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[0] OFFICE OF THE AlTORNEY GENERAL OF TEXAS AUSTIN
Hanowbls Oeo. H. Shep,mrd
Captrollo OS PubaLa Accounts
AUB t lo, ?ox8*
Qe8r Sir:
09, 8ddro8B8d to you, bore eeptlon end mm- dered our rdv 0 UJBOEX the f8QtB whloh you
t the80 opinlonr 8ro sll lng them hereln.
lnlaw oited ebovo dealt vlth lmtiom vhich are edmittsdl~ d instrumeatrlltlee, euch ee the the ‘c;aP Dopllrtaont 8nd the De- orateton, an en&aged ia war vork in furthemnco of their *otivitier, ion8 have ontored into ‘e08t-plUem hmztxuaets with rarlous private aontmatora, uuoh
as the Fort Worth Aircraft. Asawmbig Pleat mad
libergenq Plpe1lner, Inc. In generel there con-
treata follov a comon petters, with provi8lom
whereby the fedeml sgoncies reimburse the con-
tmotors tar matertils and labor ured by the ~htter,
Honorable 5eo. H. Sheppard, Page 2
and, In addition, p~iy to the contmcton e
atIgulated profit. Although the contrectr nor-
mally provide that, subject to aortain oontrols,
the oontsmctors may themeelver pu~chess the nec-
essary inatorlals, the federal agencies reserve
tho rlght to purohase such mstterihls and to fur-
nld them to tho contracton vhenmor they clo de-
Bee*
Ulth reference to the eativitloa of the fod- ~‘,‘,“~~~t~~~~~~~~~Qr?~) %:ooz&~
(LM rold to the fedexml agenoier and ueod by them; motor fuels are sold to the fedoml egwmiea b)
and are then turned over the oontractore for
use by them; (0) motor fkele am cold to end wed ‘phe queurtlona dleoussod In
by the oontrectors.
our former oplniona save orfsen In conaectlon vlth
tholsso three ultuatlonB.
Por purponer of this oplnlon vo roil that It 18 h- materiel vhether theae f’uela are wed in vshlalsa owned by the
f’ederex agencfes, In vehlolm ovaed by the oontreetom, or ln
vehleloe oumd by tho federal ugenolor and leaeed to the con-
tmritoru.
I, fedajral a enelesr Motor fuels~sold to end used Section 2(d) of the E tor Fuels Tax Act Article 70 5b V.A. f!!
CA.) provides in ptwt 8s follova~
“Ho tax shell be Imposed upon eale, uoe, or dL6trlbutlan of any IlIotor fuel. the InposIng
Of vhshich vould mnetitute an unlevN burden on
lntemtate camuerce and vhifkh Ia not subject to
be texod under the Constltutl&n of the State of
Texas and the Gnttod Stu toe. ”
Although large inroads have been *de on the doctrine of Inter-governmental tax Zmmunlty ae establlahed by Chief
Justioe Uars~.aall In the aaee of’ MoCulloch v. Blarylati, 4 Wheat 3x6, 4 U.S. 57$(t. Ed.), the dootrine at111 pereiata et least
to the exteri? or affosc!ing immunity frora utate taxation to the to th000 r040m ag02kt310~
f0th~i 80-mt it80u d
and laatmmenklltl~a whlah Coajpora lm8 ohown to declare
tax oxompt, Pittman v. H. 0. L. c., 508 U.S. 21, 84 L. M.
11, 60 aup. Ct. 15. Typltml of ti l8tter typa at 4eney
is tho 4foa~o Plant Corporcrtlon, whloh la saatlon 610 of Tlt10 15, U.S.O.A., the aongPoaa hr 4loakPed to he exempt tax.8 lmpoaed by into all H~OB, wo, atom&e and -H 8ubdlvlolarr. We are of the oplalon
any l kk or polltiM tuB &ootPlae @ad tb above qwted pPovl*ltfa of mm that
tax rtatcto p~~aluao tbo irporltian 0r ommotor a018 tax
upon Sal.8 0Pua.l er the fml~lwlgov*rmuitmd~ radonrl l g eaoloil aJld lnat-ta11ti.a vhloh Csagrera b&a oxapted.
