                                                                                191




                            February    21,   1950


Hon. Robert S. Calve1 t                 Opinion      No. V-1010.
ComptroLler   of Public Accounts
Austin, Texas                           Re:    Several questions     regard-
                                               ing the gross receipts     tax
                                               liability of carriers    whose
                                               intangible  taxes are delin-
Dear     Mr.   Calvert:                        quent.

               You submit for the opinion of this office several        ques-
tions,   the pertinent portions of which we quote below:

                “I wsh to call your attention to H.B. No. 8, .Acts..
         47th Legislature,    Articles   13 and 14, with”respect   to
         the motor bus and common carrier         truck lines.   Arti-
         cle 13 amends Chaprer 4. T-.tle 122, Article~JL05,        coy- 7
         ering the tax on Intangible assets.     Article   14 becomes
         a part of the Gross Receipts      Law and places a 2.2%
         tax on the receipts     of motor bus, common carrier      and
         contract carriers     as defined in Chapter 277, Acts 47th
         Legislature.    Ai title 7116 V.A.C.S.    1925, contains an
         exemption from th7: payment of Gross        Receipts Tax,
         should they pay in ful- and within the year for which
         the Intangible Tax may be assessed        o. .

                 “Each of the several  counties  in this State fi.e
         annual lists of insolvent and delinquent tax payers at
         June 30th of the succeeding    year.   We check these in-
         solvent   lists with oui~ County Certificates,    to deter -
         mine those that failed to pay this tax. We then pr~oceed
         to mail the taxpayer a notice calling his attention to
         the delinquent taxes in the various    counties,  with cop-
         ies to the county tax collectors.    At this time we are in
         the process    of checking the 1948 lists that became de-
         linquent in 1949.

                “In view of the facts as set out above, certain
         questions  have arisen and we request a ruing on those
         submitted hei ewith:

                “(1) Is the taxpayer due the Gross Receipts    Tax
         on his operations as a specialized,   common,   or motor
         bus company should he become delinquent on his Intan-
         gible Taxes for any year?    If the taxpayer fails to pay
    Hon. Robert    S. Calvert,   Page   2 (V-1010)




            his Intangible Tax for ,any given year and becomes    lia-
            ble for the tax on the gross receipts, then the Gross
            Receipts   Tax becomes due for what period of time?

                   “(2) The taxpayer    may travel through four or
r           more .+zannties. and each,rrf&hem,receive   a .+ortion of     *
            his Intangible assessment.     He may pay in one, two
            or even three counties, but omit one or more of them.
            Does the exemption,    contained  in Art. 7116. apply to
            those that only pay a part of their total assessment,
            letting one or more counties become delinquent?

                     “(3) The tax collector   may have accepted pay-
              ment and issued Insolvent     Tax ~Receipts after June
              30th. And should you ruie that the taxpayers are due
             .the Gross Receipts   Tax because of failure to pay the
         ’ _ Intangible Ad Valorem     Taxes, should the taxpayer be
              allowed credit for Intangible Taxes so paid against the
              Gross Receipts   Taxes?

                   “(4) Should you rule that the Gross Receipts   Law
            becomes    operative on these delinquent taxpayers,  can
            the county officials proceed to collect  the Ad Valorem
            Taxes:    In your Opinion No. 05770, copy of which.is at-
            tached, you ruled that,

                   ” ‘Until the carrier operating under the certificate
            of convenience    and necessity   as a Specialized Carrier
            becomes    subject to liability for Intangible Assets  Tax,
            it cannot avail itself of the exemption from Gross Re-
            ceipts Tax as is contained in Article     7066(A) VRCS.’
    -3
                   ‘This question    involves  those that have been sub-
            ject to a liability for Intangible Assets   Tax and have neg-
            lected to pay this tax within the year in which it was
            assessed.”

                 Our answers to your questions will be more easily un-
    derstood if we first state some rules of law appiicable        to taxation
    of intangible assets as provided in Articles      7105-16,   V.C.S.   This
    is an ad valorem    tax assessed   upon an annual basis, and January
    1st is a specific date upon which the status and value of the prop-
    erty shall be fixed and determined.      In this regard the same rule
    applies to intangible taxes as to ad valorem      taxes on tangible prop-
    erty.   Texas Consolidated    Transportation    Co. v. State, 210 S.W.Zd
    891 .(Tex. Civ. App. 1948, error ref.).

