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OFFICE OF THE AlTORNEY GENERAL OF TEXAS
0
AUSTIN
Hanowbls Oeo. H. Shep,mrd
Captrollo OS PubaLa Accounts
AUBt lo, ?ox8*
Qe8r Sir:
09, 8ddro8B8d to you,
bore eeptlon end mm-
dered our rdv 0 UJBOEX
the f8QtB whloh you
t the80 opinlonr 8ro sll
lng them hereln.
lnlaw oited ebovo dealt vlth
lmtiom vhich are edmittsdl~
d instrumeatrlltlee, euch ee the
the ‘c;aP Dopllrtaont 8nd the De-
orateton, an en&aged ia war vork in
furthemnco of their *otivitier,
ion8 have ontored into ‘e08t-plUem
hmztxuaets with rarlous private aontmatora, uuoh
as the Fort Worth Aircraft. Asawmbig Pleat mad the
libergenq Plpe1lner, Inc. In generel there con-
treata follov a comon petters, with provi8lom
whereby the fedeml sgoncies reimburse the con-
tmotors tar matertils and labor ured by the ~htter,
567
Honorable 5eo. H. Sheppard, Page 2
and, In addition, p~iy to the contmcton e
atIgulated profit. Although the contrectr nor-
mally provide that, subject to aortain oontrols,
the oontsmctors may themeelver pu~chess the nec-
essary inatorlals, the federal agencies reserve
tho rlght to purohase such mstterihls and to fur-
nld them to tho contracton vhenmor they clo de-
Bee*
Ulth reference to the eativitloa of the fod-
~‘,‘,“~~~t~~~~~~~~~Qr?~) %:ooz&~
(LM rold to the fedexml agenoier and ueod by them;
b) motor fuels are sold to the fedoml egwmiea
and are then turned over to the oontractore for
use by them; (0) motor fkele am cold to end wed
by the oontrectors. ‘phe queurtlona dleoussod In
our former oplniona save orfsen In conaectlon vlth
tholsso three ultuatlonB.
Por purponer of this oplnlon vo roil that It 18 h-
materiel vhether theae f’uela are wed in vshlalsa owned by the
f’ederex agencfes, In vehlolm ovaed by the oontreetom, or ln
vehleloe oumd by tho federal ugenolor and leaeed to the con-
tmritoru.
I,
Motor fuels~sold to end used fedajral a enelesr
Section 2(d) of the E tor Fuels Tax Act Article 70 f!!5b V.A.
CA.) provides in ptwt 8s follova~
“Ho tax shell be Imposed upon the eale, uoe,
or dL6trlbutlan of any IlIotor fuel. the InposIng
Of vhshichvould mnetitute an unlevN burden on
lntemtate camuerce and vhifkh Ia not subject to
be texod under the Constltutl&n of the State of
Texas and the Gnttod Stu toe. ”
Although large inroads have been *de on the doctrine
of Inter-governmental tax Zmmunlty ae establlahed by Chief
Justioe Uars~.aall In the aaee of’ MoCulloch v. Blarylati, 4 Wheat
3x6, 4 U.S. 57$(t. Ed.), the dootrine at111 pereiata et least
to the exteri? or affosc!ing immunity frora utate taxation to the
568
f0th~i 80-mt it80u d to th000 r040m ag02kt310~
and laatmmenklltl~a whlah Coajpora lm8 ohown to declare
tax oxompt, Pittman v. H. 0. L. c., 508 U.S. 21, 84 L. M.
11, 60 aup. Ct. 15. Typltml of ti l8tter typa at 4eney
is tho 4foa~o Plant Corporcrtlon, whloh la saatlon 610 of
Tlt10 15, U.S.O.A., the aongPoaa hr 4loakPed to he exempt
into all H~OB, wo, atom&e and -H tax.8 lmpoaed by
any lkk or polltiM 8ubdlvlolarr. We are of the oplalon
that tuB &ootPlae @ad tb above qwted pPovl*ltfa of mm
tax rtatcto p~~aluao tbo irporltian 0r ommotor a018 tax
upon Sal.8 0Pua.l er the fml~lwlgov*rmuitmd~ radonrl
lg e a o aJld
lo il
lnat-ta11ti.a vhloh Csagrera b&a oxapted.
