546
OFFICE OF THE ATTORNEY GENERAL OF ‘TEXAS
AUSTIN
Hon. M. 0. Plo.omrE
aaoratary of at6t-a
Austin, Tezar
Dear Ylr I Attant lent Mr.
emit whloll
subatantle llr
rmttcln rrqtiina
4 un4w Artlola
0 reaoraal O?
oa to bo olosr4
dbtdJ F--d-
1, an6 fron aoh arfl-
lta r ntia an4 rocrlhrt
lnnehlr* tsix au. nq 1; i
rrrotra qu6etlonr.
roaolpt or your lettar or Mavrbar
you submit tha following qaeatioaa
lor an opihion:
the 8eoretery of Statr author-
cupowsred to cot tin&r Artialr
&~EI and require a beginnrr eorporatlon to
file an afficiatit, p~hlab would pror&ddr nub-
6tsntiallp the lxam information n'ulma to
be coapllei4 undw Article 7089, 6n % amu*
the rrcom3s of eueh oorpemtlon to be ale6e4
at8 detr inanramel8- prroeding May 1, mn4
frtm mioh atfida*it datermine and aollrst
th6 ?r6nahir* ti8X duo xes l?
--- .---^..---” -..- .- ^_..C “i-Y-l.l .,D .TsoaI 1-m*.-....
547
Hon. M. 0. Flower-a, pafle 2
(2) If the answer of tha above qusa-
tlon Is Tua-, should the demand upon tba
corporation requlra tha books to br closed
on R definite data, or upon an lud~flnlto
data to br daterained by thr oorporatlon
from a standpoint of oanrenl*nar end 88
mar to May 1 es poniblr, whloh would
anablo thapi to filr the repar t and pay thr
tama on that date3
(3) Ii tha rooorda are to be closed
at CLfixed time, what data should be the
0loalng time?
(L) If it ban km deold.4 that we
do have tlxla authority, would this Depart-
sent havr the further authorltl to audit
ell beck irunohiar tax aooounta and ro-
aaaaaa franehlao tams, or would tbr state
ba estopped by this prior drpartaantal
praotlcr?
Artlola 7084, Ravlrd Civil Statutaa, 1925,
as amnaod, reads in part as follouar
*Lxorpt am heNin provided, arrry
domuatlo end forrltp oorporetlonhereta-
rora or heraaftar ohartrrrd or authorized
to 40 bualnoaa In Toxaa, shall, on or br-
rorr May 1st oi oasoQ par, pay in advance
to the Saemtary of State a rNnQhl88
tax for the yaar following, bared upon
that proportion of the outatandlng oapitel
stook, . . .”
Article 7086, Revised Civil Statutoa, 1925,
provldoa In part:
Whenaver a private dolpsatia clorpora-
tlon la chartrmd 5.n this Stat., . . . such
corporetlon shall ba repulsed to pay in
advanor to the Seoretary of Btato, as Its
tranch~ae tax rrcin that tlaw doom to and
inol~dlllg the thlrti(lth day of April next
iollowln~, only such prOpottlOnata pnrt
548
Eon, M. 0. Wmara, pafw 3
Of its 6~~1 ?ranUhIaa tax, as trrainabova
pnaorlbad, aa the period OS tim baswaan
the aat0 of ?lling of its artIcl88 of in-
oorporatlon or tha lssuanoo OS its grrmlt
to do bualneos, as the aese oay be, and
on the firat day of Alay ?ollouin&, boars
to a aalrndsr par.”
Artiols 7087, Rsylaad Civil Statutes, 1925,
ma48 08 Tollowar
“To dcGomine tb amount or the flrat
franohhiae tax pamnt raquirad b thla
ohaptrr of any dcuaati~ aorporat I 011whloh
MJ ba braetter ohartered, or OS any SOT-
a&n oorporstlon whleb my hsraaitar apply
ror a perrrlt to do buatlnaaa within thla
Stab, end also to drkrdae tb aorrrst-
maa 0r any rrport *hIoh 18 provided Sor
In this ohaptrr, tha Edoratary of Btata
mar, whwvrr he daraa It neao8aary or
pro-r to protab3t th8 intweet* o? th
St&+, rrqulrr any on0 or Q0rs of the of-
floors or such oorgoratlona to mLJ aPd
fllr in the o??loa or the Saontazy of
State an ~r?ld~ylt setting Sorth Sully thr
rocto oonowninc, the mount of ths aurplua
am3 utilirldrd prallts, roapaotlval~, l?