                   We assume for the purpose of this opinion that full tax-
    able years    are involved in all your questions. A taxpayer  may be
                                                                                   193
   ~~~~ Robert   S. Calvert,   Pa+   3 (V-1010)



   ,ubject to both a tax upon intangible    assets   as provided in Articles
   7105-16,  V&S.     (the intangible tax statute) and a gross receipts     tax
   as provided in Article    7066b. V.C.S.,  at the same time and for the
   same year.    ‘But the Legislature   has provided that under certain
   circumstances     a taxpayer who IS subject to both taxes may be re-
   lieved of liability for gross receipt s taxes upon certain conditions.
   These conditions are set out in Article      7116. V.C.S.,  which pro-     C(
   “ides:

                 “Whenever      any individual,    company.    corporation
         or association,     embraced    within the eighth article of
         this chapter, shall pay in full, and within the year for
         which same may be assessed,            all its State and county
         taxes for that year upon all its intangible properties            as
         determined,     fixed and assessed         under the provisions
         of this chapter,     such individual,     company,    corporation
         or association     shall thereby be relieved from liability
         for and from payment of any and all occupation              taxes
         measured     by gross receipt-, for or accruing during that
         year under any law of this State; but no such individual,
         company, corporation        or association      shall be entitled I
         to any such exemption,       except for the year for which it
         shall, before same shall become delinquent,              pay all its
         aforesaid   intangible State and county taxes for that year.”

                Therefore,   in answer to your first question, you are ad-
   vised that if a taxpayer fails to pay his intangible tax for any given
   year but permits the same to become delinquent,      the gross receipts
   tax is due for the full corresponding   year.

                 In answer to your second question,        you are advised that
   a taxpayer may not avail himseif        of the exemption contained in Ar-
   ticle 7116, V.C.S.,   unless he pays all his intangible taxes in all the
   counties to which they are apportioned,        and before they become de-
   linquent.   The statute provides,     -pay all its aforesaid    intangible
   State and county taxes for that year,” and this means all the taxes
   assessed    which have been apportioned       to all the counties as provid-
$’ ed in Article   7113, V.C.S.    That is the meaning of the statute,       and
   is in effect the holda     of Texas Consolidated      Transportation     Co.
   v. State, supra..   This decision   states “that relief from liability for
   th e gross receipts   tax is absolsitely conditioned     upon payment of
   an intangible assets tax for the year during which such relief is
   sought.”

                  In answer’ to your third question, you are advised that,
   as pzeviously     stated, a taxpayer may become subject to both an in-
   tangible tax and a g: ass i eceipts tax by his failure to avail h’.mseLf
   of the provisions     of Article 7116, supra.  In such case both become
   fixed liabilities   of the taxpayer.   The intangible tax becomes fixed
           Hon. Robert             S. Calvert,   Page 4 (V-1010)




             .by.reason   of the fact that he was subject to it on January 1st for
        . . .~which proper assessment      and legal levy is made, and his liability
.             for the gross receipts   tax becomes   fixed by his failure to avail him-
              self of the exemptiop provided in Article    7116. supra, in the time
              and manner therein<provided.
                                     .
                                   True it isthat   Art&e     7066b,   V.C.S.   (the gross   receipts
    3
           tax) contains            the following   pr,ovisioni,,
                                                             . .
                               “Provided,    however, carriers    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.”

                                   However,  in the case    of Consolidated  Transportation
           do.        v.. State,    supra, in construing    these two statutes, the court said:

                                “Both of these statutes       were a part of the .same
                        legislative  enactment.   Acts        1941. 47th Leg., p. 269;
                        ch. 184.

                                   “Art. 7116, V.A.C.S.,  is contained in Chapter 4,
                 -7
                        Title      122, of the Revised Civil Statutes of 1925, . . .

                                “This Article  is not in any manner repealed by
                        the legislative  act of 1941.    In fact it is carried   for-
                        ward and became a part of the new law by specific r&-
                        erence.    Nor is there any repugnancy      or inconsistency
