Opinion Ho. C-47A. In connection with your original~r'est for our opinion you submitted the following facts! '~

Transcription

1 Honorable Robert S. Calvert Comptroller of Public Accounts Capitol Station Austin, Texas Dear Mr. Calvertr Opinion Ho. C-47A iret Under the submitted facts, whether the Gross Receipts Tax provided for by Article 11.03; Taxation-General, is'due'by the stated corporations. I' " Upon a reconsideration of our Opinion C-47~we have been furnished additional facts,, and byvirtue thereof we are overruling C-47 and substituting this opinion in lieu thereof. In connection with your original~r'est for our opinion you submitted the following facts! '~ "Gross Receipts~Tax audits have been made.of the records of Caruth Corporation hnd Hillsfde~Corporation, both of Dallas, Texas. Caruth'Corporation owns and operates the Inwood Shopping Village, Dallas, Texas, and Hillside Corporation owns and operates Hillside Shopping.Center in Dallas, Texas..Caruth Corporation purchases electricity from Dallas Power and Light Company; gas from Lone Star Gas Company, and water from the Dallas City Water Works, and resells same to its tenants in the shopping center through individual meters and at a.profit. "Hillside Corporation purchases electricity. from Dallas Power and Light Company~ and resells~ same through individual meters to its tenants'in the shoppi'ng center at a profit. "The Gross Receipts Tax is paid by~dallas Power and Light Company, and by Lone Star Gas Company, based on their charge to the corporations A-

2 Hon. Robert S. Calvert, page 2 (C-47A) "The Dallas City Water Works, being municipally owned, is not required to pay Gross Receipts Tax." 'The Iiillside Corporation.Sells electricity only (1) Dallas Power 6 Light owns Raster Weter (2) Hillside Corporation owns transmission lines from master meter to tenant's store. (3) Hillside Corporation owns meter at tenant's store. (4) Hillside Corporation serves approximately 30 tenants. Caruth Corporation(Inwood Village) "Sells gas, electricity, and water to tenants. Lone Star Gas, Dallas Power, & Light and Dallas City WaterWcrks owns Waster Meter at Caruth Corporation property line. (1) Caruth Corporation,owns all.,laterals and lines which furnish utilities.to tenants. (2) Caruth Corporation owns a&l meters at : tenant's store. (31 Caruth Cor@oration'serves approrimately 40 tenants or customers." Subsequent to the release of C-47 we have been furnished these additional facts: Caruth Corporation and Hi~lsi@~ Corporation each own one of the two shopping centers in question and purchase water, gas and electricity from the Dublic utilities at the industrial or coamtercial rates and they haye been reselling smae to their tenants at the consumer rates as fixed by the City of Dallas. All of the pipelines and electrical wiring used by the corporations -213A-

3 , - *.., i~ i., Ron. Robert 5. Calvert, page 3 ( C-47A),. :.:.,,~. in furnishing ufilitiea to tenants &n.the-shopping centers are located on their private properties andtheir distribution system does not cross, go,.under orrun along any publ&.street ore alley, We are informed.that.as a common practice'various public utilities have beenselling~and~.distri.buting water, gas and electricity to the owners of shopping centers, larger office buildings and apartment.buildings at.commercial or industrial rates and these concerns have been distributing.same to their tenants. Some of these owners.of.shopping centers,~ office buildings and apartment houses have,been re-selling these utilities to their tenants atconsumer rates and some have been charging their tenants at then indus~tr$.al or.aosunercial rates. Only the public utilities have,beenreportlng blid ;Raying.the gross receipts tax as'levied by.article 11.03; Your.:department, which is charged with the collectionof theseigross rece$pt taxes, has advisedus that it has consistently.~accepfed.,~ese reports and paymenta. Although for a great,.~manyears you shave known of these arrangements, your departmenthas never..demanded or required the owners of such ~concerns to':rep&t pnd:pay.,the gross receipta tax based upon~ the rese~l~ng~ofsuch;ut~lities to their tenants-~ The pertinent part of Article 11~03, TitZe'l22A, Taxation-General, Vernon's Civil Statutes,.~~repds ~a$ follows: *(l) Rach individual, company, corporation; or' association Wing, operating,,managing nor controlling any gas. electric light. electric power, nor water works, or water and light plant, located within any incorporated twn or city~ in this.state,..and used for local sale and distribution,.in said town.or,city, and charging for such gas, electric lights,,electric power, or water, shall make quarterly; on the first day of January, April, July, and Gctober of-each year, a report to the Comptroller under oath of the,. individual, or of the president, treasurer or-super&n.: tendent of such company, or corporation, or association, showing the gross amount received from such business -2 14A-

