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Honorable 0. P. Lockhart, Chairman Board of InsuranceCommissioners Austin, Texas

Dear Sir: Opini~on No. O-4735 Re: Does the Board of Insurance Commissionershave the power to enforce collection of occupation tax upon gross premiums from foreign life inaurance companiesand from similardomestic companies under facts submftted?

The material portions of your recent letter in connectlon with the above question are set out below:

We desire your opiniona8 to whether under theseArticles, and any other applicable statutory provisions, this Board has the power to enforce collection from PoreLgn life insurancecompanies, and from elmilardomestic companies, of occupation taxes upon premiums paid upon life insurancepolicies Issued In favor of officersand men who at the date of issuance of such policiesw.ereand still are, or subsequently theretobecame and still are, citizens of and domiciled in the State of Texas and who are aervlng inmllltary or naval services of the United States in federalmilitary or naval
areas and elsewhere (a)within Texas and (b)without Texas; and as to the Board's powers likewisewith respect,to such classes of companies upon premiums collected from policies issued to officersand men who, at the time of Issuance of such policies,were not and still are not citizens of or,domiciled In the State of Texas butsare serving In the military or naval forces of the United States in federalmilitary
or naval areas and elsewhere in the State of Texas and who might by virtue thereofbe merely residing temporarily in the State of Texas. Also, as to whether, and to what extent, this Board has the power to promulgate and enforce rules and regulations governing the assessment and collection of premium taxes in the various situationshereinabove outlined."Honorable 0. P. Lockhart, Chairman,page 2 o-4735

The Articles referred to in your letterare Articles 7064a and 4769,Vernon'sAnnotated Civil Statutes. icle 7064a reads as follows: Art-

"Art.7064a:
%ery group of individuals,society,association,
or corporationdomiciled in the State of Texas transacting the business of life,accident, or lifeand acident, health and accident insurance for profit, or for mutual benefit or protection, shall at the time of filing its annual statement report to the Board of InsuranceCommissionersthe gross amount of premiums received from ,orupon the lives of persons residing or domiclled In this Stateduring the preceding year and each of such groups of lndlvlduals,society,association, or corporation shall pay an annual tax of five eighths (5/8) of one (1)per cent of such gross premium receipts, provided, however, that this tax shall not apply to local mutual aid associations, or fraternalbenefit societies or organizations. Such gross premium receipts so reported shall not includepremlums received from other licensed companies for reinsurance,but there shall be no deductionmade for premiumspaid for reinsurance. If any such group'of individuals, society,association, or corporationdoes more than
one kind of insurancebusiness, then it shall pay the tax herein levied upon the gross,premium for'each klna of lnsurante written; the provisions of thisAct shallnot'apply to fraternal insuranceorganizationsnorsocieties that limit theirmembership.to one occupation. The report of the gross premium receipts shallbe made upon the'swornstatement of two (2)principal officers. Deductions from thc'gross premium receipts shall be allowed any group of individuals, society,association, or corporation of'an acquisition cost of all of the first gear'spremiums, except that on lndustrial business such companies shall be permitted to deduct
one and one half (la) times the amount of the,firstgear's premiums as acquisition costs. Upon receipt by it of the
sworn statementsabove provided for, the Board of Insurance Commissioners shall certify to the State Treasurer the'amount of taxesdue by each of such group of individuals,society, association, or corporation,which tax shallbe paid to the State Treasurer on or before the 1st of March followingand the Treasurer shall issue his receipt'thereforas evidence of the payment of such taxes. NO such group of individuals, society,association, or corporation'shallreceive a permit to do business until all such taxes' are paid. The taxes aforesaid shall constituteall taxes and license fees collectibleunder the laws.of this State against any such insurance organizations,except the fees provided for under Article 3920, Revised Civil Statutes of Texas of 1925, as amended by Acts of the Forty-secondLegislature of 1931,L

Honorable 0. P. Lockhart, Chairman,page 3 cl-4735

Chapter 152, Section 1, and no other taxes shallbe levied
or collectedby any county, city, or town except State, county and municipal ad valorem taxes upon the real and personal property of such Insurance organizations."

Article 4769 reaas as follows:

"Art. 4769:

"Each life insurance companynot organized under the laws of this State, transactingbusiness in this State, shallannually, on or before the 1st day of March,make a report to the Commissioner, which report shall be sworn to by either the president
or vice president and secretary or treasurer of such company,which shall show the gross amount of premiums collectedaurlng the year edding onDecember 31st, preceding, from citizens of this State upon policies of insurance. Each such company shallpay annually
a tax equal to four and sixty-fivehundredths (4.65) per cent of such gross premium receipts. When the report of the investment in Texas securities,as defined. by law, of any such companiesas ofDecember 31st of any year shall show that it has invested on saiddate as much as thirty (30)per cent of its total Texas reserves as deflnea by law, In promissorynotes
or other obligations securedby mortgage,deed of trust, or other lien on Texas real estateand/or %n loans to residents or citizens of Texas sedred bg the legal
reserve on the respective policies held by such borrowers, the rate of occupation tax shall be reduced to four and five one hundredths (4.05)per cent; and when such report shall show that such company has so invested on saiddate as much as sixty (60)per cent of its~totalTexas reserve, the rate of such tax shall be reduced to three and six tenths (3.6)per cent; and when such report shall show that such company has so invested, on saiddate, as much as seventy-five (75) per cent of its total Texas reserve, the rate of such tax shall be re&uced to three and one tenth (3.1)per cent. All such companies shall, In any event,make the investments in Texas securities inproportIon to the amount of Texas reserves as required by law. Such taxes shall be for and on account of the business transactedwithin this State during the calendaryear inwhich such premiumswere collected, or for that portion thereofduring which the company shallhave transactedbusiness In this State. This Act shall not in any manner affect the obligation for the payment of any taxes that have accrued and that are now due or owing,Honorable 0. P. Lockhart, Chairman,page 4 O-4735

but the obligationas now prov~lded,bylaw for the payment of such taxes shall continue in :fullforce and effect."

As we understandyour letter three separate fact situationsare presentedand our opinion is requested as to the application of each of the above statutes to each of the fact situations.

In the first situation the premiums are received from or upon the life of a person who, at the date of issuance of a policy, was, or subsequentlytheretobecame, a citizen Off , qr domiciled in, the State of Texas and so remained unless the fact that suchperson isnowfinthe Army of the United States and stationed in Texas by military authority has changed his statusunderthe terms used in the above quoted taxing statutes.

The second situation IS exactly the same as the first except that the personsis stationedby military authority at some point outside of Texas.

The rule is generally recognized that a persondoes not lose his statusas a citizen of Texas or his Texas domicile merely because he enlists or is.drafted into the United States Army and this is true even though he Is stationedby military authority at some point outside of Texas. Such rule is stated inRuling Case Law, Volume 9, page 551 as follows:

"The domicile of a person is in no way affected by his enlistment or acceptance of employment in the civil,military or naval service of his country. Be does not thereby abandon or lose the domicilewhich he had when he entered the service,nor does he acquire one at the placewhere he serves. Accordingly, if one enters the military service and with his regiment goes beyond the limits of the State, remaining there for some time in such servlc'e, he does not become a non-resident of the state. o
. *'

It is the opinion of this department and you are so advised that the premiums involved in both the first and second fact situations above outlined should be included in computing the tax leviedby Article 7064a and should ,alsobe includedin computing the tax levied by Article 4769.

In the third fact situation the premium is received from or upon the life of a person who, at the'date of issuance of the policy,was, and still Is,a citizen of or domiciled in some state other than Te,xas, unless the fact that suchper-. -_ -

Honorable 0. P. Lockhart, Chairman,page 5 O-4735

son is now in theArmy of the United States and statlonedby military authority In Texas has changed his statuswithin the meaning of the above quoted taxing statutes.

The mere fact that a soldier is stationedby milltary authority In this State does not make such soldiera citizen of ordomiciled inTexas. that such solaler is not "residing" It is also our opinion herewithin the meaning of that term as used inArticle 7064a. In the case ofKinsel et ux v. Pickens, 25 Fed. Sup. 455, the court in considering the question of removinga case to Federal Courtmade the following statement in connectionwith the residence of a soldier in the Army:

“(5) However, if there be a,ny questionas to this proposition, the :CourtIs of the opinion that the residence spoken of In the statute could not possibly be of the character existing in this case. This man's locationhere Is dependent entirelyupon thewill of others. He came here under orders and he will leave under orders. Any intentionthat he may have in the matter must necessarilybe qualified by thewill of others superior to him in rank. Under the evidence, It ~111 be quite a number of years before he is entitled to retire. In themeantime, he has practically
no volition of his ownwith regard to where he will reside. To hold him to be a resident of Texas with the purview of the removal statutesunder those clrcumstanceswould be entirely outslae the purpose and spirit of the law."

It is the opinion of this department and you are so advised that the premiums Involved in the third fact situation above set out shouldnot be included In computing the tax levied by Article 7064a and shouldnot be included in computing the tax levied by Article 4769.

out. This opinion Is llmlted to the facts hereln set

It is further our opinion that the statutes themselvesprovide the procedure for the collectlon of the tax therein levied. If the Board of InsuranceCommissionersdesires to promulgate some rule or regulation in connection with such procedure the submission to us of suchproposed rule or regulationwould be necessary to enable thisdepartment to formulatean opinion thereon.Honorable 0. P. Lookhart, Chairma?, ,pa.ge 6 o-4735

DG:mp:wc

APPROVED ElOV19, 1942 s/Gerald C. Mann ATTORNBYGENNWAL OF TEXAS Yours very truly

ATTORNEY &NERAL OF TEXAS



### By s/Dpda Gay Donald Gay Assistant

This Opinion Consideredand Approved in United Conference