Case Information

*1 @ffice of the Bttornep QBeneral &date of Qexas April 26, 1993 ATTORSEY GENERAL

Honorable Ben Campbell Opiion No. DM-216 Chairman

Committee on County Affhirs Re: Whether a school district’s purchases of gasoline for use by an independent contractor in Texas House of Representatives the provision of transportation services for the P.O. Box 2910 school district are exempt from the gasoline AustiqTexas 78768-2910

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DearRepr#lentativecam*:

You have requested our opinion regarding the state tax “on the first sale or use of gasoline in this state.” Tax Code 8 153.101(a). The tax law provides an exemption from the taxation for tieI sold “to a public school district in this state for its exchtsive use.” Id. 8 153.104(7). You ask whether a Texas school district that contracts with a private transportation company to provide school bus service may avoid the state gasoline tax by diredy pudasing the beI to be used in the private buses in the provision of such service.

ln Attorney Oeneral Option No. JM-1158 (1990), this office construed the statutory exception from taxation contained in section 153.104(7) to mean

that gasoline purchased by a school district or by the agent of a school district for the exchrsive use of a school district wig be exemptfkmlthereachofthetax. Gasolinepurchasedbyan independent contractor that performs services for a school district, however, will not be exempt from the. reach of the tax.

Id. at 1-2. We did not reach in that opinion the situation in which the school district purchases gasoline and provides it to an independent contractor who uses the gasoline in the performance of services for the school district. Such a situation would literally be a sale “to a public school district in this state,” Tax Code 4 153.104(7); but would it be a sale “for [the] exclusive use,” id., of the school district?

The Comptroller of Public Accounts has adopted the following regulation defining “exclusive use” as that phrase is used in subsection (7):

Definition. The term “exclusive use” by a school district means fire1 purchased by a school district and used only in motor vehicles or other equipment:

(A) owned and operated by the district; or *2 Honorable Ben Campbell - Page 2 (DM-216)

(B) dadicatedfixtheexclwkandsolepurposeofproidiq tmqorkGonsewicesfortheschooldistktbymaamsofacontract betweeatherchooldistrict~theownaoro~orofthemotor vehicles.

34 T.AC. 5 3.173(14). The comptrollds definition inch&s gasolina used ia vehicles owaed~opaatedbyindepadmtcontractorssoloag~~~~(1) ispIuckcd district and (2) is used only fix providing transportation senks for ~h~~ool The comptroller adopted the above-quoted amdment to section-3.173 of the T~~~CodepursuMttoauthoritydelegatedbythelegislatuninseaion

111.002 of the Tax Code. The comptroller prdposed tha amendment, 16 Tcx. Reg. 5720 and made it Enal, id. at 6756, in accordance with the Adminhhve Procube (Ml), and Texas R@ter Act, V.T.C.S. art. 6252-13a The comptroUer thus pro&Sated the

The wmptrou~s wnstlucdon of aclusive we is reasonably consistent with the purposcofthastatute. Subsection(7)was~dedinaHouseUooramendmatto~ Bii 417 in the 71st J&&ture. HJ. of Tax.. 71st Leg., at 2422 (1989). In proposing the amendment, Represartative Culbcraon stated its purpose to be to “help school districts o&t the costs of transportation under [S.B. 4171.” Debata on S.B. 417 on the Floor of the House of Representatives, 71~1 Leg. (May 25, 1989) (tape racording available loom House Committee Coordinator).

WeklievethatacaatwoulddefatothecomptroltdsMnstruction~ there are no “clear and .conphg rcasons~tocon&dethattheadministmtive wnstructioniserronwus. “Constn&onofastatutebytheagcncycha@~the arecution~administrationthaeofbauthoritativeandshouldbcfollowedbythecourts unless there. are ckar and compelling reasons that such cwstructioll is emoneoua” Baseman v. Rice, 653 S.W.Zd 951,952 (Rx. App.-Amarillo 1983, writ refd nr.e.).

We amciude that the school district exemption fkom the gasoline tax applies to gasoline puchascd directly by a school district and used by independent contractors solely for the provision of transportation services to the district.

HonorableBenClTnpben - Page 3 W-216)

SUMMARY

The school district exemption from the gasoline tax, Tax Code sectiw 153.104(7),rppliestogasoline~~directlybyaschool district and used by independent conwactom solely for the provision of trausportation services to the district.

Attomey Oeneral of Texas WILL PRYOR

Fist-Attomeyoeneml

MARYKELLER

Deputy Attorney General for Litigation

RENEAHlcKs

State Solicitor

MADELEINE B. JOHNSON

chair, opiioncommittee

PrqarcdbyJamesB.Pinson

At3aantAttomeyGeneral