Honorable George H. Sheppard
Comptroller of Public Accounts
Austin, Texas
Dear Sir: Opinion No. O-2008
Re: Where one person operates a
store and another person owns
title to the merchandise in the
store, the operator is liable
for the chain store tax.
This is in answer to your letter which reads as follows:
“There are a number of concerns, foreign and
domestic, operating in Texas, that consign merchan-
dise to warehouses and retafl stores to be sold at
wholesale and retail in the State of Texas. This
merchandise is on consignment only when sales are
made. The store aperator or warehouse operator .~
receives a comm ission from the sale of such mer-
chandise; the ownership of the merchandise is re-
tained by the consignor, and he places the price on
the merchandise that the consignee sells.
‘Does the ‘store tax’ apply to the actual owner
of the merchandise or to the operator of the ware-
house 7 *
We assume that there is no contract between the operator of the
warehouse and the owner of the merchandise whereby the owner of the
merchandise has any control over the warehouse, that the owner of the
merchandise does not own an interest in the warehouse or exercise any
control over it, and that his only connection with it is that h.e retains
title to the merchandise in the warehouse until said merchandise is sold.
The ‘Chain Store Tax Law” of Texas is House Bill No. 18, Chap-
ter 400, First Called Session, 44th Legislature, Acts 1935 (codified as
Article 111 Id of Vernon’s Annotated Penal Code). It provides that cer-
tain prescribed license fees, which are in fact taxes, shall be paid for
the privilege of operaffng a store. and reads in part as follows:
Honorable George H. Sheppard, Page 2 (Opinion No. O-2008)
‘Sec. 2. Any person, agent, receiver, trustee, firm;> ‘.
corporation, association or copartnership d.esiring to ,.
operate, maintain, open or establish a store or mercan-
tile establishment in this State shall appIy to the Comp-
troller of Public Accounts for a license so to do. . . .”
“Sec. 5. E,very person, agent, receiver, trustee, firm,
corporation, association or copartnership opening, estab- ~.
lishing, operating or mainfaining oneor more stores Or .~ ~
mercantile establishments within this State, under the
same general management, or ,ow+rship, shall pay the
license fees her&after
.i ~,.~.i prescribad for the privilege of
dpniqgl e~stablisliing; operatingor maintaining such
,‘#orc$k~o.r’Lercaiitile establishments . . .*
ii ) ,‘I i”.” ” ,.) .,._
” ‘“tie&; ‘I;’ ,yl& teim”sto&~ as used in this Act shall be
construed tome& and include any store or s,tores or any
mercs+lq establishment or establishments not specifi-
cally exempted’within &is Act, which are owned, operated,
maintained, or contrqll,ed by the same person, agent, re-
ceiver, trustee, firm, $or~poratiP11,copartnership or
associationli either ~. domestic ‘or fereign, in whL& goods i
wares or mkei~ch+iise &.a~$ kiad~ax+&s?ld; At retail ore‘.
wholesale.
.’
This is I& b ‘&x &. ‘hi&@& nor On thi msr&umdise nor on the
gale of the merchandise, b,ut it ‘is a t&c C&the privilege of aperatillg the
store. In the cas.e of HI& v. Gooper.~13O~Tex. 433, 110 S. W. 2nd 896,
the Supreme Court of Texas .sai’&
U . . . we experie- PO difficulty in reaching the
conclusion that the so-,+&d license fees levied thereby
are primarily occkqktibn ‘$&c&S.~ . .
Sectiqn 5 of the ~CJpjrin.S$we~Tax Law* says that Pevery person
(etc.) . .. ~+.
opening, o,stablishingl, ope,r+fing or,maintaining one or more
stores . . . sill. pay the ,Iicen+e fee,9 . , . prescrmed for the privikge
of opening, establis~ng, operating or maintaining such stores.* The
fact that a person owns all of,,the merchandise, or a part thereof, in a
‘store wouId be an eIemant~of,considera~? in determing whether or not
the owner of such merchandise was operating or maintaining said ‘store;
but that fact alone, does n$ jus,tify, a.holding that, the owner of the mer-
chandiseis .engaged,in *opening, .istsb~ishing, dpdrating or maintaining”
/
- -
. -
Honorable George H. Sheppard, Page 3 (Opinion No. O-2008)
said store. Under the facts that you give, the only person who comes
within the meaning of those words is the operator of the war~ehouse. He
clearly operates and maintains the warehouse.
If the warehouse in question is a store as that term is defined
by the statute, the “store tax” applies to the operator of the warehouse
and he is liable for the tar.
Yours very truly,
ATTORNE,Y GE,NE,RAL OF TEXAS
BY s/ Cecil C. Rotsch
Cecil C. Rotsch
Assistant
CCR:ew-rn
APPROVED MAY 1, 1940
s/ Gerald C. Mann
ATTORNE,Y GENERAL OF TEXAS
APPROVEJ3 Opinion Committee
By B.W.B., Chairman