-      ;.




    Hon. Robert S. Calvert            Opinion No. W-365
    Comptroller of Public Accounts
    Capitol Station                   Re:   Is the tax levied by
    Austin 11, Texas                        Article 7047-l appli-
                                            cable: To tne sale of
                                            all three of these Items,
                                            that Is, speakers, ampli-
                                            fiers, and tuners when
                                            sold as a single unit?
    Dear Mr. Calvert:                       And related questions.
              You request the opinion of this office upon the
    above-captioned matter. House Bill 630 of the Regular
    Session of the Fifty-fourth Legislature, presently codified
    as Article 7047L-1 of Vernon's Civil Statutes, imposes a
    tax upon the sale, distribution and use of radio and tele-
    vision sets in this State in the following language:
                 "Sec. 2. (a) There is hereby levied
            and shall be collected and paid upon the
            sale, distribution, or use of radios and
            television sets in this State an excise
            tax equal to two and two-tenths per cent
            (2.2%) of the retail sale price of each
            such radio or television set sold, distrl-
            buted or used in Texas.
                 "Every retailer who makes a sale or
            distribution of a radio or television set
            in Texas to the user shall add the amount
            of said tax to the selling price which
            said tax shall be collected from the pur-
            chaser or recipient of such radio or tele-
            vision set at the time of such sale or
            distribution, and said tax shall be reported
            and paid to the State of Texas at the time
            and in the manner hereinafter provided. . .'
              Radios and televisions are defined for the purpose
    of the Act as follows:
                 "(a) 'Radios' shall mean the apparatus
Hon. Robert S. Calvert,   page 2 (wW-3f5)


    or devices commonly known and sold as radios
    or radio receiving sets and shall include any
    instrument, apparatus or mechanical contrivance
    constructed, assembled or designed to receive
    oral, musical and similar sound broadcasts
    transmitted by radio broadcasting stations.
          "(b) 'Television Sets' shall mean the
     apparatus or devices commonly known and sold
     as television sets or TV sets, and shall in-
     clude any instrument, apparatus or mechanical
     contrivance constructed, assembled or designed
     to receive television broadcasts transmitted
     or projected to such sets by television broad-
     casting stations or systems."
          This tax is collected by the retailer but paid by
the purchaser. Retailer is defined by the Statute in the
following language:
          "(c) 'Retailer' shall mean and include
     every person in this State who manufactures,
     produces, or in any other manner acquires
     or possesses radios and television sets for
     the purpose of making a resale, use, or dis-
     tribution of the same in this State to the
     user, and it shall also include every person
     in this State who ships, transports or im-
     ports any radio or television set into this
     State and makes the first distribution of,
     use by, or sale to the user of same in this
     State."
          You request us.to advise you specifically if the
tax Is owing under the circumstances contained in your
letter of December 5, 1957, from which we quote as follows:
          "We are experiencing some difficulty
     in administering H.B. 630, Acts of the
     Regular Session of the 9th Legislature,
     in determining the application of the tax
     to sales of certain items now referred to
     in the industry as 'Hi Fi.' Hi Fi, among
     other things, consists of speakers, audio-
     amplifiers, and electronic tuners. Each
     of these items or components is a separate
     unconnected unit. No two of the units can
     receive and reproduce a broadcast signal.
L     -




    Hon. Robert S. Calvert, page 3 (~~-3651


          It takes all three unit6 to accomplish that
          result, and even ,a11three units cannot do
          so without being oonnected and Installed
          together; No sales of television sets nor
          radio sets in the usual sense are involved
          in these questions. The tuner nould operate
          with a pairof headphones and reoeive both
          standard and FM broadcasts.
               11
                . . . I shall thank you to answer the
          following questions: Is the tax levied by
          Article 7047-l applicable:
               "(a) To the sale of all three of these
          items, that is, speakersj amplifiere, and
          tuners when sold as a single unit?
               "(b) Is the tax applicable to the sale
          of all three of these items when sold to-
          gether and Installed as a unit?
               "(c) Is the tax applicable to the sale
          of only one or two of these items when sold
          separately?
               "(d) Is the tax applicable to the sale
          of the tuner (which can receive by the ad-
          ditional headphone,but cannot reproduce)
          with one of the other items?"
              The tax accrues upon the first sale made in this
    State of radios and television sets, We must,,therefore,
    determine, if under the various conditions mentioned in
    your letter, if a radio or television set is comprehended
    within the statutory definition of these terms. The defini-
    tions of radios and televisions, as set out in the Statute
    are substantially in accord with the generally accepted
    meaning of these terms as understood by the publid generally.
    "Radios" or "radio reoeiving sets" are interchangeable and
    synonymous terms, and so are "televisions" and "television
    receiving sets", and no tax is due unless there is a sale
    of a radio or a radio receiving set or a television or
    television receiving set as defined by Statute&
              The purchaser of speakers and amplifiers in single
    items, is in no sense the purchaser of a radio or television
    set within the purview of the statutory definition.
Hon. Robert S. Calvert,   page,4   (W-365)


