December 19, 1951
Hon. Robert S. Calver,t ’ Opinion No. V - 13 79
Compt,roller of, Public Accounts
Austin, Texas Re: Legality of motor fuel tax
refunds to subcontractors
on highway projects and to
counties on lateral road
Dea,r Mr. Calvert: projects.
You request the opinion of this office ~Ipon t& guee-
tiotis pre,sented in your letter as follows:
“We desire the opinion of your office on several
questions which have been presented in connection with
the new motor fuel tax refund law as amended by the
recent Session of the 52nd Legislature, Article 7065b,
Vernon’s Annotated Civil Statutes.
“Contracts for the construction and maintenance
of State highways are Awarded by projects described
in the contracts on bids submitted by general or prime
contractors.
“The general or prime contractor, who is award-
ed the contract: usually engages one or more subcon-
tractors to do a part of the work such as grubbing and
clearing right of ways, laying the concrete, etc.
“When the project js completed the general or
prime contractor is paid for the entire project by a
warrant drawn on the State Highway Fund to which mo-
tor fuel tax collections, or a part thereof, are allocated
by Section 25 of the Act.
“The general contractor in turn pays the subcon-
tractors for the part of the work performed and any
materials furnished by such subcontractors. Some of
the subcontractors involved have adopted the view that
since they are paid by the general contractor and not
directly by warrant dr~awn on State funds to which mo-
tor fuel tax collections are allocated, that they are en*
titled to a refund of tax paid on motor fuel used by them
Hon. Robert S. aalvert, Page 2 (V-1379)
on such projects and have filed claims for such tax re-
funds,
“Will you please advise whether the Comptroller
can legally issue warrants to pay refund claims to sub-
contractors under the conditions described above?
“The next questions concern tax refund claims
filed in behalf of counties which use a part of the mo-
tor fuel tax collections allocated to them for the con-
struction or improvement of lateral county roads and
related purposes a
“Section 25 of the Act, above cited, provides that
one-fourth (l/4) of the taxes collected after deductions
for the enforcement of the Act and the payment of re-
funds, shall be allocated and deposited to the credit of
the County and Road District Highway Fund a part of
which fund is allocated to each county in the State to
be used by said counties under the provisions of Sec-
tion 6(b), Chapter 324, Regular Session of the 48th Leg-
islature, as amended by Section 1, Chapter 319, Regu-
lar Session of the 50th Legislature. The latter Acts
provide that the counties may use a part of the fund al-
located to them for (a) the acquisition of right of ways
for county lateral roads and for the payment of legal
obligations incurred therefor prior to January 2, 1939;
(b) for the construction or improvement of county lat-
eral roads; (c) for the purpose of supplementing funds
appropriated by the United States Government for Works
Progress Administration highway construction, Public
Works Administration highway construction, and such
other grants of Federal funds as may be made available
to the counties of this State for county lateral road con-
struction; and (d) for the purpose of cooperating with
the State Highway Department and the Federal Govern-
ment in the construction of farm-to-market roads.
“Several of the counties which have used a part
of the funds allocated to them by Section 25, in the con-
struction‘and improvement of county lateral roads have
filed claim for refund of the tax paid on motor fuel used
off the highway in such work. The District Attorney in
one county has raised a question as to whether the word
‘person’ used in Section 13 (b), above quoted, would in-
clude a county, as the term ‘person’ is defined in Sec-
tion 1 (j) of the Act.
- .
Hon. Robert S. C&=ert, Page 3 (V-1379)
“Will you please advise whether the, Comptroller
can legally approve the payment of tax refund claims
filled by counties on motor fuel which has been used, in
the construction or maintenance of lateral or county
roads and highways?
“If you answer the above question affirmatively,
will the work performed in the acquisition of a right
of way be construed as a part of the construction or
maintenance work on such roads or highways? ”
You state that the work involved is construction and
mainknance of highways in this State and that the same ie paid for
from &o&r fuel taxes allocated to th,e State Highway Department
and counties by the provisions of House Bill 285, Acts 52nd Leg.,
R.S. 1951, ch. 402, p,, 695. Section 4(b) of SECTLON XXII of House
Bill 285 reads in part as follows:
“(b) Any person, (except as hereinafter provld-
ed) who shall use motor fuel for the purpose of oper-
ating or propelling any stationary gasoline engine, *Q-
tor boat, aircraft, or tractor used for agricultural pur-
poses, or for any other purpose except in a motor vehi-
cle oparated or intended to be operated upon the public
hi,ghway of this State, and who shall have paid the tax
imposed upon said motor fuel by this Ar,ticle, either di-
rectly or indirectly, shall, when such person has fully
complied with all provisions of this Article and the rules
and regulations promulgated by the Comptroller, be en-
titled to reimbursement of the tax paid by him less one
per cent (1%) allowed distributors for collecting and re-
mitting the tax and complying with other provisions of
the laws Provided, however, no tax refund shall be paid
to any person on motor fuel used in any constructton or
maintenance work which is paid for from any State funds
to which motor fuel tax collections are allocated or which
is paid Jointly from any such State funds and Federal funds,
“.” (Emphasis added.)