                        between art. 7116 and the concluding       sentence of Sec.
                        (a), art. 7066b, supra.    These statutes should, therefore,
                        be construed together.     When this is done, the legisla-
                        tive intent plainly appears (1) that a taxpayer subject to
                        both an intangible assets tax and a gross receipts tax
                        should not necessarily    be required to pay both at the
                        same time or for the same period, but (2) that relief
                        from liability ior the gross receipts     tax is absolutely
                        conditioned upon payment of an intangible assets tax for
                        the year du~ring which such relief is sought.”

                         As stated in the Consolidated   case, *a taxpayer subject
           to both an intangible assets tax and a gross receipts     tax should not
           necessarily    be required to pay both at the same time or for the same
           period.”    But in that case the court was not dealing with a situation
           where the liability for both taxes had become fixed by reason of the
           taxpayer’s   failure to avail himself of the exemption contained in Ar-
           ticle 7116.   It was dealing with a situation where the taxpayer could
           not in any event be subject to the intangible tax for the year involved
           for the simple reason that he did not fall within the class required
           under the law to pay an intangible tax until after January 1. and hence
eon. Robert   S. Calvert,   Page   5 (V-1010)



in no event could the taxpayer be subject under the law to pay an
intangible tax for that year.   Therefore    the taxpayer in that case
was subject to the gross receipts     tax for the remaining    portion of
the year after he fell into the classification    of those required to
pay the tax. Construing    these two exemption      statutes together, Ar-    .
title 7116 is a further limitation upon Article      7066b (the gross re-
ceiptstiatute) with the result as foilows:

             *Provided,   however, carriers    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.”

              ”
               . . . but no such individual, company,    corpora-
      tion or association    shall be entitled to any such exemp-
      tion, except for the year for which it shall, before same
      shall become delinquent, pay all its aforesaid      intangible
      State and county taxes for that year.”

              Turning to your fourth question,   if a taxpayerhas    be-
come liable for both intangible and gross receipts      tax upon the con-
ditions we point out above. then clearly   the Tax Collector    would
have no authority to allow credit against the gross receipts tax for
the amount paid for delinquent intangible taxes.      This would have
the effect of forgiving a tax liability which had become fixed, and
this is forbidden by Section 10 of Article   VIII of the Constitution,   (-
which provides:        ‘-

             “The Legislature   shall have no power to release
      the inhabitants of, or property in, any county, city or
      town from the payment of taxes levied for State and
      county purposes,   unless in case of great public calam-
      ity in any such county, city or town, and such release
      may be made by a vote of two-thirds     of each house of
      the Legislature.”

Not even the Legislature     has this power, and certainly the Tax Col-
lector does not have it. The same would also violate Section 55 of ‘e
Article III of the Constitution   which provides:

             “The Legislature    shall have no power to release
      or extinguish,   or to authorize   the releasing   or extin-
      guishing,   in whole or in part, the indebtedness,     liabil-
      ity or obligation of any incorporation     or individual, to
      this State, or to any county or other municipal corpora-
      tion therein.”

              In answer to your question No. 4, you are advised that
if a taxpayer   becomes  subject  to both intangible and gross re-
ceipts taxes under the circumstances     we have discussed  above, the
Hon. Robert   S. Calvert.   Page 6 (V-1010)




tax collector   is not onIy authorized   but it is his duty to collect   the
ad valorem    taxes’on the taxpayer’s    intangible assets assessed      by
virtue of Articles    7105-16, V.C.S.

              You submit    a supplemental    request   as follows:

             “Supplementing  our request of September     19, 1949,
      I wish to’submit additional questions   on delinquent In-
      tangible Taxes and/or Gross Receipts      Taxes.
                                                            t
             “(a) A man sells his bus certificates~to   a larger
      line during 1947 and did not pay his 1946 taxes on in-
      tangible assets or on his gross receipts.

             “(b) A man sells his equipment,    shops and ter-
      minals during February     1945 and leases his certificates
      to a corporation  who continues the same business.      The
      lease is for ten years, but within a year or two the cor-
      poration buys his certificates  and lease contract.    The
