Hon. George H. Sheppard      Opinion NO. o-1382
Comptroller of Public        Re: Whether suit club award is
  Accounts                        taxable under’Article 7047f,
Austin, Texas                    Revised Civil Statutes.
Dear Sir:
            We are in receipt of your letter of September 2,
1939, wherein yoursubmit to us the ,followlngfact situation:
          “The operator of the club agrees to deliver
     one $25.00 suit’of clothes to a club member after
     he has paid the operator $2.50 per week for ten
    :consecutiveweeks.
         ‘IOna certain day of each’week for ten weeks
    all club members who .havepaid the $2.50 weekly
    payment to the club operator are entitled t,o;
                                                 ‘par-
    ticipate in a drawing of names or numbers’whichis
    held to determine the winner of a credit equal to
    the unpaid balance the member owes for the $25.00
    suit he is buying. If the winner has paid one
    weekly payment of $2.50, a credit of $22.50 (or
    the unpaid balance he owes for a suit,)is awarded
    to him. The second week some member is awarded a
    $20.00 credit or the balance he owes for a suit,
    and so on, until ten credits of,various amounts
    have been awarded, one each week for ten weeks.”
          You request our opinion as to whether or not the
awards thus made‘are subject to the twenty per cent tax levied
by Article 7047, Revised Civil Statutes of Texas.
         ‘SeotionA and the first .sentenceof Section B of Ar-
title 7047f, Revised Civil Statutes, read as follows:
         “(a) Every person, firm, or corporationcon-
    ducting a theatre, place of amusement, or any busi-
    ness enterprise in connectionwith the operation of
    which a prize in the form of money or something of
    value is offered or given to one or more patrons
    of such theatre, place of amusement or business
    enterprise,and not given to all patrons therecf
Hon. George H. Sheppard,Page 2


    paying the same charge for any certain service,
    commodity,or entertainment shall make a veri-
    fied monthly report on the kenty-fifth day of
    each month to the Comptrollerof Public Accounts
    of the State of Texas, showing the amount of money
    so given in prizes, and the value of 611 prizes
    or awards so given in connectionwith such busi-
    ness during the next preceding month.
         "(b) There~is hereby levied a tax equal to
    twenty per cent (20s) of the value.of all such
    money, prizes, and awards given in connectionwith
    the operation of each and all of the foregoing
    business enterprises,and at the time of making
    the report to the Comptroller of Public Accounts,
    the owner or operator of any such business shall
    pay to the State Treasurer such,tax upon the total
    amount of money, prizes, and awards so given dur-
    ing the next preceding month."
          An examination of the facts in'this case discloses
that each requirementof the statute is met such as to mature
the tax. The prizesis given in connectionwith the operation
of a business enterprise. Such prise is in the form of some-
thing of value. It is given to a patron of the place of busi-
ness and it is not given to all other patrons paying the same
charge. The first winner received a $25.00 suit for $2.50.
He thus received an award which otherspatrons paying $2.50 do
not receive. Our answer to your question, therefore, is that
the tax is clearly due.
          You also inquire as to whether tax liabilitywould
be affected if no drawing is held to determine the winner of
the award ,butinstead the operato- of the club arbitrarilyse-
lects the member he wishes to receive the award each week.
Our answer to this question is that tax liability would not be
affected. The manner of making the award is immaterial. The
statute does not require that the person receiving the award
be selected by chance in order for the tax to be due.
APPROVBD SEP 7, 1939             Yours very truly
/s/ Gerald C. Mann               ATTORNEY GBNBRAL OF TEXAS
ATTORNEY GENERAL 0% TEXAS        By /s/ Glenn R. Lewis
APPROVED: OPINION COMMITTEE      Glenn R. Lewis, Assistant
BY:       BWB, CHAIRMAN
GRL.:F'L,vb
