Honorable Robert S. Calvert              OpInlon Ho. (C-328)
Comptroller of Public Accounts
Austin, Texas                            Re:   Whether Article      10.03(3)
                                               V.C.S. requires a supplier
                                               to collect    the tax on all
                                               special. fuels delivered       to
                                               statutorily    defined dealers
                                               or users who are not bonded,
                                               or whether it requires the
                                               supplier to collect        the tax
                                               only on deliveries       made to
                                               dealers    and users who are
                                               acting in the capacity        of
                                               non-bonded dealers or non-
                                               bonded users as classlfled
                                               by Article    30.11(l),     V.C.S.
Dear Mr. Calvert:                              and related     questions.
         We quote your letter  requesting      the opinion   of this
office    on the above captioned   matter:
               ‘we desire the opinion of your office  as to
         the following   questions lnv6lvlng the sales of
         special fuels to *users’ as that term Is defined.
               “‘User’,   as defined by Article  10.02(8),
          ‘means and includes every person who delivers
         any special    fuels into the fuel supply tanks
         of motor vehicles     owned or operated by him.
         “User” also means any person who Imports ape~clal
         fuels into ~thls State in fuel supply tanks of
         motor vehicles     owned or operated by him. f
               ” *Supplier I, as defined by Article     10.02(6),
         ‘means any person who delivers      special  tie16 to
         dealers or users (Including     locations   of the
         supplier)   for redelivery   by them Into the fuel
         supply tanks of motor vehicles.’



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Honorable   Robert S. Culvert,   Page 2       Oplnlon No. (C-328)


            “Article    10.03(3),  provides that, ‘Every
     supplier shall collect       the tax, at the rate
     Imposed, on each gallon of special       fuels de-
     livered to nonrbonded dealers or users and shall
     report and pay to this State the tax so
     collected.      . . .I
             “Article  10.06, provides   in part as follows:
       ‘Except In the case of tax-paid dellverles       into
      the fuel supply tanks of motor vehicles,       It Is
     unlawful to make bulk sales of special fuels
      to any person who (1) iS not licensed      as a
      supplier,    or (2) Is not licensed   as a dealer
     .or user of special Reels, or (3) does not
      furnish a signed statement that none of the
      special fuels purchased will be delivered       by
      him or permitted by him to be delivered       Into
      the fuel supply tanks, of motor .vehlcles.    @
            “Article  10.09, provides that,  ‘Every
     person defined herein as a stippller,    dealer or
     user shall secure from the Comptroller. the kind
     sclass       of permit required herein to act in
     such capacities    or to perform such functions.’
           “Intrastate ‘users’ with whom we are coti-
     cerned here are classified   In Article 10.11(l)
     as follows:
                   ‘NonGonded Users are     persons
            whose purchaseoofclal           fuels are
            predominantly for delivery      by them
            Into the fuel supply tanks      of motor
            vehicles   owned. or operated   by them.

                   ‘Bonded Users are persons whose
            purchaEG?T     ZiGETa fuels are not
            predominantly for delivery    by them
            Into the fuel supply tanks of motor
            vehicles   owned or pperated by them. t




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Honorable          Robert S. Calvert,   Page 3     Opinion NO. (c-328)


                  "This office   has before It two audits made from
            the records
                   .     of
                          ._  bonded
                                  _. suppliers
                                         .       of special fuels which
            Show that 8816 auppllers have sold special fuels tax
            free In large quantities     to persons who were operating
            In the capacity of bonded users, as classlfled       above,
            but such persons Were not licensed or dld not hold
            permits as bonded'ussrs,     which would have enabled them
            to purchase special fuels tax free.
                  "In one case,, the supplier entered into an
            arrangement with the user to consis     the special fuels
    l       to him and, after the fuel was used, he collected    the
            tax from the user only on the fuel that said user was
            presumed to have delivered   into the fuel supply tanks
            of his motor vehicles   for use on the highway - which
            was not supported by records which a user is required
            to keep.
                 "In the other case, the supplldr merely sold
            and delivered  the special fuels tax free to a user
            whom he thought was llcen,eed as a bonded user and
            was reporting  and paying the tax on the highway
            use as a bonded user Is required  to do by Article
            10.13(4).
                  "Sinde Article      10.03(3),  quoted above, places '
            the collection     of the tax by the supplier upon each
            gallon of special fuels delivered         to non-bonded users,
            this office    has construed the law to mean that the
            supplier bust collect       the tax on all deliveries    made
            to any person operating in the capacity of a non-
            bonded user as classified        by Article 10.11 - which, If
            correctly    oonstrue      would require collection    of the
            tax on special     fue 9 s dellvered  to a non-bonded user
            by consignment or otherwise.
                  "In these cases, the suppliers   sold and delivered
            special fuels to users who were operating In the capacity
            of banded users as classlf$ed   by Article 10.11, but who
            were not licensed   as bonded users, which made the sales
            unlawful under the terms of Article    10.06, above cited.




