816
OFFICE OF THE AlTORNEY GENERAL OF TEXAS
AUSTIN
&xsorobla Y. 0. Flower8
se~e~r;yof~statl
*
Doa! Sir; Attsntionl I&.
iittormyp
x levied by raid
oorporatloar under
of ArtIsle 7lo5,
are now paying their
r the terse and provirriona
di~hi0n f~) R. c. s. 0r
h of thr total amount of
ohacked R nwabsr or tham oor-
et contend they ars required to
~~'intangibJ.ataror and find that in truth
on& In taot they are not pejizg any lataaglbla
taxes, ncrsrthalasr, payiq only 115th of their
gnahlae taral umlar Artlola 7084, Bubdlrlaion
.
Eonorabls IL Q. Plowers, ps::t 2
"~looe% 5llOw WI t0 direct your ott6R-
tlon to ths r0ii0viingunderllnsd portion of
Article 7284, Subdlvlalon (E), 8. C. S. of
Tuoa, *(b) CorPoratIona whloh --are now re-
~gi$l~O~t~ ,J?-%e"g!!!~lge~~
the tarmTTKls partioiilaratntute it ~a8
the purpose 6nQ intention of the L6gii3l6tUr6
to persit these corporatlcns W.-pay 1/5t.h
Of their franchise tsxas, u&see they me
&Ctllallypayin intangibls taX6s. W4 under-
stand a nuaber tf thes6 corporatlone contend
for varloar r4asc.m they do not ova lntan-
gibls taxes, when aasoss%d by tho Intsngiblr
Tax Eoard, and at the saae tlmr prspare and
file their franchlee tax return with thle
department classifying themselyes ee corpora-
tions required to pay the intangIble ter.
"x6 will apprdolate your answer to th%
r0ihing question:
"Doe% a corporation have to
pay ennuallp lntarqlble taxes upon
Intangible asrrets before bolng an-
titl%d to tb6 4/5tha redUOtiOn Of
Its franahlse tax64 under Artlale
7084, Sub&lvlrlon (b), R. C. S. of
Tares?"
Artiole 7105, Vernon*s Annotated Clyll Stetutelr,
larlee an Intangible tax upon oertaln Remed corporationa
in the foll~wlng lnnguage:
Taoh lnaorporet%d railroad co3lgany,
forry ocmpany, bridge oou;pany,turnpike
or toll oomppany,011 pip6 line aompany,
and all uommon oerrier pip4 llna ooqwmiea
Of 6Y6ry UhharaOt%r Wh?lllte!OeY%r, %II@g%d ia
tb6 traneportatlan of Oil, aO* basinads
vbolly or in part within this State, vhetb
er inaorporeted.undar the laws ot this Stat%,
or or any other State, t%rrltAW, Of fore&n
aountry, snd every other lndiyldual, OoWmnuIJ~
corporation or assooiation doing busin%se of
the same chareater in thle State, in 0dditiOll
to the ad oelorem tares >n tangibl% proper-
SionorebleM. 0. FU~~6rst 95% 3
tie8 which era or say be lrspoaadupon them
rospectloaly, by lew, shall pay en ennuel
tax to th6 State, beginning with the iirat
dey Of Ja2IUarg Of each yaor, 013 t?6ir ln-
tan@bl% asset% and proptrty, an4 local
term thereon to the counties in uhich
its business Is aarrldd on; uhlch addltlonel
tax shell bs eas%ss%d and lavl%d upon suah
Intangible asasts md property in the men-
ner prorICed In this cheptor. The county
or oountlcs in which such texss era to be
paid, en4 tha manner o? epportionment or
the 8890, rh%ll b6 dstarmln64 in eaoor4ence
wlth th6 prOViSiOn% Of thiS chapter.”
Subdivision (B), Artiala 7084, VeruoaL'eAnno-
ktted Clril Statutes, or4et48 a pert161 sxemption in
ieyor o? oarteln oorporatloca ?roa the tex lcrled by
subdlvlslon (A) o? said franahlse tex statute, whloh
examptlon reads es iollans:
'(B) Corporationa whlc);are now ra-
qu5rad by law to pay annually a tax upon
lntenglbl% aaaets, oorporatlona owning or
operetlng rtreat rallwa~tiin or upon th%
public strsati o? any touQ or efty, en4
oorporatlons organlzab to meintaln or own-
ing or operating aleotrlo interurban reil-
vfiya,shell be raqulrad to hsraafter pa
a rrenohlad tax aqua1 to one-flrth (I./57
o? th6 franahlza tax h6r%in lmpos~d qeiDSt
all other aor~retlons under Section (A)
h6r4ln.c
The aorpomtion In question aon@nde ?or the
right to at&s a Trmahlss tax return en4 peym6nt on th%
beais of one-Slith o? tha total ?renahl%% tax l%yl%d by
subdiylslon (A), Artials 7084, Vernon's ,knWzdsd Clril
Statutes, end pal4 by tha corporations therein -%4.
