OFTEXAS 1, 

AUSTIN. TEXAS 78731 

August 22, 1974 

The Honorable Robert S. Calvert Opinion No. H- 378 

Comptroller of Public Accounts 

State Finance Bldg. 

Austin, Texas 

Re: Whether ‘unlicensed surety 

companies may furnish bonds 

in satisfaction of the security 

required under Art. 20.021 (N) 

(l), Taxation-General, V. T. C. S. 

Dear Mr. Calvert: 

As a result of the number of delinquent sales tax accounts and the 

difficulty in collecting them, the 63rd Legislature added Sec. N to Article 

20.021, Taxation-General, V. T. C. S., reading, in part: 

.(N) Bonds or Securities 

(1) Every person who holds a sales tax permit 

under this Chapter as of January 1, 1974, and is delinquent 

in the payment of any taxes, penalties and/or .interest 

on January 1, 1974, and every applicant for a sales 

tax.permit on or after January 1, 1974, shall furnish to 

the Comptroller a cash bond, a bond from a’ surety 

company chartered or authorized to do business in the 

State of Texas, certificates~ of deposits, certificates 

of Savings or U.S. Treasury bonds or, subject to the 

discretion and approval of the Comptroller, an 

assignment of negotiable stocks or bonds, or such 

other security as the Comptroller may deem sufficient 

to secure the payment of taxes under this Chapter . . . . 

(emphasis added) 

. 

Apparently many small businesses in Texas have been unable to 

purchase a bond or to furnish cash or other specified security as required 

, 

p. 1774 
The Honorable Robert S. Calvert page 2 (H-37%) 

by the statute. As a result, some of these businesses have sought the 

assistance of surplus lines agents who offer to procure the necessary 

bonds from out-of-state insurance companies not licensed to do business 

in Texas. 

You ask, whether and under what circumstances Article 20.021 (N) 

(1) permits the Comptroller to accept bonds written by unlicensed surety 

companies, and you specifically bring to our attention Article 1.14-2 of 

the Texas Insurance Code which deals with surplus lines insurance 

--insurance which cannot be obtained from duly licensed, regulated 

insurers conducting business in this state. 

By the very terms of Article 1.14-2 surplus lines insurance is 

insurance with an unauthorized insurer. Authorized carriers are thoee 

licensed by the State Board of Insurance to do business in Texas. Article 

1.14, Sec. 1, Insurance Code, V. T. C.S. 

Therefore, it is our opinion, that the Comptroller of Public 

Accounts is not obligated to accept bonds written by unlicensed surety 

companies, but he may do so if he first determines that they provide 

sufficient security to secure the payment of taxes. 

SUMMARY 

An unlicensed surety company is not one authorized 

to do business in the State of Texas under Article 20.021 

(N) .(l), Taxation-General, V. T. C. S., so.88 to require 

the Comptroller to accept its bond in satisfaction of that 

statute, although he may accept it if he determines hit 

provides adequate security. 

Very truly yours, 

L. HILL 

.Attorney General of Texas 

p. 1775 
The Honorable Robert S. Calvert page 3 (H-378) 

APPROVED: 

AVID M. KENDALL, Chairman 

Opinion Committee 

ps 1776