ConaoquemtS~,yms m-0 napoetfull~ ad*imd tlmt a0 tu
should k lwlad or eolleoted upcrmauah nlar OP uaea.
II.
Motor faola aold to toderrl 4uwlom uul uati W
oantrrotona Won c~~motorfwlr Lua males Lu, doubt-
ma th-r0d0~i ~OVOPXBIW~~~OXOBP~~~~~~~ 40mea urd
lad-talltlea oould pwobB~0 the fu.1 w pmlu~l~~ wo
by tholr aaaItMotoM lahaut th4 l.aeuPPwam
llat&lyf&rBl&ah ax. WP, OUP tax pla %a7 iBBeP0
. moti6a""t20) of tba t8x rtatutepPwldea
in partt
l
nlePedullk a a dlB h e P m b y levLo dua
posti (axoopt aa benlwtter prov&M) apon the
riw ~10, ai8tributiak or ~0 0f rotor lhui in
or oxoin tu of PmIP
g8llQab*beello0llMted* the rid tax ahsllk
a d& te
e&th e
l*ll.iry p
I
Hcuio~blo 0.0. R. Sheppard, Fag. 4
I(oroovoc, SootIon (d) provldu In part:
“In tha wont this Artlole Is In oonfliat
vlth tha Conatltutlon or any law ot the 0hIt.d
Stat.8 vlth ns~at to the tax lovhd upan the
rim ~ls, di6ttibai0tb 0~ ~0 0f wt0r ~1
ia thI6 aata, then it ti brro~ doolasod to k
the IntentIon of thie Artiolo to Impore the tax
1evi.d horan upon tb rirot 6ubrequeJat aale,
dI6trIbutlon, or us0 of aaid rotor fwZ vhloh
may be rubjoot to beln# tutod.”
lbghdle88 of how our to&r motor ml6 tax atrt-
ute (Aat6 1993, 43r4 Lag., p. ah. 44, 88 ammded by hots
1935, 44th Leg., p. 558, ah. 2?8 j m¶.@t hva m oanatruod,
wo em utIrfled that tb legal Inoldonoo of tha prosenttax
ir upon tba tlltlmate usor or uomumr of motor -16 8ad t&t
th6 6tatutorllJ dafixmd %l8tributor” of lwh fuel.a I# wrml~
a bonded ftdualary or agent of the Stak for tha purpou of
aiding tn the sollootlon of the tax. Moreovo~, In vleu of the
portlam of Sekotlan (d) quoted supm, w feel that own: though
the "6alo" oi motor fuolr to the fodorrl govemmmt or aortain
o$’Its IrgonaIo6 might 80 tas oxmpt, it nr the lskmtloa of
the legIa&rtum to levy 8 tax on aubamt “uam’ of luoh
fuelm vhleh right aonatltuttona1l.y70 tuod. It ml.lu to k
soon uWtber the tax mar aonatttut%65ally bm loviod upon 00~1
tmatura of the typo under diaouaaion who use lwh fuels.
That awoh mat-plus oontraatora lu noithec agonaloa
nor %natruwntalItIoa of ths fodorrl gov*nrmt la va iael,
lettlod W the OC.S~Sof Alabara v. Xlng & Booaer, 62 Sup. Ct.