      lease contract provides that the corporation    will not be
      liable for, nor do they assume any obligations    then ex-
      isting against the individual.  The individual does not
      pay the tax on intangible assets during the period of the
      lease, nor does the corporation   pay on either of the tax-
      es on intangible assets,  or gross receipts.

             “The question arises:    do we look to the present
      owners of these properties,    since the intangible asgets
      and/or   gross receipts taxes have not been paid?        Does
      a tax lien attach itself to the certificate   for delinquent
      taxes, either on intangible assets     or gross receipts?    ”

              In answer to the questions therein presented,         we think
it only necessary    to say that personal liability for, taxes exists only
against those against whom the taxes are lawfully-assessed,             and a
subsequent   purchaser    does not become personally        liable therefor.
This is the holding of the case of City of San Antonio v. Toepper-
wein, 104 Tex. 43, 133 S.W. 416 (1911).         To the same effect are
scks      v. State, 41 S.W.2d 714, (Tex. Civ. App. 1931); Slaughter v.
City of Dallas,   TO1 Tex. 315, 107 S.W. 48 (1908).        The law does not
fix a lien against the operator’s    certificate   to secure    the payment
of delinquent intangible taxes or gross receipts        taxes.    But a lien
does attach upon ail the property of the taxpayer as provided in Ar-
ticle 7083. V.C.S.,   and a subsequent purchaser       would take such prop-
erty subject to the lien provided in said Article       of the statute.

            In Acts 1941, 47th Legislature,   chapter 184, known as
the Omnibus Tax Law, there was included as Article      21, and incor-
porated as Article  7083b, V.C.S., the following general provision:
                                                                               PY7

Ron. Robert   S. Caiv,ert.   Page 7 (V-1010)




               “All taxes, fines, penalties,     and interest        . . due
      . . . to  the State   of Texas,   by virtue   of  this.Act,   shall
      be a preferred      lien, first and prior to any and all other
      existing liens, contract or statutory,         legal or equitable,
      and regardless       of the time such liens originated,          upon
      all the property of any individual,         firm,    association,
      jokh’rrtockoompny+         rydieace,    oupa~bkemship, cerpe
      ration, agency, trustee, or receiver.            This lien shall be
      cumulative,     and in addition to the liens for taxes, fines,
      penalties,    and interest now provided by law, and shall
      attach as of the date such tax or taxes are due and pay-
      able. ”

               The Omnibus Tax Bill amended the intangible tax law
by including motor bus companies,         common carrier      motor carriers,
and specialized     motor carriers.     The foregoing    lien provision would,
therefore,    apply for intangible taxes assessed      against motor bus
companies,     common carrier       motor carriers,   and specialized    mo-
tor carriers;    and it would likewise apply for gross receipts        tax un-
der Article    7066b, V.C.S.,    where liability attaches under the condi-
tions we have set out above.        Therefore,  a subsequent    sale of any
property that had become subject to the lien provided by the fore-
going statute would not operate to extinguish        the lien, and a subse-
quent purchaser     would take such property subject to the lien, but
would not be personally       liable for the tax.

                                SUMMARY

               A taxpayer may become subjecfto           a tax on intan-
       gible assets as provided in Articles         7105-711’6~, V.C.S.,
       and to gross receipts      tax as provided in Article       7066b,
       V.C.S..   for the same year or years         and for the pame
       time if he fails to pay the intangible tax before it be-
      ,comes delinquent as provided in Article           7116, V.C.S.
       Under such circumstances         credit may not be allowed
       against the gross receipts       tax for the delinquent intan-
       gible’tax   when paid. The Tax Collector         is authorized
       to collect the intangible tax where a taxpayer has also
       become liable to pay a gross receipts          tax. A subsequent
       purchaser     is not personally    liable for taxes of his pre-
       decessor     in title, and no liens exist against the certifi-
       cate of a bus or motor carrier         to secure the payment
       of either intangible taxes or gross receipts           taxes.  But
~Hon, Robert   S. Calvert,   Page 8 (V-1010)




        a lien does attach upon.*11   property of the taxpayer as
        provided in Article  7083b,   V.C.S.,  and a subsequent
       -purchaser would take such     property subject to the lien
       .provided in said Article of   the statute.

                                               ‘.Yours very   truly,

                                                ;PRIC E DANIEL
                                               Attorney .General




‘W.. ‘V,. :Geppert
Taxation:Division

Price .Daniel
Attorney  General


:LPL/mwb
