             THE      Arro         NE\-   GENERAL
                             OF   TEXAS


                             June 2, 1988




Honorable Toby C. Wilkinson                  Opinion No.   JM-913
Hunt County Attorney
P. 0. BOX 1097                               Re: Constitutionality of
Greenville, Texas 75401                      temporary occupation tax
                                             on attorneys (RQ-1347)

Dear Mr. Wilkinson:

     you ask whether a temporary occupation tax imposed              on
attorneys is constitutional. We conclude that it is.

     The 70th Legislature enacted a temporary occupation            tax
on attorneys to be applied  from January 1, 1988, until             May
31, 1990. Acts 1987, 70th Leg., 2d C.S., ch. 5, art.                IX,
5 12 at 35: Tax Code, 55 191.141 - 191.145. The tax                  is
applicable to persons licensed to practice law in Texas,            Tax
Code, § 191.141, but it does not apply to:

           (1) an attorney who is 70 years of age           or
        older: or

           (2) an attorney who has assumed   inactive
        status under rules governing the licensing of
        attorneys.

Tax Code, g 191.144.   Additionally, the Tax Code            provides
for the proration of the tax due in certain cases:

           If a person is licensed to practice    law
        after the beginning of the tax year [June 1
        of one year through May 31 of the following
        year] or resumes active status to practice
        law after the beginning of the tax year, the
        person being .licensed or resuming     active
        status shall pay the tax imposed by this
        subchapter in proportion   to the number of
        months for which he will be licensed during
        that tax year. If a person is licensed after
        the beginning of a calendar month, the month
        in which he is licensed shall count as a
        month for purposes of payment of taxes. . . .




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Tax Code, 5 191.143(b).l

     You ask    whether   these provisions    violate the        ?
requirement  in article VIII, section     2, of the Texas
Constitution that occupation taxes be "equal and uniform
upon the same class of subjects within the limits of the
authority levying the tax. . . .I'

     The courts have long concluded    that the constitution
permits the legislature   to levy occupation  taxes based on
classification schemes established by that body, so long as
the legislation is not discriminatory between     the same or
JJ&  classes.   In other words, if there is a rational basis
for the classification scheme selected by the legislature,
the constitutional command that occupation taxes be uniform
will be satisfied.   The propriety of classification   schemes
selected is

        primarily  within the    discretion  of   the
        Legislature; and . . % courts can interfere
        only when it is made clearly to appear that
        there is no reasonable basis for the attempt-
        ed classification.  If there is a reasonable
        basis or, to express it differently,        it               ?
        cannot be said that the Legislature     acted
        arbitrarily, the courts will not interfere.

Hurt v. Coover, 110 S.W.2d 896, 901 (Tex. 1937). See also
Bullock v. AB'C Interstate  Theatres. Inc., 557 S.W.Zd   33M
(Tex. Civ. App. - Austin   1977, writ ref'd n.r.e.),   cert.
denied 439 U.S. 894 (1984), and Bank of Texas v. Childs, 615
S.W.Zd 810, 815 (Tex. Civ. App. - Dallas 1981, writ ref'd
n.r.e.), reversed sub nom. American Bank and Trust Co. v.
Dallas County,   463 U.S. 855, reh*a denied,  463 U.S.  1250
(1983).2




   1. The legislature may provide for the pro rata payment
of taxes. See aenerallv Attorney    General Opinion JM-399
(1985).

   2. A classification scheme employed by a state in a tax
law will not offend the equal protection clause        of the
Fourteenth Amendment to, the United States Constitution if it
is founded on a reasonable distinction or difference       in
state policy.  Kahn v. Shevin, 416 U.S. 351, 355 (1974).




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    Honorable Toby C. Wilkinson - 3     (JM-913)




            In Attorney General   Opinion C-46 (1963),   it was   held
    that:

              The mere fact that discrimination is made in
              classifications for occupation taxes proves
              nothing against classification  which is not
              on its face    an arbitrary, unreasonable or
              unreal one.

         The Texas Supreme Court has noted that this rule  "has
    been stated so often as to render unnecessary any further
    discussion of it." Texas Co. v. Stenhens, 103 S.W. 481, 482
    (Tex. 1907). See also 54 Tex. Jur. 2d, Taxation, at section
    29.  The Texas Supreme Court has written:

              The very language of the Constitution of the
              state implies power in the Legislature        to
              classify the subjects of occupation taxes and
              only
                 .- requires that
                             .     the tax shall
                                              - be equal and
              unirorm upon tne same class. persons who. in
              the most aeneral    sense. mav be reaarded    as
              pursuina the same occuoation . . . mav thus
              be divided into classes. and the classes may
              be taxed in different amounts and accordinq
              to different   standards.    Merchants   may be
              divided into wholesalers and retailers,     and,
              if there be reasonable grounds, these may be
              further divided according    to the particular
              classes of business in which they may engage.
              The considerations    upon which such class-
              ifications   shall be based are        primarily
              within the discretion     of the Legislature.
              The courts . . . can only interfere when it
              is [clear] that an attempted     classification
              has no reasonable basis in the nature of the
              businesses   classified,   and that the      law
              operates unequally     upon subjects     between
              which there is no real difference to justify
              the separate treatment of them undertaken     by
              the Legislature. . . . (Emphasis added.)

