THE ATTORNES GENERAL 

OF TExpis 

January 10, 1968 

Honorable Robert S. Calvert 

Comptroller of Public Accounts 

Austin, Texas 

Opinion No. M-188 

Re: Whether certain insurance 

companies whkch pay a gross Jo. 

premium receipts tax are sub- 

'Dear Mr. Calvert: 

ject to Limited sales and use 

tax. 

You have requested an opinion as to whe'ther two certain 

insurance companies which pay a,gross premium receipts tax are 

also liable for the limited sales, excise and use tax.1 The 

first company writes fire and casualty insurance and is subject 

to the gross premium receipts tax imposed by Article 7064.2 The 

se~cond oompany writes life insurance and is subj.ect'to the gross 

premium receipts tax imposed by Article 4769.3 

Our opinion is that 'each of 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 

following relevant provisions: 

"No occupation tax shall be levied on 

insurance companies herein 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). 

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

the laws of this State against any 

such insurance carriers . . . No 

other tax shall be levied ox 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 (Emphasis added .I 

Article 4769 imposes a gross premium receipts tax,,on 

certain insurance companies and contains th,e following relevant 

provisions: 

and municipal ad valorem taxes upon real 

or personal properties of such.;,insurance 

organizations." (Emphasis added.) 

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 specifically named in said Articles may be 

imposed upon the companies. We do not agree with this ..' 

contention. 

Our construction of 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 

them by reason of their engaging in any type 

of insurance business subjected to the gross 

premium receipts taxes by either of these 

Articles: 

-894- 
Hon. Robert S. Calve&, page 3 (M-188) 

(2) the other specific taxes named in 

said Articles, none of which relate either 

primarily or exclusively to either insurance 

companies or the business of writing insurance. 

The exempt language simply means 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 4859f which read, 

"Except as herein expressly provided, 

noinsurance law of this State shall apply 

to any corporation operating under this Act, 

and no law hereafter enacted shall apply to 

them unless they be expressly designated 

therein." 

The Court then said, 

"The provisions of the foregoing sections do not exempt mutual companies from 

the law of respondeat superior, or from 

y of the principles of general law. ,The 

ZFovisions referring to 'insurance law" 

do not have the effect to place the subject 

companies beyond 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 statutory provision was again construed to 

the same effect in the later case of McCoy Undertaking Co. 

v. American Cas. & Life Co., 248 S.W.2d 311 , 313 ( 

1952, error dism.). 

Tex.Civ.App. 

This was the rationale of our holding in Attorney General's 

Opinion No. C-590 (1966). 

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

Our Supreme Court has recognized the similarity of 

the gross premium receipts tax and the franchise tax. The 

Court has stated, 

"Insurance companies required to pay 

the tax imposed by Article 7064 are specifically exempted from payment of franchise 

taxes. Article 12.03 V.A.T.S. Tax.-Gen. 

The gross premiums tax like the franchise 

tax is a charge which corporations subject 

thereto must pay for the privilege of engaging in business in Texas, and the levy 

is made annuallv. . . ." 

State v. Nationii Lloyds, 368 S.W.2d 765, 766 

(Tex.Sup. 1963). 

We do not believe that the Legislature intended that 

insurance companies operating under either Article 7064 or 

Article 4769 should be exempt from general tax laws which 

are not related primarily to operating as an insurance compav . For example, an insurance company would not be exempt 

from paying gasoline taxes on gasoline used by company automobiles, or state sales tax on items of furniture, equipment 

and supplies purchased for use in the business. 

The sales and use tax is wholly different in its'nature 

from the gross premium receipts taxes paid by the insurance 

companies in question which 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 in Article 20.04 the only exemptions from 

its coverage. These exemptions are specific in their nature 

and we find nothing in'them which exempts any type of insurance company from their terms. The very completeness of the 

taxing scheme as set out in the sales and use tax act, toaether with the clear, specific and limited exemptions from 

that Act, support our-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 imposed by L 

Articles 7064 and 4769, Vernon's,Civil 

Statutes, are also subject to the Limited 

Sales, Excise and Use Tax imposed by Chapter 20 of Title 122A, Taxation-General ,of 

said statutes. 

WEA:tb 

Prepared by W. E. Allen 

Assistant Attorney 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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