                    E    *                     GENERAL
                              OFTEXAS
                             AUSTIN 1~1.TEXAS

                                  January   21,    1957


Honorable   Robert 5. Calvert            Opinion     No. WW-4
Comptroller    of Public Accounts
Capitol   Station                        Re: Whether or not, under the
Austin,   Texas                             terms of lease   agreements,   the
                                            lessors  of trucking   equip-
                                           ment are liable     for gross re-
                                           celpts   tax as provided    for by
Dear Mr; Calvert:                          Article   7066b, V.C.S.

               Your letter  requesting our opinion         in reference     to the
captioned      matter reads in part at follows:

               “Sub-Section  A of Section      I of Article     7066b,
      V.C.S.     reeds as follows:

      iil Each individual,        partnership,     company, association
      or corporation      doing business       as a “motor bus company”
      as defined     in Chapter 270, Acts,         Regular Session       of the
      Fortieth    Legislature,       as amended by the Acts of 1929,
      First   Called Session       of the Fort x-first      Legislature,
      Chapter 7,8, or as “motor carrier              or “contraqt    carrier”
      as defined     in Chapter 277, Acts,         Regular Session       of the
      Forty-second     Legislature,       over and by use of the public
      highways of this State,          shell make quarterly        on ,the first
      day of January, April,          July end October      of each year,
      a report    to the Comptroller,         under oath, of the individ-
      ual, partnership,        company, association,        or corporation
      by its president,        treasurer,     or secretary,     showing the
      gross amount received         from intrastate      business    done with-
      in this State in the payment of charges               for trensport-
      ing persons for compensation            and any freight      or commo-
      dity for hire,      or ~from other sources        of revenue received
      from intrastate      business     within    this State during the
      quarter next preceding.           Said individual,       partnership,
      company, association,         or corporation      at the time of mak-
      ing said report,       shall pay to the State Treasurer             an
      occupation    tax for the quarter         next preceding      said date
      equal to 2.42% of said gross receipts,              as shown by said
      report.     Provided,     however,    carrier5    of persons     or prop-
      erty who are required         to pay an intangible        assets    tax
      under the laws of this State,            are hereby exempted from
      the provisions      of this Article       of this Act.’
                                                                 .     -

                                i,



Hon.   Robert   S.   Celvert,        Page 2   (WW%)



              “1 have contacted     a number of truck owners for
       the tax end have.been       furnished   with copies   of Lease
       Agreements,   copies    of which Lease Agreements,        covering
       leased commerclel     ,vehicles,    ere on file  with the Depart-
       ment of Public    Safety in accordance       with Article     67OlC-1,
       R.C.S.

            “lam enclosing   e copy of one of the Lease Agree-
       ments between OR. F. Moore, L. H. McCeIvey and Joe
       Ferguson of Temple, ,Texes,    lessors and Baldwin-Hill
       of Trenton,  New Jersey,   lessee.

              “Please advise me whether or not, under the
       terms of this Lease Agreement,      the lessors  are liable
       for the gross rece.ipts    tax provided   for by Article
       7066b, V.C.S.     If the lessors   are not required    to
       pay the tax, please advise me whether or not the
       lessee   or anyone else  is required    to pay the tax.”

             Under the express     provisions   of Article   7066b, Vernon’s
Civil   Statutes,   a gross receipts      tax is only levied    against
those who transport      persons or freight     for compensation.       Anyone
who transports    himself    or his own commodities      is not  subject   to
the tax.     In doing h,is own transporting,       whether h,e uses a
vehicle    that he owns, borrows,      leases,   or rents is im-
material.

             We have ca,rafully      examined the lease agreement f,urnished
us*   and find   that   same, :gives   the lessee   full   control  over the
leased tractors      end trailers;      that the operators      of the vehicles
are to be hired by the lessee           and to be under lessee’s      control.
It is our opinion       that this lease agreement is valid-and,           if the
parties   thereto    operate    in compliance     therewith,    no tax will ac-
crue under said Article         7066b.

           Of c-*rrse,  if the lease agreement is a subterfuge,
and the lessor   of the ,vehicles   operates    them himself   or through
his own drivers,    then the lessor    is liable   four the gross receipts
tax.




              Individuals,   partnerships,      companies,   assocla-
       tlons or corporations      may transport      their own commod-
       ities   by use of leased motor vehicles         without   sub-
       Jetting    themselves  or their     lessee  to the payment of
Hon.   Robert”S.   Celvert,   page 3 (WV!-4)


       the motor carrier      gross receipts     tax levied     by Ar-
       ticle  7066b,  V.C.S.,     whep the lease agreement pro-
       vides that the lessee       shall have full    control     over
       the vehicles    and the lessee     is to hire the drivers
       and control   them.     However,   if the lease agreement is
       is a subterfuge    and the lessor      retains   control    over
       the vehicles    or drivers,     the tax will   accrue against
       the lessor.

Approved:                              Yours   very   truly,
      Opinion Committee         *’
     H. Grady Chandler                 WILL WILSON
            Cha 1 rman
                     I,                Attorney General        of Texas




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