                        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