ConaoquemtS~, yms m-0 napoetfull~ ad*imd tlmt a0 tu
should k lwlad or eolleoted upcrm auah nlar OP uaea.
II. Motor faola aold to toderrl 4uwlom uul uati W oantrrotona Won c~~motorfwlr Lua males Lu, doubt- ma th-r0d0~i ~OVOPXBIW~~~OXOBP~~~~~~~ 40mea urd fu.1 w pmlu~l~~ wo lad-talltlea oould pwobB~0
by tholr aaaItMotoM lahaut th4 l.aeuPPwam
llat&lyf&rBl&ah ax. WP, OUP tax pla iBBeP0 %a7 . moti6a 20) of tba t8x rtatutepPwldea ""t in partt
l nlePedullka adlB he P mbylevLoduadiB- posti (axoopt aa benlwtter prov&M) apon the
riw ~10, ai8tributiak or ~0 0f rotor lhui in
or oxoin tu of PmIP g8llQab*beello0llMted* the rid tax ahsllk ad&e& te th e l *ll.iry p
I
Hcuio~blo 0.0. R. Sheppard, Fag. 4
I(oroovoc, SootIon (d) provldu In part: “In tha wont this Artlole Is In oonfliat vlth tha Conatltutlon or any law ot the 0hIt.d
Stat.8 vlth ns~at to the tax lovhd upan the
rim ~ls, di6ttibai0tb 0~ ~0 0f wt0r ~1
ia thI6 aata, then it ti brro~ doolasod to k IntentIon of thie Artiolo to Impore the tax
1evi.d horan upon tb rirot 6ubrequeJat aale,
dI6trIbutlon, or us0 of aaid rotor fwZ vhloh
may be rubjoot to beln# tutod.”
lbghdle88 of how our to&r motor ml6 tax atrt- ute (Aat6 1993, 43r4 Lag., p. ah. 44, 88 ammded by hots 1935, 44th Leg., p. 558, ah. 2 j m¶.@t hva m ?8 oanatruod, that tb legal Inoldonoo of tha prosent tax wo em utIrfled
ir upon tba tlltlmate usor or uomumr of motor -16 8ad t&t
th6 6tatutorllJ dafixmd %l8tributor” of l wh fuel.a I# wrml~
a bonded ftdualary or agent of the Stak for tha purpou of
aiding tn the sollootlon of the tax. Moreovo~, In vleu of the portlam of Sekotlan (d) quoted supm, w feel that own: though
the "6alo" oi motor fuolr to the fodorrl govemmmt or aortain o$’ Its IrgonaIo6 might 80 tas oxmpt, it nr the lskmtloa of aubamt “uam’ of l uoh
the legIa&rtum levy 8 tax on
fuelm vhleh right aonatltuttona1l.y soon uWtber the tax mar aonatttut%65ally bm loviod upon 00~1 tuod. It ml.lu to k typo under diaouaaion who use l wh fuels.
tmatura of That awoh mat-plus oontraatora l u noithec agonaloa nor %natruwntalItIoa of ths fodorrl gov*nrmt la va iael,
l ettlod W the OC.S~S of Alabara v. Xlng & Booaer, 62 Sup. Ct.
