### THE ATTORNES GENERAL OF TExpis

January 10, 1968
Honorable Robert S. Calvert Comptroller of PublicAccounts Austin, Texas Opinion No. M-188 Re: Whether certain insurance companieswhkch pay a gross Jo. premium receipts tax are sub- 'DearMr. Calvert: ject to Limited sales and use tax. You have requested an opinion as towhe'thertwo certain insurance companieswhich pay a,grosspremium receipts tax are also liable for the limited sales, excise and use tax.1 The first companywrites **fire** and casualty insuranceand is subject to the gross premium receipts tax imposedby Article 7064.2 The se~cond

oompanywrites life insurance and is subj.ect'to the gross premium receipts tax imposedby Article 4769.3

Our opinion is that 'eachof these insurance companies is subject to the sales and use tax. Article 7064 imposes a gross premium receipts tax on certain insurance companies other than life, and contains the followingrelevantprovisions:

"No occupation tax shall be levied on insurance companiesherein subject+ to the gross premium receipt tax by any county, ~' city or town.
. . .The taxes aforesaid shall constitute all taxes collectable under

1. Chap. 20, Title 122A, Taxation-General,V.A.C.S. 2. All references to Articles are to Vernon's Civil Statutes. 3. Art. 4769 is shown at page 484 of,Volume 14A,V.A.C.S. (1963).



### -893-Ron. Robert S. Calvert,page 2 (&188)

the laws of this State against any such insurance carriers
. . . No other tax shallbe leviedox conected Earn any insurance carrier by the state, county, city or any town,but this law shall not be construed to prohibit the levy and collection of state, county and municipal taxes upon the real and personal property of such carrier.
. . .'I (Emphasisadded

### .I Article 4769 imposes a gross premium receipts tax,,on certain insurance companies and contains th,efollowingrelevant provisions:

and municipal ad valorem taxes upon real or personal properties of such.;,insurance organizations." (Emphasisadded.) Each of the companies claim to be exempt from the sales and use tax by reason of the provisions in both Article 7064 and 4769 to the effect that only the gross premium taxes and the other taxes specificallynamed in saidArticlesmay be imposed upon the companies. We do not agree with this ..' contention.

Our constructionof these Articles is that these provisions exempt the companies covered by them from,

(1) any other occupation,privilege or franchise tax which might be imposed upon themby reason of their engaging in any type of insurancebusiness subjected to the gross premium receipts taxes by either of these Articles:

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(2) the other specific taxes named in saidArticles, none of which relate either primarily or exclusively to either insurance companies or the business of writing insurance. The exempt language simplymeans that the comp,anies which pay the gross premium receipts taxes are not subject to any other types of occupation,privilege,or franchise taxes.

f Artic Our Supreme Court in Hassell v. Commonwealth.Casualtv & Ins. Co., 143 Tex. 353, 18hS.W.2d s-. _-_ .--.-, )17.919 119451.wherein he court considered similar language of'section 19 kf.._______. le 4859fwhich read, "Exceptas herein expresslyprovided, noinsurance law of this State shall apply to **any** corporation operating under thisAct, and no lawhereafter enacted shall apply to them unless they be expressly designated therein." The Court then said,

"Theprovisions of the foregoing sections do not exemptmutual companies from the law of respondeat superior,or from y of the principles of general law. ,The ZFovisions referring to 'insurancelaw" do not have the effect to place the subject companiesbeyond the pale of the general law of agency. Calhoun et al. v. The Maccabees, Tex.Com. App., 241 S.W. 101." (Emphasis added.) This same statutoryprovisionwas again construed to the same effect in the later case of McCoy UndertakingCo. v. American Cas. & Life Co., 248 S.W.2d 311 313 , ( 1952, error dism.). Tex.Civ.App.
This was the rationale of our holding inAttorney General's OpinionNo. C-590 (1966).

-895-Hon. Robert S. Calvert,page 4 (M-188)

Our SupremeCourt has recognized the similarityof the gross premium receipts tax and the franchise tax. The Court has stated,

"Insurancecompanies required to pay the tax imposedby Article 7064 are specifically exempted frompayment of franchise taxes. Article 12.03V.A.T.S. Tax.-Gen. The gross premiums tax like the franchise tax is a chargewhich corporations subject theretomust pay for the privilege of engaging in business in Texas, and the levy ismade annuallv.
. . ." Statev. Nationii Lloyds, **368** S.W.2d 765, 766 (Tex.Sup.1963). We do not believe that the Legislature intended that insurance companies operating under eitherArticle 7064 or Article 4769 should be exempt from general tax lawswhich are not relatedprimarily to operating as an insurance compav . For example, an insurance companywould not be exempt frompaying gasoline taxes on gasoline used by company automobiles, or state sales tax on items of furniture,equipment and suppliespurchased for use in the business.

The sales and use tax is wholly different in its'nature from the gross premium receipts taxespaid by the insurance companies in questionwhich are in **the** nature of franchise, privilege or occupation taxes. The sales and use tax is a transaction tax. Calvert v. Canteen Company, 311 S.W.2d 556, 558 (Tex.Sup.19637. Neither does the sales and use tax bear any particular relationship to the business of insurance.

On the other hand, the sales and use tax is a general tax which provides inArticle 20.04 the only exemptions from its coverage. These exemptions are specific in their nature and we find nothing in'themwhich exempts any type of insurance company from their terms. The very completenessof the taxing scheme as set out in the sales and use tax act, toaetherwith the clear, specific and limitedexemptions from thatAct, supportour-opinion. State v. MauritzlWells Co., 141 Tex. 634, 175 S.W.Zd 238, 242-243 (1943).Hon. Robert S. Calvert, paqe 5 (M-188)

SUMMARY '5 Insurance companies subj&ct to the' gross premium receipts taxes imposedby L Articles 7064 and 4769,Vernon's,Civil Statutes, are also subject to the Limited Sales, Excise and Use Tax imposedby Chapter 20 of Title 122A, Taxation-General,of said statutes.

WEA:tb Prepared by W. E. Allen AssistantAttorney General ,APPROVED: OPINION..COFIMITTEE Hawthorne Phillips,Chairman, Kerns B. Taylor, Co-Chairman Robert Davis Ralph Rash Brandon Bickett STAFF LEGAL ASSISTANT A. J. Carubbi, Jr.

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