                       THEA~ORNEY                       GENERAL

                                      OFTEXAS

                                    AUSTIN      ~x.TEXAR
   WII.LFVIJ%ON
A’ITORNE’.Y GENEWAX.                         August 18, 1959


              Honorable Jesse James                Opinion No. WW-688
              State Treasurer
              Treasury Department                 Re:      Whether a credit memo-
              State of Texas                               randum invoice issued
              Austin, Texas                                by the State Treasurer
                                                           in 1954 may be allowed
                                                           now as a credit against
                                                           a purchase of cigarette
              Dear Mr. James:                              stamps.

                       You have certified the following facts for opinion
              by this Department:

                         "In August, 1953, the Associated Grocers of
                       San Antonio, Texas, purchased the assets of the
                       Merchants Wholesale, Inc., of Kenedy, Texas.
                       Included in the fixed assets of the Merchants
                       Wholesale, Inc., was a Pitney-Bowes cigarette
                       tax machine together with the tax meter.  In
                       this meter the gross amount of $1,320.80 of
                       unused tax (3,302 units or 33,020 impressions)
                       was transferred or sold to Associated Grocers.

                         "On September 1, and September 30, 1953, we
                       suggested to the Merchants Wholesale, to return
                       the meter to us or to advise us if this meter
                       was transferred to Associated Grocers. No reply
                       was received to our letters nor was the meter
                       returned to us at that time.

                         "On November 24, 1953, Mr. Lowell Gault, Auditor
                       for the Cigarette Tax Division of the State Comp-
                       troller's Department, made a final audit of the
                       Merchants 'Wholesale and advised us that the ma-
                       chine and the meter was transferred to Associated
                       Grocers in San Antonio. Mr. Gault further advised
                       that Associated Grocers would re-new the lease of
                       the meter and would purchase a cigarette distri-
                       butor's permit to use the meter. About two months
                       later, Associated Grocers returned the meter to
                       us with no instructions or advice concerning the
                       meter.
Honorable Jesse James, page 2           Opinion No. ~-688



           "This Department held this meter intact until
         August 30, 1954, at which time we issued a credit
         memorandum invoice No. 40906 in the gross amount
         of $1.,320.80 and a net amount of $1,281.80 cov-
         ering the unused tax in the meter and Pitney-
         Bowes service man checked the meter out of service.
         The difference between these amounts is the dis-
         count allowed on the purchase of cigarette stamps
         or meter impressions.

           "Since that time this credit of $1,281.80 has
         been carried on our records and no advice or
         information was received from Associated Grocers
         until May 22, 1959. On that date a letter request
         was received seeking a refund for this unused
         cigarette tax.

           "Since almost five years have passed since the
         credit memorandum invoice was issued, we respect-
         fully request your opinion if this credit now may
         be allowed against a purchase of~cigarette tax
         stamps,"

         Section 2a of the Cigarette Tax Act (Article 7047c-1,
V.A.C.S.) empowers the Comptroller to authorize licensed
cigarette distributors to evidence the payment of the cigarette
tax by impression of "tax meter stamps", Unless otherwise
specifically provided in the cigarette tax act, all provisions
relating to cigarette tax stamps apply to "tax meter stamps."

         In 1955, the Legislature raised the rates at which
cigarettes were taxed. See Article 7047c-1, Sec. 2, and
Sec. 2a. To facilitate the rate change the cigarette tax
stamp board was directed to design and have printed or manu-
factured new cigarette tax stamps. Article 7047c-1, Sec. 3(a).
It was further provided in Article 7047c-1, Sec. 3(c):

           "The State Treasurer is hereby required to
         redeem at face value any unused cigarette
         tax stamps lawfully issued prior to such change
         in denomination and in the possession of any
         bona fide owner, by exchanging at face value
         cigarette tax stamps for cigarette tax stamps
         of the new denomination.  After the effective
         date of this Act, every person having in his
         possession stamps of the old denomination shall
         send them to the Treasurer for exchange at face
         value for stamps of the newt denomination. Such
         exchange shall be made within thirty (30) days
         after the effective date of this Act. . . .
.     -




    Honorable Jesse James, page 3           Opinion No. WW-688



             After the expiration of thirty days from the
             effective date of this Act, stamps of the old
             denomination shall be void . . . .I!

             In view of the above quoted provision, it is
    obvious that your question must be s.r,sweredin the negative.
    By allowing a credit for tax meter stamps issued prior to
    1955 against a present purchase of cigarette tax stamps,
    your department would, in effect, be exchanging such stamps
    for stamps of the new denomination.  Since old tax meter
    stamps are void, and since they were not exchanged within
    thirty days from the effective date of the rate change, your
    department has no authority to allow such a credit.

             Though your specific question concerns your authority
    to give a credit for the tax meter stamps against a purchase
    of new cigarette tax stamps, you also state that on May 22,
    1959, you received a letter from Associated Grocers seeking
    a refund of the unused cigarette tax. Since it is expressly
    provided that the tax meter stamps in question are void, it
    is implicit that no refund for such stamps could be made.
    However, there appears to be an additional reason why a
    refund is unauthorized.  Sec. 3(l) of Art. 7047c-1, states:
               II
                . . .Provided further, that the Treasurer
             shall be authorized to make refunds on unused
             stamps on unbroken sheets of not less than
             one hundred (100) stamps each to the person
             who purchased.said stamps only when proof
             satisfactory to said Treasurer is furnished
             that any stamps upon which a refund is requested
             were properly purchased from said Treasurer
             and paid for by the person requesting such
             refund."

             From the facts in your letter, it is obvious that
    the Associated Grocers cannot furnish proof that they personal
    purchased the stamps in question from the Treasurer.  Con-
    sequently, a refund is not authorized under the act.

                            SUMMARY

                  Tax meter stamps issued prior to the
             effective date of the 1955 cigarette tax
             rate change became void thirty days after
             the effective date of such change; conse-
             quently, the stamps cannot be exchanged
             for or allowed as a credit against a pre-
             sent purchase of cigarette tax stamps, nor
             can any refund be made thereon. Further,
Honorable Jesse James, page 4                 Opinion No. WW-688



            the State Treasurer is prohibited from
            making a refund on cigarette tax stamps
            to anyone other than the person who actually
            purchased such stamps from the Treasurer.

                              Yours very truly,

                              WILL WILSON
                              Attorney General of Texas




JNP:cm
                              Byw Assistant


APPROVED:

OPINION COMMITTEE:
George P. Blackburn, Chairman

C. K. Richards
Howard Mays

REVIEWED FOR THE ATTORNEY GENERAL
BY: W. V. GEPPERT
