THE A~BXORNEY GENERAL TEXAS
GROVER SELLERS Arwrrniu 11. -rexAn
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Honorable George B. Butler, Chairman Board of InsuranceCommissioners Austin, Texas Dear Sir: OpinionNo. 0-6536 Re: Whether ta'xlevied by Art. 7064a, V.A.C~.S.

pard by statewidemutual assessment association3 operating under Art, 5068-l may be paid from their Mortuary Fund, and related questions.
Your letter ofApril 16, 1945, requesting an opfnion of this department presents the followingquestions:

"1

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"2

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ante May any part of the occupation tax levied by Article 7064a paid by statewidemutual assessment associations operatingunder Article 5068a-1 be pald from their Mortuary Fund? May any part of the Federal Income Tax assessed agatnst and collected from assessment assoctations operatingunder Article 5068-lbe paid from the MortuaryFund of such associations in the event that (a) the premium income is from life insurpollcles exclusively, or (b) the premium income is from health and accident insurancepolicies exclusively, or (cl a part of the premium income is from life insurancepolicies and apart from health and accident policies, or (d) where the premuim income IS from health and accident policieswhich include life benefits or from life insurancepolicieswhich include health and accZdent benefits?"
In your letter, opinions from this department - o-2988, O-5337, and O-5539 - are referred to in connectionwith the*

.

. Honorable George B. Butler, page 2 O-6536

foregoingquestions. In Opinion NO, o-2988 approved January 30, 1941, this department held that no part of the premium tax imposedby Art. 7064a,Vernon's Annotated Civil Statutes,may be paid from the mortuary or relief funds as provided for under Section 12, Art. 5068-i of said statute,

OpinionNo, O-5337 holds that mortuary OP relief funds of mutual assessmentassociations subject to the S.B. 135, 46th Legislature (Art, 5068-1,V.A.C.S.Frovisionsof accumulated or contributionsthat may be made thereto, shouldAot be treat84 as taxable incomeunder the Federal Revenue Act of 1936. This ruling is based upon and follows ,the decision cited by you In General Life InsuranceCompany vs. Commissioner of Internal Revenue (5thCir. Ct, of Appeals, 137 Fed. (2d) 185, decided July 8, 1943)o In OpinionNo, O-5589 we follow the ruling in OpinionNo. O-2988 snd hold tha,tthe gross premium tax levied under Art, 7064a cannot be paid out of the mortuary or relief funds described in Sec. 12, Art, 5068-1,V.A.C.S. Said opinions are applicable to statewidemutual assessment assoclations operatingunder and subject to the provisions of Art. 5068-l.Answering your first question, therefore,you are respectfully advised that no part of the receipts tax leviedunder Art. 7064a may be paid by statewide mutual assessment associations operatingunder and subject to the provisions of Art. 5068-1, V.A.C.S,, from their mortuary funds.

As to your secondquestion, you doubtless have in mind the provisions of Art, 5068-4,V.A,C.S, enactedby the 48th~ Legislature, effectiveMay 1.8,1943. This statutewas referred to in OpinionNo, O-5337 and shouldnot be given any greater import than the intent of the Legislature can be gathered from its language. This statuteprovides:

'Any company or association operating under the provisions of SenateBill No. 135, Acts of theRegular Session of the 46th Legislature,Chapter 6, page 401,may pay from the mortuary or relief funds by whatever name It may be called any taxes that may be assessed against or required to be paid by the company or associationbecause of income to such funds."
As recognized in the last above cited opinion, the foregoing statutewould permit payment from the mortuary or relief funds of any legally assessed income tax against OP required to be'paid by the company because of such funds being held taxable as incomeunder the Federal Revenue Act.Honorabie George B, Butler, page 3 O-6536

Answering your second question, i.tis our opinlon ttiat only those taxes legally assessed under the Federal Internal RevenGe Act against the mortuary or relief funds, collected from or required to be paid by assessment associations subject to and operatingunder the provisions of Art. 5068-1,V,A.C.S., may be paid from such fund. Any portion of the funds of one g'ro;*p,

club or class;,

bowever,may not 'be used to pajisuch claims or obligations of any other group, club or class as provided In Set, 12 of said statute, Yours very truly, ATTORNEY GENERAL OF TEXAS
By s/Wm. J. R. King Wm. J, R. King Assistant
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APPROVED MAY 3, 1945 s/Carlos C. Ashley FIRST ASSISTANT ATTORNEY GENERAL
Approved Opinion Committee By s/BWB Chairman