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Honorable   Robert S. Calvert,   Page 4     Opinion No. (c-328)


             "Our questions are therefore  as follows:      Does
     Article    10.03(3),cited above, require a supplier to
     collect    the tax on all special fuels delivered      to
     statutorily    defined dealers or users who are not
     bonded, or does It require the sler           to collect
     the tax only on deliveries     made to dealers and users
     who are acting In the capacity of non-bonded de-
     or non-bonded users as classified     by Artlcle.10.11(1)
     of the law?
           "If you answer that said supplier Is required
     to collect    the tax only on deliveries    made to users
     acting In the capacity of non-bonded dealers and users
     as classlfled    by the said Article   10.11, then, will
     making of bulk sales of, special fuels to persons acting
     In the capacity of bonded dealers and users who are not
     so licensed as bonded dealers or bonded users make the
     suppller liable for collection      and payment of the tax
     to the State on such unlawful deliveries?        Or, will
     such supplier merely be liable      to punishment under the
     civil  and criminal penalties    of the law for such sales?"
      Article   10.03(3)places a mandatory duty upon every
supplier to collect     the tax on each gallon of specialfuels
delivered    to non-bonded dealers or non-bonded users and to
report and pay to the State~the tax so collected.       We are
therefore    In accord with your construction   that the supplier
must collect    the tax whether the special   fuels were delivered
to the non-bonded user or non-bonded dealer by consignment
or otherwise.
       We are further of the opinion that the tax must be
collected   even when said dealers and users were acting In
the capacity of bonded dealers and bonded users but had not
been properly licensed.    This for the reason that said dealers
and users were In fact non-bonded since they were not properly
licensed.
      Since' the suppliers in the cases under consideration
have falled‘to     perform the mandatory duty of collection  Imposed
by Article    10.03 and since the sales-were   therefore unlawful
under Article     10.06, we think the suppliers are liable to the
State for the amount of taxes due at the time of said deliveries.
We are not here concerned -with any possible     recourse they may
have against the parties to whom the unlawful deliveries      were
made.


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        Honorable       Robert S. Calvert,   Page 5      Oplnon No. (C-328)


               Article     10.18 provides,   In part,   as follows:
                       "(1)     If any person affected   by this Chapter
               shall fall or ref’use to comply with any provision
               of this Chapter or shall violate         the same, or shall
               fall or refuse to comply with any rule and regulation
               promulgated hereunder by the Comptroller or shall
               violate      the same, he shall forfeit     to the State of
               Wxas as a penalty the sum of not less that Twenty-
               five Dollars ($25) nor more than Five Hundred Dollars
               ($500). . . .Provlded that In addition to such pen-
               altles,      If any supplier,   dealer or user does not make
               remittance for any taxes collected,           or pay any taxes
               due the State of Texas by sald supplier,            dealer or
               user, within the time prescribed         by law said supplier,
               dealer or user shall upon the first           offense forfeit
               two per cent (2s) of the amount due; and If said taxes
               are not paid within ten (lO)days from the date of
               notice in wt&tlng by the Comptroller that any taxes
               have not been reported and paid, an additional             eight
               per cent (8%) shall be forfeited;         provided that upon
               each subsequent offense during any calendar year of
               falling      to remit taxes collected    or due the State
               within the tlme prescribed        by law, such supplier,
               dealer or user shall forfeit         twenty-five    per cent
                (25%) of the amount due.        All past due taxes and
               penalties       shall draw Interest   at six per cent (6%)
               per annum.
                       11. . . II

              The suppliers are likewise  subject to the penalties
        provided by the provisions   above quoted.
               Article  lo.23 provides penalties     In those cases In which
        the taxes have been collected      but willfully    not paid to the
        State.     Its provislons.are  therefore   not applicable   here.
                                     SUMMARY
                                     -------
                      Every supplier must collect   the tax on
               all special fuels delivered    to non-bonded dealers
               or non-bonded users and pay to the State the tax
               collected.    The tax must be collected   whether de-
               livery was by consignment or otherwise and even In
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Honorable Robert 9. Calvept,   Page 6   Opinion     No.     (C-328)


     cases when said dealsrs and users were acting
     In the capacity of bonded dealers and bonded
     users but had not been properly lioensed.
     Suppliers who fall to collect taxes due the State
     are liable to the State therefor and are likewise
     subject to the penalties Imposed by Artlole 10.18,
     V.C.S.

                                Yours very truly,     ,‘,
                                                      :.
                                WAOOONER CARR
                                Attorney Qeneral of Texas




APPROVED:
OPINIONCOMMITTEE
W. V. Qeppert, Chairman
Arthur Saridlin
Roy Johnson
J3 H. . Broadhur’st
APPROVED   FOR,THEATTORNEY   GENERAL
B;y: Roger Tyler