any, OS such dolvatla or foraign aorpora-
tloon; and until tha Gaoratary of State ahall
bo rull~ astia?lrd ae to thr amount OS aaah
aurplua end undlvldrd protlta, rag ootlvelr,
l? any, he shall ntt Slle thr artlolaa of
lnoorporatlon OS auoh pmpoaad 4omaatlo
oorpratlon, or issue such peralt, or aa-
aapt such Sranohlae tax.*
Art1610 7089, Reviaad 01~11 Eltatutee, 1925,
reeds as rollowar
i
549
Hon. U. 0. Flowms, peer 4
wEccept as hsrrir, ~mvldad, a11 cor-
2oratlms now required to pay an annual
frenchles tax shall. between January lot
erd i&ml; 15th of aaah yoer, m&e a aworn
roport to the 8aomtary of 8tata. on
blnnka fumlrhod by that officer, mowing
the oondltlon of suoh corporation on th
lart day of ita preoading flcloal year. . .I
(Tha atatuto here mkrs tsrlous provl111onn
QGnaOruiug tha oxrtant8 8nd fill&3 Of fhr
report, ana other mtterr.)
Artlalr ?W?9a, F%~vlmd Civil 6tatute8,
Aots 1930, 4lat La&lslaturr, 5th Called 68rslon, p&go
220, Chapter 66, R~otlon 4, read8 aa followat
'The f'orprs prrrarlbad shall eoataln
other information a8 the Baoratary or Stat0
may drain adtlrabls end ha ma,r adopt rulem
and ragul9tlons prorldi~ for the anrome-
mnt of the pmvlslo~ hrroof sod may ro-
qulrs cor~orstlona to mum auoh moor66
MI say be naorrssry In dotrrinlnlng tha
aaonnt cf taxaa that may k dua herrundsr.
No tar shell be paid Wloh my not be col-
;;;IM;~ andar tha Stats atId Fadwe Conotl-
.”
Your lettrr dlsoum~ the eboro quaetlona
end atcatuks contlrmek as lollowt
‘For t&r purposes of thti opInlon
oonslder a corporation formed between
January 1 and May 1. Artldrm 7086 and
‘Jo137presarlba the proowkm to b8 Ml-
10~~~3 in asorrtainlng the correot aaount
of tax due rrtxu data ot inoorgoration to
nay 1. Article 7089 raqulrrr all ompor+
tlons to file betwarn Jen~r~ 1 and bieroh
15 or wioh year (whioh tlms my ba ertrod*d
to %ay 1) Q rranohlse tmx report showin% the
candltlcn or suah oorpomtion on the l~Jt
day or lta praosding flecal yeer. Cbviaun-
ly tl corporation fx:aorpomted during th*
tima under oonsldsretlon has not had suf-
ficient tirns prior to Malay1 to oo@5t* a
risoal year. Artlc.l.8 7087, on tha othar
550
Bon. M. 0. Fl08ar8, pa&a 5
hand, maraly prasorlb88 tie pmeadura to
ba fOllowa in d8tarmlning tha tax rrom
data bf lnoorporatlcm down so May 1, and
maker no mantlon ai tie method to ba fol-
lowad in aaeartaln* the tax due on May 1.
Art1018 7089a ~rorldaa that the horatr~y
or Stata say edapt rule8 ma ragulatlon8
prorl4lng for the anl’erorm8nt of the pro-
vision8 oi Art1018 7089, and amy raqulr8
oorporatlona to 0~88 ~ruoh record8 81 m8y
b8 naoa88ary la data~lnleg the amount or
taxer that nay be dur under Artlola 7084.
‘?A8 8n illurtr8tfon of tin problem
OOUiZW&ing thil 0ffiOa ~8 sita th ~!88a Oi
a oorpor8tlon lnoorpor8trd February 9, 1938,
with a oapltal of $209 000.00, who88 trxeblr
oapital ~88 lnoraaaa4 ~~3.,000.00 two~daJr8
th8raaftar. Traqusatl~, oorporetlon8 8rc4
araatad for the purpoos o? borrowlag sonar
to prwen$ lndlvlduetl liablliQy. 0n the oth8r
hrnd, tha eorporatlon sight luoraara (T de-
oraaaa I t8 aapltsl ltook, or be eonrayed a
t-8 uD0m 0r 88m8 *iah would ozuati
a larea rurplus bat-an the data o? lneorpora-
tlon and the followfail May 1.
"It ha8 bean a oonattant praotloa bi
thia otrloa for the Charter Mvision to a@-
oartmin tba amount or tar &a at tha time of
lnaorpontlon, and also 8Urin the asrpon-
tlon of tha mount of tax &a on H8r 1 follow-
lng the data of inoorporatlon,barrd upon
the taxable 011plb1 dlsolosrd by the @hertar.