4 ,Hon. Robert S. Calvert, page 4 (C-47A) '. '.',~.;!. s:: done in each such incorporated city or town within this State in the payment of charges for such gas, electric lights,~electric~ power; or water f~or thhe'it~ quarter next preceding. Said.individual. company/ " ' corporation,.or association, at the time of making '.~ said report for any such incor$oratedtown or cityof more than one thousand (1,000) inhabitants and.' :," less than two thousand* five hundred (2,500) in- '.-':.:. habitants, according the last Federal.Census: next ~,I. preceding the fiung of said ~report,' ahalvpay to the ',.'..\. Treasurer of this State.an occupation tax for'the.:..' quartes beginning on said date equal, to ~561% of said.'',f gross.receipts, asshown w said report; anda'for~any :..': incorporated ~town or city of,'more than'two'thousand',' : five hundred (2;500), 1nhabftants and:less'than ten thousand (lo,ooo), inhabitants; according to;the last'.. Federal census.next $re&sding~~the filing of said. :.. :-, 1. report; the said.individual;~company~ corporatfon.:.or '~'.I. association at'the~ time of' maklng~;said report.shall '.. pay to the TreastirBr of. this State'ah occupatton';' ~. i..~: ~,~~ tax for the quarter beginnlng:~onsaid~~ date an Yamount,.:.-s'f :;~ equal to 1.07% of said gross-receiptei~ de showfi~by':said,-,'t" report; and for any incorporated town cr cityof~',ten: " ~'1: thousand (10,000) inhabitants or more, according to the last Federal census next' preceding,the fi2.ing of said report, the said individual~~companyr~~'corporation'or ~' '..'y association, at the time of making said report, shall pay to the Treasurer-of, thisstate anoccupation tax for the quarter beginning-on:tibid idate aii aimunt.&&al to 1,997% of said~gross receipta, as shownby said.repott. Rothing herein ahalf apply to"&ny,such g&s; electric light, power OB? water workis, or water and;light'plant. :within this State, owned and.'operated,by'anl,city~ or town, nor to any county or.watei improvement or~'conservation district..,.* '(2) Rothing herein shall be construed to"require payment oft the tax on gross receirts herein~levied'more than once on the sa& commodity, and *here the. kiikdity.i -215A-./)!, '

5 lion. Robert S. CalVert, page 5~ (C-47A) :r i j..l:~, is produced by one individual, company, corporation, or association, and distributed.,by-.ano*er, the tax. L shall be paid by the distributor alone." The Supreme Court in Rddins-Walcher Butane Co. v. Calvert, 156 Tex S.W.2d 93 (1957), in construing Art. 7060, V. C. S. (now codified as Art , Title l,??a,,taxation- Genera1,V.C.S.) defined *gas works' in the 'following words: II.We hold, therefore, that the.term,,?gas,_,. works"&ana either: (1) an establishment &which,.: gas is manufactured, produced or.process~q(l;qr'~~i) ~',,~. a distribution system consisting of~pipes through,,.:,!~: :,:,: which the gas flows and is delirered to the vremisds... ~ of consumers. n (Rmphas;Ls supplied).: The Court in Utilities Watural~Gas'do. V.'Siate,,lj3;., Tex. 313, 128 S.W.2d,l153 (1939) defined.the word distribution.,~ as used in the taxing statutes in guestion as follows?.,.:',' "It means the transfer of possession of gas to various individuals.or concerns in.the city.".~ According to Websterss'Rew International'~~tiictionary, ~: Second Rdition (unabridged) the word.concern is.,given the following meanings "An organization or establi+ment. for.business or'manufacture: a firm and its business; as, a banking concern.- It is evident that the Hillside Corporation and the Caru$h ~Corporation are shopping center cgnc~rns.:.. ~, The ~'premises" of these two corporations embrace the:whole of the shopping,centers, as the shopping centers are owned and operated by,the corporations. Their tenants~ have common parking areas for their customers. Rach shopping center constitutes a separate business enterprise. The question to be decided, then, is whether the,two shopping centers are making local sales and distribution as contemplated by Art A shopping center might, under some circumstances make local sales and distribution, subject to the tax. -216A-