          We, therefore, answer,in the negative your question
in subsection (a), except as to "tuners held to be taxable
in answer to subsection (d)";
          For the same reason we answer subdivision (b) in
the negative, unless the respective parts are assembled by
the retailer or seller into a radio or television set and
sold and purchased as a completed unit.
          For the same reason we answer subdivision (c) in
the negative.
          Upon the facts submitted by you, we hold that a
"tuner" is taxable because it is within the statutory defi-
nition of a radio. It is capable of receiving sound and is
a unit when purchased. The only thing necessary to be added
is an amplifier, but without an amplifier under the facts
submitted it is capable of recelvlng through earphones.
The amplifier only adds to the volume of the sound. We,
therefore, answer subdivision (d) in the affirmative.
          A short answer to your questions (a), (b), and
(c) is that none of-the component parts, such as speakers,
amplifiers, etc., purchased separately constitute a radio
or radio receiving set or a television or television re-
ceiving set, hence are not taxable.
          Neither is a tax applicable unless,the purchase
embraces a completed unit capable of receiving sound from
a radio transmission station or capable of receiving sound
and video from a television transmission station.
          The tax is imposed upon the sale of completed
radlo and television sets and not upon the,manufacture or
assembling of the parts so as to constitute a complete
radio or television set.
          We pass next to that part of your opinion request
pertaining to the installation of High Fidelity music system
by contractors in the building of homes. For clearness we
quote your question, as follows:
          "A High Fidelity music system is in-
     stalled by a contractor in the building
     of a home and includes the aforementioned
     component parts and alsoincludes phono-
     graph reproducing equipment or a TV chassis.
Hon. Robert S. Calvert,    page 5 (W-365)


         "(a) What portion, if any of this equip-
    ment is taxable; and when and where does the
    tax accrue?"
          From the facts submitted by you, it appears that
the contractor installs a completed radio or television
set in the building constructed by him for the owner and
obviously makes a charge therefor, and this regardless of
whether it be what is commonly referred to as a turnkey
job or upon a cost plus basis or in whatever manner the
contractor is paid. The contractor makes a retail sale
of a radio or television set which under the Statute is
taxable.
          There is no exemption found in the Statute cover-
ing radio and television sets installed by a contractor in
a house as is true with radios in"t
                                  3 alled in automobiles upon
which a tax has been paid (Article 7047k V.C.S.).   It must
be assumed that the Legislature incorporated in the Act all
of the exemptions it intended. The price charged for such
radio or television set installed by a contractor in a
building should not be too difficult to ascertain, and
when ascertained the gross receipts tax, as provided in
the Statute, is imposed thereon, the same to be paid by
the purchaser to the contractor who in turn should make
proper accounting for the fax to t:ieSt;t:~.

                          SUMMARP
          The purchaser of separate componen'
          parts necessary to complete or 'build
          a radio or television set is cc; sib-
          ject to the Gross Receipts t.~.x?.ri&)sed
          upon the sales of radio OI :2i.:?~:!
                                            ,.,:-on
          sets under Article 70&7L-1 i'.i'.S,,for
          the reason there is no sa.1.e
                                      r;,?a radio
          or television set as defined in the
          Statute. The tax is upon the sale of
          radio and television sets and not upon
          the manufacture or assembling of the
          parts into a radio or television set.
          Under the facts submitted a "tuner"
          is a complete radio set because it is
          capable of receiving sound and the
          addition of an amplifier is merely
          for the purpose of increasing the
          volume of the sound.
Hon. Robert S. Calvert,   page   6   (W-365)


            A radio or television set installed
            by a contractor in a building is
            subject to the gross receipts tax
            imposed upon the retail sales of
            radios and televisions as defined
            by the Statute. The tax is owing
            by the owner of the building as
            the purchaser and should be collect-
            ed by the contractor and accounted
            for by him to the State.
                                 Very truly yours
                                 WILL WILSON
                                 Attorney General of Texas
                                    -,
                                 By:
                                     Assistant Attorney General
LPL:gs
APPROVED:
OPINION COMMITTEE
George P. Blackburn, Chairman
J. Mark McLaughlin
Ralph Rash
F. C. Jack Goodman
REVIEWED FOR THE ATTORNEY GENERAI,

BY   W. V. GEPPERT