    Texas Co. v. Stevhens, 103 S.W. 481, 485 (Tex. 1907).     See
    also Dancetown. U.S.A.  Inc. v. St e, 439 S.W.2d 333    (Tex.
    1969) and wont     Dallas Restaurants, Inc., v. McBeath, 618
    S.W.2d 931 (Tex. Civ. App. - Waco 1981, no writ).

          In Dancetown, SLWZ,    a taxpayer  complained  about a
     classification scheme in an occupation tax levied on certain
    .amusement enterprises.  The rate of,tax differed based on
P    the sort of amusement  furnished. The taxpayer argued that




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Honorable Toby C. Wilkinson - 4   (JM-913)




an "amusementV* is an *'amusement,**and that there was no
rational basis for varying the rate of tax by classifying,
for example, the amusement provided   by operas differently
from that obtained from dance halls or animal contests. The
court, after citing the language  in Texas Co. v. Stevhens,
noted that:

           The members of each class into which the
        amusement business is now divided    obviously
        differ from the members of every other class
        in their methods and places of operation    and
        in the nature of the entertainment   generally
        offered.   Each class seems to embrace    every
        enterprise that should reasonably be included
        in the same category.   Since appellants   have
        not demonstrated by proof or otherwise     that
        'there is no real difference to justify     the
        separate treatment undertaken by the Legisla-
        ture,' we cannot say on the present      record
        that the classification   is so arbitrary   and
        unreasonable   as to    render the    statutes
        unconstitutional.

439 S.W.2d  333, 337   (quoting Texas   Co. v.   SteDhens,   103
S.W.2d 481, 485).

     You have not suggested  any reason why the classifica-
tions chosen by the legislature   in this statute might be
unreasonable, and we believe that rational explanations for
the choices made by the legislature can be presumed.      We
conclude that a court would find that the legislature    has
divided the broad categories of lawyers     into reasonably
drawn classifications which distinguish between persons  who
do not in fact pursue the occupation of an attorney      and
those who do. See. e.a., State v. Pioneer Oil and Refining
Co., 292 S.W. 869 (Tex. Comm'n App. 1927, judgment adopt'd).

     Thus, a rational basis can be perceived        for the
classification schemes selected by the legislature     here.
First, lawyers who are in an inactive status under the
statute governing the status of attorneys cannot engage    in
any activities in Texas which will constitute the occuDation
of being an attorney at law. Gov*t Code, §§ 81.052-81.053.
Thus, they are not even within the occuvation group to which
the tax applies, absent any question about classifications
of that group. Second, it is not irrational to assume that
lawyers over the age of 70, more often than not, do not
actively engage in the practice of law, and it is reasonable
to assume that in the main, attorneys in that classification
are not in the same occupational   circumstances as lawyers




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      Honorable Toby C. Wilkinson - 5     (JM-913)




      whose careers are still in full blossom. Tex         co
      ;;;Ihens, suura; see also Kahn v. Shevi&    416 U":. 352 :;
            2.   C mDare Massachusetts    Board of Retirement
      Wuraia, 427 'U.S. 307    (1976) (legislative classificati%
      distinguishing the elderly from the non-elderly   population
      for the purpose   of conferring benefits and burdens has a
      rational basis and thus is permissible     under the equal
      protection   clause of the Constitution).     Finally,   the
      proration  provision   merely   makes a rational    temporal
      distinction between   taxpayers who practice the occuoation
      subject to the tax for an entire tax year (lawyers on active
      status under the statute governing the practice of law, see
      Government Code §§ 81.052-81.053) and taxpayers who may not
      lawfully practice the occupation at the beginning of the tax
      year, but who become eligible to carry on the occupation
      during the year.

           Thus, the classifications    cannot    be said to   be
      arbitrary, or without relation to the actual division    of
      lawyers into those who carry on the occupation of attorney
      in Texas, and those who do not. State v. Humble Pine Line
      co., 247 S.W. 1082 (Tex. 1923).    Accordingly, the statute
      under consideration here is constitutional.
e
                             SUMMARY

                 A classification scheme specified by the
              legislature, levying a temporary   occupation
              tax on attorneys according to section 191 of
              the Tax Code, does not violate the "equal and
              uniform" rule of article VIII, section 2 of
              the Texas Constitution   unless the classes
              devised by the legislature clearly appear to
              be arbitrary and




                                            JIM     MATTOX
                                            Attorney General of Texas
      MARY KELLER
      First Assistant Attorney General

      mu MCCREARY
,C.   Executive Assistant Attorney General

      JUDGE ZOLLIE STEAXLEY
      Special Assistant Attorney General




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Honorable Toby C. Wilkinson - 6   (JM-913)




RICK GILPIN
Chairman, Opinion Committee

Prepared by Don Bustion
Assistant Attorney General




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