Section l(j) of SECTION XXII of Hol~se Bill 285 provides
as fbllows:
“(j) ‘Person’ shall mean and include every indi-
vidual, firm, association, joint stock company, syndi-
cate, co-partnership, corporation (public, priva,te or
municipal), trustee, agency, or receiver. n
For the purpose of this opinion we assume that the pur-
chase, sale, and use of the motor fuel meets the requirements of
I-Ion. Robert S, Calvert, Page 4 (V-1379)
the statute for a refund, unless it falls under the exception provided
in the part of the statute last quoted above which we have under-
scored, This part of the statute constitutes an exception which for-
bids a refund of motors fuel tax to the purchasers of motor fuel com-
ing within its terms. That subcontractors employed by prime con-
tractors to perform all or part of the work of construction and
maintenance on the highways of this State are paid by the prime
contractors is not, in our view, the crucial test in determining the
eligibility of subcontractors for, a refund of motor fuel tax in con-
nection with the motor fuel purchased and used in such construction.
The real test is that the highway construction and main-
tenance work is performed and paid for from motor fuel taxes allo-
cated to the Highway Department or the counties in connection with
highway work. The incidental fact that the prime contractor engag-
es and pays the subcontractor who performs a certain portion of
the work is not material. That the subcontractor uses the motor
fuel in construction and maintenance work on the highways must be
conceded, We think that portion of the exception which reads, -. . .
which is paid for from any State funds to which motor fuel tax col-
lections are axcated . -” does not have the effect of excluding
from the exception the subcontractors simply because they are paid
by the prime contractor. It is sufficient to bring them within the
exception that they perform construction and maintenance work
which is paid for from allocated funds. The work is actually done
as a part of the work which the prime contractor under his contract
with the Mighway Department obligates himself to perform and
which is paid -for from allocated funds,,
Turning next to the question of whether or not the tax
paid by counties may be refunded under the facts disclosed by your
request, we should first determine whether or not a county is a
“person” under the statutory definitions We think clearly it is, for
Section 1 of Ar~ticle XI of the Constitution of this State says: “The
several counties of this State are hereby recognized as legal sub-
divisions of the State.” And Section 3 of the same Article reads in
part: “No county, city, or other municipal corporation shall here-
after become a subscriber to the capital stock of any private cor-
poration . j I” It is therefore quite appar’ent that the Constitution
recognizes counties as municipal corporations, and, as we have
observed, municipal corporations are included in the statutory def-
inition of “person.” City of Abilene v State, 113 S.W.2d 631 (Tex.
Civ. App. 1937, error ref,)
You point out in your request that the construction, and
maintenance work performed by the counties in building farm-to-
market and lateral roads is paid for from a portion of the motor
fuel tax allocated under House Bill 285, supra- Under these cir-
cumstances counties performing such construction and maintenance
Hon. Robert S. Calvert, Page 5 (V-1379)
work upon highways, which work is paid for from allocated funds,
fall within the exception t,o the statute.
We think it was the intention of the Legislature to for-
bid the refund of any motor fuel tax in connection with highway
construction which is paid for ,from allocated motor fuel taxes.
You are therefore respectfully advised that neither subcontractors
nor counties, under the facts submitted by you, are entitled to any
refund of motor fuel taxes paid by them. :
In view of our negative answer to your question in re-
gard to counties, it is unnecessary to answer your question as to
work performed in the acquisition of right of way.
SUMMARY
Subcontractors perf,orming work in the conatr.w~-
tion and maintenance of state h@hwesa riuy not be ra-
f-dad the tax upon motor fue.1 purchased and used in
connection wi.th such construct,ion work for the reason
that the statute forbids a refund of motor fuel taxes for
such work when paid for from motor fuel taxes allocated
to the Highway Depar,tment, under the te,rms of House
Bill 285, Acts 52nd Leg., R.S. 1951, ch. 402,, p. 695.
The tax on motor fuel purchased and used by coun-
ties in construction and maintenance work on highways
paid for from allocated motor fuel taxes under House
Bill 285, supra, may not be refunded.
Yours very truly,
PRICE DANIEL
Attorney General
APPROVED:
W. V. Geppert
Bys@L2k- Assistant
Taxation Division
E. Jacobson
Reviewing Assistant
Charles D. Mathews
First Assistant
LPL/mwb