attorney Somervell County Re: Whether the aircraft of a Glen Rose, Texas commercial alrllne are taxable on an ad valorem basis when such aircraft are based 1~ the county of the cotipany's domicile even though the aircraft Dear Mr. Elam: .fly in interstate commerce. You have requested an opinion on two questions: Are the aircraft of a dommerclal airline [ taxable "" &on an ad valorem basis when such air- ' craft are sed In the county where the company Is domiciled, even though the aircraft fly In in; t&state commerce? ”2. If these aircraft are taxable would the' apportionment rule as laid down by the @d&al Courts in the Flying Tigers and other cases be legally appllaable in Texas, or should the assess- ment be made on all the aircraft on the basis of total yalue?" Article VIII, Section 11, of the Texas Constitution provides: "All property, whether owned by pereons or corporations, shall be assessed for taxation, and the t&es paid In the oounty where situated, br &he LeglslatuCe may, ~by a t,worthlrds vote,~author- ize the payment of taxes Of non-residents of ooun- ties to be made at the office of the C?mptroller of Public Accounts." Article 7153 of Vernon's Civil Statutes of'Te=s states: "All property, real and personal, except suqh as la required to be listed and'assessed otherwise, shall be listed and assessed In the county where Hon. E. J. Elam Page 2 Oplnlon NO. ~~-818 I’ .: It is situated; and all personal Droner&~.&b.l;?& ”’ to taxation and temporarily removed from the State or county, shall be- listed- and assessed In the oounty of the residence of then owner thereof> or In the oounty where the principal offloe.. of such owner Is situated.” The foregoing provisions have been oonstrued to mean that property shall be taxed at its ProDer tax sltus. Great Southern Life Insuranae Companyv. clti OS Austin; 243 Su Ct 1922) . pi ld er, lh TexasTaxSt ruo - V0k11***0, p&e X&I. Undo! the oommonlaw, personal property Is taxable at the domloile o? lts~ owner inless such property has acquired a fixed or Permanent slttis elsewhere. Bee- Ore& South&n Life Insuranke- Companyv. City OS Austin inma. Under the faots preaoatod In ques- 1 No 1 181s apparent that the ab?Orait, uhlch are sd 1; tie oounty where the wimpany-owner ia domlclled have a sltus In that county (and ~only In that oounty) iok the purpose of Texas ad valorem taxation. See Chemloal Ex- em, et al. v. City of Roaoob, 310 S.W.2QX94 (Tex.clv. 195U, error ref ) It remalna to detg?~~r~;plg~ kty may,. oonsls&& with the Federal pose ad valorem taxes upon the fill value of the altiorh. The answer to aueatlon No. 2 Is oontrolled bv four cases deolded by the United States Supreme' ‘hrf. Sikh; firat Is Northwest Airlines,. Incorporated v. BIlnziesota 322 .U.S.. 2927’I’944). This oase held that the. State:.bf rd nnesota. in &l& the‘ subjeot .a$rune was domiolledi - h&jl oonstltutlkal pouer to tax the alrllzpile entire ,fleet of -qirbraft at the’ full value thereof, even though all the planes were. oontlnu- owly engaged In. inter.a$ate fllgh$. A vlgosoxi@ dissenting opinion was rrritteq .by,-chief Just4p?,.Stone,“~ln,whioh at was ooatended that .tinneqota could on&y ‘i@!posp +I apportioned ad valorea tax. . .:i In 1949 thi Su$rm.e Court heLU In.‘pt v. UlssIsal~ol Bar Line 336 U,%.%69, that Lcngslana, ~i.~non-dc& 111w mua e, cou d tax..~barges. Andytugs moving In ,+nd tit olot$he state, on an apport~iofreg ad valorq :?W#ia @doording tq the c-cd carried on -;!Q$t$n the state. ~. standarci Oil ~c&lpany v. PBOk 34cJw.4. $2 (1952), t&&h Involved’ .98888x:8.,: traveling or*@ ~W@i~rippl @v&r;. adopted the rule that ,+i domlolllaqy @fiat& oeuld not t&x,~.~bn au ti valorem~ b&Is, ,:tjg* full valui of?preperty looatcr(l only e of the tlme:j?it&$n: Its .borders, ,~g&:,edh must m- h&e ,. Hon. E. J. Elam Page 3 opinion Nb. ~~-818 ac ulred a tax situs eleewhere, without oonstltutlngan un- b- reasona e burden Interstate commerce. !fhe court stated at page 310: "The rule which permits taxation by two or more states on an apportioned basis DFecltideS taxation of all the-hroperty by the state of the domlolle." The court distinguished the Northrest Airlines oase on the grouxlthat In that case It had not be. shown that "a de- fined part of the dom~clllary corpvsueiad aoqulred a taxable sltus elsewhere. In 1954 the Supreme Court held ln~ Braniff AlrGs, Inc. v. Nebraska Board of Equalization and assessment, 347 U.S. 590 that the State of Nebraska could subject th e alr- craft of's non-domlclllary interstate airline to an appor- tloned ad valorem tax, even though the airline made only 18 regularly scheduled stops In then-state. In~holdlng thai; the regularly aoheduled stops.formed a sufficient nexus with the taxing jurisdiction to allow taxation of a properly appor- tioned fraction1 of the alrllnete property; the oourt ratl- fled and adhered to Standard 011 v. Peck, and distinguished the Northwest Airlines case In the f@lowlng language: "While no one view in the Northwest oase mustered a majority of &I 8 court, It seems f az r to say that without the position stated In the Conclusion and Judgment uhlch announoed the de- cision of this court,,the result would have been ., the reverse. That position wa's that It me not shown 'that a defined part of the domlolllary oorpus has acquired a permanent looatlon, i.e., a taxing sltus, elsewhere.' 