Honorable George H. Sheppard
Comptroller of Public Accounts
Austin, Texas

Dear Sir:                         Opinion No. O-2008
                                  Re: Where one person operates a
                                      store and another person owns
                                      title to the merchandise in the
                                      store, the operator is liable
                                      for the chain store tax.

        This is in answer   to your letter which reads as follows:

        “There are a number of concerns, foreign and
    domestic, operating in Texas, that consign merchan-
    dise to warehouses and retafl stores to be sold at
    wholesale and retail in the State of Texas. This
    merchandise is on consignment only when sales are
    made. The store aperator or warehouse operator      .~
    receives a comm ission from the sale of such mer-
    chandise; the ownership of the merchandise is re-
    tained by the consignor, and he places the price on
    the merchandise that the consignee sells.

        ‘Does the ‘store tax’ apply to the actual owner
    of the merchandise or to the operator of the ware-
    house 7 *

          We assume that there is no contract between the operator of the
warehouse and the owner of the merchandise whereby the owner of the
merchandise has any control over the warehouse, that the owner of the
merchandise does not own an interest in the warehouse or exercise any
control over it, and that his only connection with it is that h.e retains
title to the merchandise in the warehouse until said merchandise is sold.

         The ‘Chain Store Tax Law” of Texas is House Bill No. 18, Chap-
ter 400, First Called Session, 44th Legislature, Acts 1935 (codified as
Article 111 Id of Vernon’s Annotated Penal Code). It provides that cer-
tain prescribed license fees, which are in fact taxes, shall be paid for
the privilege of operaffng a store. and reads in part as follows:
Honorable George H. Sheppard, Page 2 (Opinion No. O-2008)



         ‘Sec. 2. Any person, agent, receiver, trustee, firm;>                   ‘.
     corporation, association or copartnership d.esiring to ,.
     operate, maintain, open or establish a store or mercan-
     tile establishment in this State shall appIy to the Comp-
     troller of Public Accounts for a license so to do. . . .”

           “Sec. 5. E,very person, agent, receiver, trustee, firm,
       corporation, association or copartnership opening, estab-         ~.
       lishing, operating or mainfaining oneor more stores Or             .~ ~
      mercantile establishments within this State, under the
       same general management, or ,ow+rship, shall pay the
      license      fees her&after
            .i ~,.~.i                  prescribad for the privilege of
      dpniqgl e~stablisliing; operatingor maintaining such
     ,‘#orc$k~o.r’Lercaiitile establishments . . .*
           ii      ) ,‘I i”.” ” ,.) .,._
       ” ‘“tie&; ‘I;’ ,yl& teim”sto&~    as used in this Act shall be
     construed tome& and include any store or s,tores or any
     mercs+lq        establishment or establishments not specifi-
     cally exempted’within &is Act, which are owned, operated,
     maintained, or contrqll,ed by the same person, agent, re-
     ceiver, trustee, firm, $or~poratiP11,copartnership or
     associationli either  ~. domestic ‘or fereign, in whL& goods i
     wares or mkei~ch+iise &.a~$ kiad~ax+&s?ld; At retail ore‘.
     wholesale.
                       .’
         This is I& b ‘&x &. ‘hi&@&      nor On thi msr&umdise nor on the
gale of the merchandise, b,ut it ‘is a t&c C&the privilege of aperatillg the
store. In the cas.e of HI& v. Gooper.~13O~Tex. 433, 110 S. W. 2nd 896,
the Supreme Court of Texas .sai’&

        U . . . we experie-   PO difficulty in reaching the
     conclusion that the so-,+&d    license fees levied thereby
     are primarily occkqktibn ‘$&c&S.~                      . .

          Sectiqn 5 of the ~CJpjrin.S$we~Tax Law* says that Pevery person
 (etc.) . .. ~+.
               opening, o,stablishingl, ope,r+fing or,maintaining one or more
 stores . . . sill.   pay the ,Iicen+e fee,9 . , . prescrmed for the privikge
 of opening, establis~ng,      operating or maintaining such stores.*     The
 fact that a person owns all of,,the merchandise, or a part thereof, in a
‘store wouId be an eIemant~of,considera~?           in determing whether or not
 the owner of such merchandise was operating or maintaining said ‘store;
 but that fact alone, does n$ jus,tify, a.holding that, the owner of the mer-
 chandiseis .engaged,in *opening, .istsb~ishing, dpdrating or maintaining”
                                              /
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    .       -




                Honorable George H. Sheppard, Page 3 (Opinion No. O-2008)



                said store. Under the facts that you give, the only person who comes
                within the meaning of those words is the operator of the war~ehouse. He
                clearly operates and maintains the warehouse.

                        If the warehouse in question is a store as that term is defined
                by the statute, the “store tax” applies to the operator of the warehouse
                and he is liable for the tar.

                                                     Yours very truly,

                                                    ATTORNE,Y GE,NE,RAL OF TEXAS


                                                     BY    s/ Cecil C. Rotsch
                                                          Cecil C. Rotsch
                                                          Assistant
                CCR:ew-rn


                APPROVED    MAY 1, 1940
                s/ Gerald C. Mann
                ATTORNE,Y GENERAL OF TEXAS

                                                      APPROVEJ3 Opinion Committee
                                                      By B.W.B., Chairman