43, 66 L. M. la snd Ckwy v. Wted stataa, 62 mp.. ct. 48,
86 L. gd. 9. Thase waw am quoted end disowud at loagth
in our Oplnian Ilo. O-4389, and ve adhan to the ana1~606 of the 086.6 thorn made. Hovover, oven though the aantmoton tamp-
8olvos are nelthor fedelrl agamI*a m-t* InatmmaitalItIoa, tlaa aqpmont ia r&o that a tax upon the use of rator%alr by aort- Is i;l offoot 6 tu upon * hdorel l gema~ or
~1x16 aontrrotor6
lnatnmonta1l.t~ alnae the 8mwit of the tax will ba nilmated
In th8 lnoruud oost of the mtwlal6 to the organIution6
which oaploy l wh oontrrretora. 5% r ow0 OS l uah 8n arguwnt
Is deatroywl when eonaldrrrd in the ll@tt of the nuwroua re-
sent oases tmlah hold that a general, mm-diaarkixmtory tax
16 not const:tutiomlly objectionable merely because its
imp~oait:on upon G vendor or contractor may reeult in a
slight incream in the cost of goods or services acquired
by the federal ~overnmcnt. Tnus, in ; l&ama v. King F:
Boozer, stipra, Chief Juatlce Stone ecrldr
“The mlrerted right of tks one (government) to be free of taxation by the other doea not
spell lmmunlty from pay* th6 added co*t sttrl-
butable to the taxation of thosa who fUurai6h cup-
~1106 to the government and vho have been granted
no tax Inanun1ty. so far an 0 d!.ffbrent viev ham
prevailed, 608 Panhandle 011 Co. v. )II66i68lppi
and Graves v. Texar Co., supra, ve think It no (Parenthetical word added)
longer tenable. * LIkevise, in Curry v. United States, aupm, the Chief Yustios aaid:
“If the atats law laya the tax upon tti (coat-plus contractors) rather than the indivld~l
with whom they enter into a cost-plus oontmot
1lJm the present one, then it affect8 the Govern-
ment, like the indlvldual, only a6 the eoonomlc
burden is shifted to It through operation of the
contract. As pointed out In the opinion in the $2 BOOBctP t%ASe, b OOIltW68iO~
gin&J Of ~VOXll- ment and on authority, the Cozmtltutlon, wlthout
lmplemmtatlon by oongresslonel legislation, doen
not prohibit a tax upon Oovernwnt contractors be-
cause lta burden Is pssaed on economlcelly by the
term6 of the oOntr8Ot or othervise a6 a “r&n- the conrrtruotion oost to the Oovernmsnt.
~thetlcal vord added)
See also James v. Dravo Contmcting Co., 302 U.S. 134, 58 Sup.
ct. 208, 82 L. I%%. 155; Federal Lsnd ~cnk of St. ma V. CQ Rochford, 287 E.W. 522 (E.D.); Western LithoUr& co. v. state
Board of Equslleation, 11 C&l. (26) 156, 78 P. 26) 731. ph
Conaequontly, you are reopectfully edvised that when n tax exempt fedeml agency purchase8 motor fuel6 and permits the u6e of such fuel6 by It6 cost-plus in this State
contractors, our motor fuels ttax attaches to the use of such fuels nnd the
contractors are llebte for nuoh tax.
571 Rcootiblm 0.0. H. Sheppaxdd. Page
III. t0 and used w the aOntmatOm8 HOtOr fUO16 sold
~Tbs abon disouaston aapalr tbo oonaluslcm tint the rotor
fwla tax aoorwa in a sltwtion when motor fuolo are both of the typa wdor sold and used by a aoat-plw aontrrator
dlaowalen, and rou arm napoatfully advised that tha tu Is
duo in awh a l ltwtlw.
T his oplnlen wnly amplltioa ant4 asrim8 the aon- olualma raaabod in our oplnlonlo.0-4I&P,ud In lnnowy
lntmdod torlkrruob0piaIon. 8iaoo thla oplnloala in ylth moat of tba statemoats awl eonolwIonm
dlmot o&lot
Inoro&lntw~~0-5309, the latter @pinion la hereby over-
. Trusting that the iongol@g aatiafaetorllf na6lvma
my aonfllata vhloh may have existed In oplnlwa of thla
dopwtamt, w am
vary truly yew6 A¶ToltxY -0FTXA8