322 U.S. at page 2%. 64 S.Ct. at page 952. That opinion recog- nized the 'doctrine of tax apportionment for ln- strumentalltles engaged'ln Interstate oqmmerce,l ' The concurring opinion of Mr. Justice Douglas etates, In effect, that this fraction Is the amount of.property that, justlflably can be said to be within the taxing jurlsdlo- 'tlons at all times during the taxing period. The validity of this proposition Is somewhat dubious In view of the ap- portionment formulas that have received either dlreot or tacit approval. See the dlaousslon above. Page 4 Opinion No. WW-818 322 U.S. at page 297, 64 S.Ct. at page 953, but held It Inapplicable because no 'property (or a portion of funglble units) Is permanently sltu- ated In a state other than the domlclllary state.'" In view of the foregoing, It appears that where a non-domiciliary state has acquired the power to Impose an apportioned ad valorem tax, the domicile must also Impose an apportioned tax. See the analysis In Flying Tiger Line v. County of Los Angeles, 333 P.2d 323 (Cal.Sup.Ct. 1956); and parttires in a state are sufficient to establish an ad valorem tax situs in that state. However, though there has been no concrete rule established on.thls point, It does not. appear that lntermltterit, Irregular or sporadic flights Into another state will form a sufficient nexus with that state to allow the imposition of even an apportioned ad valorem tax. See Braniff case, 347 U.S. at pages 592-3. Therefore, we are un- able answer your second question since you have not set forth sufficient facts upon which to baae a conclusion. If, In fact, the'alrllne to which you refer has not acquired a taxable sltus In another state within the purview of the Braniff case, then all aircraft based In your county are tax- able at their full value. If, however, a taxable situs has actually been acquired In another state then the ad valorem tax by your county must be apportloned.fi In this connection, 2 Texas has no uniform apportionment rule. Therefore, the formula to be used is within the discretion of the county. All that Is required Is that It comport with the traditional con- _ oept of due process, I.e., that It have some relation to the benefits and protection afforded by the taxing state. See Plylllg Tiger Line v. County of Los Angeles, 333 P.2d 323 (Cal. Sup.Ct. 1959); Braniff Airways v. N mula meets this test th d case, there will be Ao v%a$o?of the Commerce Clause- Federal Constitution. Tl er cases in California the apportionment formula In lihewas ==+-base upon the equalization board's determination of the amount of time spent by the aircraft In the county dur- ing an arbitrary period during the taxable year. In the Braniff case the apportionment was based upon a three-factor all- formula, the three factors being (1) arrivals and departures, (2);revenue tons and (3) originating revenue. Justice Frankfur- ter, in footnote 3 to his dissenting opinion In this case (347 U.S. at page 606), points out that three other apportionment formulas have been proposed. Hon. E. J. Elam Page 5 Opinion No. ~~-818 It makes no difference whether the aircraft are actually being taxed in another state, so long as a taxable eltus in another state has been acquired. Plying Tiger Line v. County of Loa Aneeles; 333 P.2d-323. SUMMARY Aircraft of a oommerclal airline are taxable on an ad valorem basis when suoh aircraft are based in the county where the ._ company Is domiciled even though the alr- craft fly In Interstate commerce. Whether or not such aircraft are taxable at their full value or on an apportioned basis depends upon whether such alroraft have obtained a taxable situ8 In another state within the purview of the case of Branlrf Airways v. Nebraska State Board of zatlon and Assessment. 347 U S 390 l 0. Very truly yaws, ,~ WILLWILSON Attorney General. JNP:bct APPROVED: OPINIONCOMMITTEE: W. V. Geppert, Chairman James M. Farrls J. Arthur Sandlln John C. Stelnberger Zellner J. Turllngton APPROVEDFORTRE ATTORWEY GENERAL: By: Leonard Passmore