OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
6l.D 0. MANN
I”.. .*“s..L
Januaxy Z7, 1939
Hon. Ooorge R. Sheppard
Comptroller of Fublio Aooount8
Austin, Tous
Dear I&. Sheppard:
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in the letter froa the law firpl
t0 JOUr latter, &XW 88 tOiiOWCtt
OS a Vualners Building Campaigna
by The Peooa Entuprl~e and ooop-
uatltig amrohanta in the town OS Peoos. Aa rooltad
in the opinion of the Attorney General rrferred to,
the prlmory purpose of the oampaign wag to stimulate
buslnees and to provide employment for a number of
foone ladlea. The plan was worked out on a oommlsalon
basis with extra remuneration in the form of an euto-
Hon. Ceocpe H. Sheppard, January 27, 1939, Dupe 2
mobile presented to the young lady in the oampni~n
:$homade the moat sales.
'The salesladies employed in the enterprise
sold ooupon books upon which there we8 printed the
name of one of the oooperatlng msrobonts. The
book4 were in vnrlous denomlnatlons and were sold
for the full face amounts thereof, the books being
aoceptable at full value to the msrohont whose name
wes prlnteC thereon. The 41rls oountsr-slcned the
books and delivered them to the purohoser, made a
note on the stub and reported the sele to The Peoos
Rnterprlse and made due aooountlng of ths monies
received. Upon report belnp made at deslcnated
intervals, The Feoos Enterprise in turn pold to the
young lady maklnp ths ssls a desleneted oommlsslon
or the monies oolleotea. Then of the funds so rs-
celved an amount was deducted to assist In paying
the sxpenses of the oampalw, and the balanoe re-
nalni~ was paid to the respective oooperatlng mer-
ohants. Then as the oampaien olosed, the girl who
had sold the largest amount of ooupon books reoelved
an automoblls, in addition to oosh oommlsslons al-
ready paid.
*In the a~re.m.nt entered Into betwesen The Peoos
Enterprise and the respeotlvs oooperatlne msrohanlts
It was rsolted that ths elrls engaged in the sale of
the ooupon books were entered in a Wpopularlty" oon-
test; however, the award of the automobile was not
baaed on "popularitya* rather it was bared upon the
industry of the lndlvldual partlolpant. Ho votes
were oast by any persons. It a prospeotlve oustomer
desired to favor a rrlcna'or.ao~ualntanos, he or she
mlfht make purehase of a desiwated amount of ooupon
books from the young lady in question; however, on
aaoh sale the tlrl making the sale had paid fo her
a derlnit. oommlsslon, and then, at the end of the
oontest, the youn(!lady maklne the largest sales of
ooupon books had present~~dto her an automobile In
, addition to the amount or oommla~lons theretofore paid
to.her in oosh.
"During ths entire oontest the young ladles enter- \
ed were oarrled on the payrolls of the oompany (LOem-
Hon. Caorpe H. Fiheppnrd,JAnuary 27, 1939, Page 3
ployees and due payment was made of social seouri-
ty tax on eaoh of the young ladles. In other
words, The PeooA Enterprise treoted the salesla-
dies as its employees And accounted for soolal
security tax, And on the award of the automobile
accounted ror the value of the same by payment of
the proper Amount of social security tax on its
said value."
Y;edlreot your attention to Article 7M71 (a). In
this portion of the statute you will note thet every puson,
firm or corporation oonauctlng a theater, plaoe of amusement,
or any bualnsse enterprise In oonneotlon with the operation
of whloh a prize In the form of money or something of value
14 offered or flven to on. or more patrons of suoh theater,
plaoe or amusement or plaoe of buslnese and not plven to all
patrons thereof paylap the some OhArge for Any woh service,
oommodity or entertainment will be required to pay 20$ of
the value of said prlw or Flit as provided in seotion (b)
or said Article.
Xt Is the opinion ot this Departient, and you are
so advised, that under ths faots sutaltted with your lnqulq,
no tax would be due the State beoause eaoh of the persons
selling the ooupon books was oarrled on the payrolls of The
Peoos Enterprise as an employee and was not a patron as would
bs affeoteclby the provisions OS Artlole 70471, Revised Civil
Statutes of Texas. The automobile that WAS &iven to the em-
ployss sslllng the largest numbsr of ooupon books, ln the
opinion al this Department, would not be olasssd as a prize
bat, on the other hand, would be a bonus and/or sxtra oom-
peneatlon for suvlces randered by the employee.
Yours very truly
ATTORREY cSXKXL OF TKXAS