Thla parttal axamption is eaaarta4 under aubdiyiaian
(B) o? the frenehlss tex atatuts next above quoted, an4
is deubtlaes upon the theory that the m6r% nemlng o?
such corporatlonn in hrtlala 7105, Vernon*8 Annotatatl
Cfvil Statutas, as bolng pot%ntlelly subject to an ad
ralorem tax on intanglbla essota, brings th%m squer%lp
Honorable M. 0. Plovers, page 4
within the purview of this partial exemption from ths
franGhise tax.
With this contention we cannot agree. It la
Our conolusion that there must rest upon the oorpora-
tione Olaking this partial exemption from franchise
taxes, en aatual annual llablllty for en ad .valorem
tax On their lntenglble asasts, rather than a mere
theoretical or potential liability for such taxes. In
other words, not all of the corporations described in
Arti 7105, Vernon’s Annotated Civil Statutes, become
liable each year to this tax on Intangible assets, as
such liability dependa upon the facts appearing in the
COrpOret8 statement required by Article 7106 and Article
7lO7, Vernon’s Annotated Civil Statutea, and the msthod
of computation fbllowed by the Intangible Tax Board in
arriving at such tax liability for any given year. It,
under all of the pertinent articles of’Chapter 4, Title
122, Vernon’s Annotated Civil Statutes, conoerning the
levy, assessment and oollection of taxas on -tangible
assets, no such tax is oertifled by the Intangible Tax
Board to the assessors of the various counties of Texas
against any given corporation for a partloular year, then
how can it reasonably be said that such corporation is
*required by law to pay annually a tax upon intangible
assets* within the language of subdivision (B), Axtfols
7084, Vernon’s Annotated Civil Statutes, so as to al-
low such corporation to pay its franohise taxes on the
basis of one-fifth of the total tar levied? In determ-
ining whether or not a oertaln corporation is “required
by law to pay annually a tax upon Intangible aaaets,*
it ia neoesaary to refer to all of the pertinent statutes’
for the assessment end oaloulatlon of such tax, beoauae
Article 7105, Vernon’s Annotated Civil Statutea, in levy-
ing said tax, provides that *suoh additionel tax shall be
assessed and levled upon such intangible assets and proper-
ty in the manner provided in this ohapter.”
This oonolusion is without ths benefit of support-
ing authorities, beaause this ia en open quea~ion in Texas;
being relegated to the bare text of the etatUt inmlrsd,
we are constrained to sooord to such statute a reasonable.
rather than an unreasonable, construotion, end we, feel that
the foregoing conclusion end an errirmative answer to your
question 1s the only reasonable’Construation.
Honorable ki. 0. Flowers, page 5
Tbo manifest @mpose of subdlvlsion (B). Art-
lole 7084, Vernon*s Annotatad Clril Statutes, Is to
lessen to tbe extent of four-fifths the franohlrre tax
burden resting upon eorpoTatlaus which w6ro likewise
liable ror tax on tbolr lntanglble assets. If, from
oontrolllng statutes, it eppsars that no assessment ror
suoh lisxon the intangible assets of said oorpora%lons
Is OS can ba oertlflod by the Intangible Tax Board to
the proper tax officials of the various oountiee In whloh
the property of the oorporatloa is found, then such oor-
poratlon does not have to pay the eddltlonal tax oa
intangible aeeeta and the reason for the exemption
of such corporetlon from the payment of four-fifths
of ita franchise taxer no longer obtains.
To ellw suoh oorpontlon to pay only one-lift&
of the rranohls6 tu lsrled against it, whlle other oar-
poratlonci ,arapaying such rranahi8e tu in It6 entlretr,
would be to oonter a gratuity or gift upon such oorpom-
tion, and the intention to do this Ml1 not be aaorlbed
to the Legislatare, absent lauguaga l.n the statute oom-
pelllug such oonstmotlo~.
Tours vary truly
BT