L -.- 

Honorable 0. P. Lockhart, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sir: Opini~on No. O-4735 

Re: Does the Board of Insurance 

Commissioners have the power 

to enforce collection of occupation tax upon gross premiums from foreign life inaurance companies and from 

similar domestic companies 

under facts submftted? 

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

We desire your opinion a8 to whether under 

these Articles, and any other applicable statutory 

provisions, this Board has the power to enforce 

collection from PoreLgn life insurance companies, 

and from elmilar domestic companies, of occupation 

taxes upon premiums paid upon life insurance policies Issued In favor of officers and men who at 

the date of issuance of such policies w.ere and 

still are, or subsequently thereto became and still 

are, citizens of and domiciled in the State of Texas 

and who are aervlng in mllltary or naval services 

of the United States in federal military or naval 

areas and elsewhere (a) within Texas and (b) without 

Texas; and as to the Board's powers likewise with 

respect, to such classes of companies upon premiums 

collected from policies issued to officers and 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 federal military 

or naval areas and elsewhere in the State of Texas 

and who might by virtue thereof be 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 situations hereinabove outlined." 
Honorable 0. P. Lockhart, Chairman, page 2 o-4735 

The Articles referred to in your letter are Articles 7064a and 4769, Vernon's Annotated Civil Statutes. 

icle 7064a reads as follows: 

Art- 

"Art. 7064a: 

%ery group of individuals, society, association, 

or corporation domiciled 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 Insurance Commissioners the gross amount of premiums received from ,or upon the lives of persons 

residing or domiclled In this State during 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 fraternal benefit societies or 

organizations. Such gross premium receipts so reported shall 

not include premlums received from other licensed companies 

for reinsurance, but there shall be no deduction made for 

premiums paid for reinsurance. If any such group' of individuals, society, association, or corporation does more than 

one kind of insurance business, then it shall pay the tax 

herein levied upon the gross,premium for' each klna of lnsurante written; the provisions of this Act shallnot' apply to 

fraternal insurance organizations nor societies that limit 

their membership.to one occupation. The report of the gross 

premium receipts shall be 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's premiums, except that on lndustrial business such companies shall be permitted to deduct 

one and one half (la) times the amount of the,first gear's 

premiums as acquisition costs. Upon receipt by it of the 

sworn statements above provided for, the Board of Insurance 

Commissioners shall certify to the State Treasurer the'amount 

of taxes due by each of such group of individuals, society, 

association, or corporation, which tax shall be paid to the 

State Treasurer on or before the 1st of March following and 

the Treasurer shall issue his receipt'therefor as evidence of 

the payment of such taxes. NO such group of individuals, 

society, association, or corporation'shall receive a permit 

to do business until all such taxes' are paid. The taxes aforesaid shall constitute all taxes and license fees collectible under 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-second Legislature of 1931, 
L 

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

Chapter 152, Section 1, and no other taxes shall be levied 

or collected by 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 company not organized 

under the laws of this State, transacting business 

in this State, shall annually, 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 

collected aurlng the year edding on December 31st, 

preceding, from citizens of this State upon policies 

of insurance. Each such company shall pay annually 

a tax equal to four and sixty-five hundredths (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 companies as of December 

31st of any year shall show that it has invested on 

said date as much as thirty (30) per cent of its total 

Texas reserves as deflnea by law, In promissory notes 

or other obligations secured by mortgage, deed of trust, 

or other lien on Texas real estate and/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 said date as much as sixty (60) per cent 

of its~total Texas 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 said date, 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 in proportIon to 

the amount of Texas reserves as required by law. Such 

taxes shall be for and on account of the business 

transacted within this State during the calendar year 

in which such premiums were collected, or for that 

portion thereof during which the company shall have 

transacted business 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 obligation as now prov~lded ,by law for the 

payment of such taxes shall continue in :full force 

and effect." 

As we understand your letter three separate fact 

situations are presented and 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 subsequently thereto became, a citizen 

Off , qr domiciled in, the State of Texas and so remained unless 

the fact that such person is now fin the Army of the United 

States and stationed in Texas by military authority has 

changed his status underthe terms used in the above quoted 

taxing statutes. 

The second situation IS exactly the same as the 

first except that the persons is stationed by military authority at some point outside of Texas. 

The rule is generally recognized that a person does 

not lose his status as 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 stationed by military 

authority at some point outside of Texas. Such rule is stated 

in Ruling 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 domicile which 

he had when he entered the service, nor does he acquire one at the place where 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 levied by Article 7064a and should ,also be included in 

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 such per- 
. -_ - 

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

son is now in the Army of the United States and statloned by 

military authority In Texas has changed his status within the 

meaning of the above quoted taxing statutes. 

The mere fact that a soldier is stationed by milltary authority In this State does not make such soldier a 

citizen of or domiciled in Texas. 

that such solaler is not "residing" 

It is also our opinion 

here within the meaning 

of that term as used in Article 7064a. In the case of Kinsel 

et ux v. Pickens, 25 Fed. Sup. 455, the court in considering 

the question of removing a case to Federal Court made the following statement in connection with the residence of a soldier 

in the Army: 

“(5) However, if there be a,ny questionas to 

this proposition, the :Court Is 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 

location here Is dependent entirely upon the will of 

others. He came here under orders and he will leave 

under orders. Any intention that he may have in the 

matter must necessarily be qualified by the will 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 the meantime, he has practically 

no volition of his own with regard to where he will 

reside. To hold him to be a resident of Texas with the 

purview of the removal statutes under those clrcumstances would 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 should not be included In computing the 

tax levied by Article 7064a and should not 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 themselves provide the procedure for the collectlon of the tax 

therein levied. If the Board of Insurance Commissioners desires to promulgate some rule or regulation in connection 

with such procedure the submission to us of such proposed 

rule or regulation would be necessary to enable this department to formulate an opinion thereon. 
Honorable 0. P. Lookhart, Chairma?, ,pa.ge 6 o-4735 

DG:mp:wc 

APPROVED ElOV 19, 1942 

s/Gerald C. Mann 

ATTORNBYGENNWAL OF TEXAS 

Yours very truly 

ATTORNEY &NERAL OF TEXAS 

By s/Dpda Gay 

Donald Gay 

Assistant 

This Opinion Considered and Approved in United Conference