43, 66 L. M. la snd Ckwy v. Wted stataa, 62 mp.. ct. 48,
86 L. gd. 9. Thase waw am quoted end disowud at loagth
in our Oplnian Ilo. O-4389, and ve adhan to the ana1~606 of the
086.6 thorn made. Hovover, oven though the aantmoton tamp-
8olvos are nelthor fedelrl agamI*a m-t* InatmmaitalItIoa, tlaa
aqpmont ia r&o that a tax upon the use of rator%alr by aort-
~1x16 aontrrotor6 Is i;l offoot 6 tu upon * hdorel lgema~ or
lnatnmonta1l.t~ alnae the 8mwit of the tax will ba nilmated
In th8 lnoruud oost of the mtwlal6 to the organIution6
which oaploy lwh oontrrretora. 5% r o w0OS lua h 8narguwnt
Is deatroywl when eonaldrrrd in the ll@tt of the nuwroua re-
sent oases tmlah hold that a general, mm-diaarkixmtory tax
16 not const:tutiomlly objectionable merely because its
imp~oait:on upon G vendor or contractor may reeult in a
slight incream in the cost of goods or services acquired
by the federal ~overnmcnt. Tnus, in ; l&ama v. King F:
Boozer, stipra, Chief Juatlce Stone ecrldr
“The mlrerted right of tks one (government)
to be free of taxation by the other doea not
spell lmmunlty from pay* th6 added co*t sttrl-
butable to the taxation of thosa who fUurai6h cup-
~1106 to the government and vho have been granted
no tax Inanun1ty. so far an 0 d!.ffbrent viev ham
prevailed, 608 Panhandle 011 Co. v. )II66i68lppi
and Graves v. Texar Co., supra, ve think It no
longer tenable. * (Parenthetical word added)
LIkevise, in Curry v. United States, aupm, the
Chief Yustios aaid:
“If the atats law laya the tax upon tti
(coat-plus contractors) rather than the indivld~l
with whom they enter into a cost-plus oontmot
1lJm the present one, then it affect8 the Govern-
ment, like the indlvldual, only a6 the eoonomlc
burden is shifted to It through operation of the
contract. As pointed out In the opinion in the
gin&J $2 BOOBctPt%ASe, b OOIltW68iO~ Of the ~VOXll-
ment and on authority, the Cozmtltutlon, wlthout
lmplemmtatlon by oongresslonel legislation, doen
not prohibit a tax upon Oovernwnt contractors be-
cause lta burden Is pssaed on economlcelly by the
term6 of the oOntr8Ot or othervise a6 a
the conrrtruotion oost to the Oovernmsnt. “r&n-
~thetlcal vord added)
See also James v. Dravo Contmcting Co., 302 U.S. 134, 58 Sup.
ct. 208, 82 L. I%%. 155; Federal Lsnd ~cnk of St. ma V. CQ
Rochford, 287 E.W. 522 (E.D.); Western LithoUr& co. v. state
Board of Equslleation, 11 C&l. (26) 156, 78 P. ph
26) 731.
Conaequontly, you are reopectfully edvised that when
n tax exempt fedeml agency purchase8 motor fuel6 in this State
and permits the u6e of such fuel6 by It6 cost-plus contractors,
our motor fuels ttax attaches to the use of such fuels nnd the
contractors are llebte for nuoh tax.
571
Page 6
Rcootiblm0.0. H. Sheppaxdd.
III.
HOtOr fUO16 sold t0 and used w the aOntmatOm8
~Tbsabon disouastonaapalr tbo oonaluslcmtint the rotor
fwla tax aoorwa in a sltwtion when motor fuolo are both
sold to and used by a aoat-plw aontrrator of the typa wdor
dlaowalen, and rou arm napoatfully advised that tha tu Is
duo in a wh a lltwtlw.
amplltioaant4asrim8 the aon-
T h is oplnlenwnly
olualma raaabodin our oplnlonlo.0-4I&P,ud In lnnowy
lntmdod torlkrruob0piaIon. 8iaoo thla oplnloala in
dlmot o&lot ylth moat of tba statemoats awl eonolwIonm
Inoro&lntw~~0-5309, the latter @pinion la hereby over-
.
Trusting that the iongol@g aatiafaetorllf na6lvma
my aonfllatavhloh may have existedIn the oplnlwa of thla
dopwtamt, w am
vary truly yew6
A¶ToltxY -0FTXA8