"While th5a la @ia ouatomary and moat
lxpsdiantmcsthod ofhandllaQ the a8tt8r,th
writer 18 umbla to rm any 8Qatutory rwthor-
lzation ior the oomputation of thr franshin
tax due on May 1, in this (Banner, n&W18 thare
any spaolflo 8tatnterp authotizatlon for the
acmpll~tlon or this tar by 81~ othar mam8,
other then tha ponafbla iapliQatiOn Of Artlola
7069a. *
551
Hon. Y. 0. Flusara, page 6
The AttotmJ Oanarti ‘8 opinion to whlnh you
refer, addra8aad to Hoa. W. W. Eaath, tlatadOetobrr 18,
1934, nrkar the Sollouing rulkpgo:
* it 18 th8 O@liOE Of tbr WrikX
that 8ia'a&81 X8pOl-tto ba SIM4 b tW8m
Jaauarf lrt and Marohl$$h should rbaw tb
oonditim of a oorporstiem oa tbr hat day
of 1 ta pnardiag flMa1 yasf prior So $Sn-
wary 1st. . . .
I) It
0pin10n 18 th
or Oh8 altar
that b;S&; a ~omortio eorpvmtloa fr rrq~irrd
to Slla what ~001p
term a rawlar report and
8ufSargaaaltla8 tha:aree for railmu to
rile said report, itaut have brd a vomplatr
sir081 ear priar to the tima la ahlob It Ir :'
raquka 3; to f&la its annul rcrprt. ti otbr
*ordO, it EUUt h8~8 hf4d 8 ~O!@pl@tS ?bOdl
year prior to fabuary 100..
". . . X will statr Ub if a dOluSti0
corporationhas had a @oil ate f%a81~ yam?
prior to JaaMxy lst, it SOQU$T86 to s&l*
it8 8nntl81rrporo b.twraa~Yalmar~ let an4
X8rohlJth,andtbr fraaohla8 tarIP8tai
neo888ity ba baro&kp. 8&a NpOd. on th8
othar hand, ii the"-tror#Wat~on
I8 not liabla
r0r the ririira of an annrul report, rlnor
it hnd 11~ ii8Oa~ Ptr,, tbm tOP SUPt OOIP-
pat8 the t132sxos the n~ooxar Ln pur 0rf-m .'
relating to SU8h OQrpVa%irJa, ~888 YOU
deem other InSormtIon moa8sary to datarm&
the amunt of tax that m)r br OU@. In 8aeh
avant you m8y raqulrr 8n Sfs~uEVit,ex ur
xaquira ruoh oorporatlonto aura,8aah m-
cords ar you dora aaoa8aa~ In datermlnlqg
the amount of tax t&at rry ba dU8. *
Han. Ii. 0. 7low~rr, pa&. 7
Tha faot that 8 beglnnrr oorporatlon nr
lnomasa its taxable capita1 and.2 ArtIola 7064, b-
tveerl the date of IaoorporatIon ena xaf 1st without
atioh increasei bakq tarrble under your baparwental
prsatlaa a006 aot plea43 it In 6 dlffor8nt porlaio~l
from an older oorpomtion whI0h Iaorra8rs It8 oapltal
on Ma7 2nd or brtursn its pneoding flroal 0108lng
11x3 Ma7 lat. Opinion lrlo. o-764.
We l&ma with 7our oonolwio~ that the rrtatutem
do net mike datlnlta provloIon for tkn proordurr to k
miOW8a 133 08O~Tti~~g t&0 MOtUIt Of 08X i%M its 8d~811418
on the bfa7 lot next w0t3*0aiag tbr iaoorpomtIon or l k-
glnmr aorporetlon. Thi8 kilt% trtra, th6 lO= $Og;.'i;hd
WI4 00moIobmt 00LutTu0t10aeul pre0tIor of
mat, whloh you alao 8teta la thr m8t 8~~6 r@ on’;,& th#-
lamgae6gr ot tbr ootut in a* 1, ALtl8l¶tI9 PIN L
(Tar. Clr. App., 1939, * reihmd), 134 8 a t2aj
322, 'mo)f WWMfOM booonm 8 bO%Omini~~(& &O&r. J8-
BeOiall7 i8 tb18 t?U* ra&?~tdili& rOVOnU.uI *OaOltr@8, the
lbmin~tzation of whlob ,&a (Lll&8r eoa8turt ob8an~tioa
Of tO0 10&i818ttlSS.w
Youra var7traly
ATTORSBY
OtlilWRAL01 TUXA8