6 . - Hon. Robert 8. Calvert, page 6&47A)' mt It is evident that the Dallas City WaterWorks, the Dallas Power and Light Company and'the Lone StarGas, Company are all public utilities: ~that the-dallas City.Water~~WorkB is operating a water works and is making a local sale and "distribution" to the *premisesu of the two corporations.:, that the Dallas Power and Light Company is operating an electric powerworks and is making a~:local sale and *distribution to the,,"premises" of the two corporations: that the Lone Star Gas Company is operating a gas works and is making a local sale and 'qdistributionn to the "premises- of the two corporations. The above enumerated distributions are completed~before the water, electricity and gas is resold.by the shopping centers 'to~their tenants..whether the shopping centers gave'the gas'totheir tenants,:sold' to them at a profit or at a~loss,.would,not,' inour opinion, 'have'any bearing on the fact that thethree pubpic utilities made a local sale'and distribution of the water,, electricity, and gas: The shopping centers by virtue'.of ~the~~praviafons of paragraph (2) of Article could~notbe; required t0.pay.a tax on the same commodity that had already been. subj,ected tija:loca~ sdie~.:anu,~~ distribution.._ Our conclusions'.above ekpressed.are reinforcrd~by your long standing, uniform and consistent departmental construction, as stated on page 3 of this opinion..the court in Rurroushs v. Lvles, 142 Tex. 704, 181~S.W.26'570, 573 (1944) 'in;:considering departmental construction stated2 *This long continued administratlvi tionstructiqn is entitled to great weight, especia&ly in view of the fact that.the statute was amended es late,'asi 1943,.and'. the Legislature, which'~'is pre'siuaed~ to'have been.' aware; ' of the interpretation/made no changes in the Xanguage~ that would indicate a contrary intent.*" Y'. Article 7060 (nowcodifiedas Article Z1.03) was amended in 1951 and again as late'as 1959~. and, the Legislature, which is presumed to have been'aware of~this departmental construction, made no changes in the language of the Act that would indicate a contrary intent. -21-/A-'

7 .. _ Hon. Robert 6. Calvert, page 7 (C-47A) You are therefore advised that it is our opinion, based upon the submitted facts, that the Caruth Corporation and the Hillside Corporation do not own, operate or control electric light, electric power, water or gas works used for local sale and distribution, and are not subject to the gross receipts tax levied by Article 11.03, Taxation-General. Further, the fact that the Dallas City Water Works is expressly exempted from the gross receipts tax by the Act does not operate to shift the legal incidence of the tax. Attorney General's Opinion WW-810 (1960). SUMMARY The Caruth Corporation and the Hillaide Corporation, are not subject to the gross receipts tax levied by Article 11.03, Taxation - General. Opinion No. C-47 is over-ruled. Yours very truly, WAGGONER CARR AttoMey General WVG:me Assistant Attorney General APPRWRD: OPINION COWHITTER Ii. Grady Chandler, Chairman Hilton Richardson W. E. Allen W. 0. Shultz Frank Booth APPROVED FOR THE ATTORNEY GENERAL BY: Stanton Stone -210A-