## THEATTORNEY 

# GENER& OFTEXAS

PRICE DANIEL ATTORNEYGENERAL August 21,1951

Hon. George B. Butler, Chairman Board ofInsurance Commissioners Austin, Texas Opinion No. V-1249 Re: Effect of House Bill 285, Acts 52nd Leg., 1951, upon rates applicable to gross premium taxes to be collected under the provisions Dear Mr. Butler: ofArticles 7064, 7064a. and 

## 4769, V.C.S. You have requested the opinion ofthis office as to the legal effect ofHouse Bill 285, Acts 52nd Leg., 1951, upon the rates applicable inthe collection ofgross premium taxes under the provisions ofArticles 7064, 7064a and 4769, Vernon’s Civil Statutes, inthe year 1952 and thereafter. You have also requested an opinion as towhether certain conclusions reached byyou from your examination ofHouse Bill 285 are correct. For the purpose ofbrevity, the conclusions reached by you will be discussed seriatim

. Your first conclusion is that House Bill 285 will become effective onSeptember 1, 1951. This conclusion is correct inthe light ofthe clear andunmistakeable language ofSection XXVII of **House** Bill 285, which is as follows:

“The crowded condition ofthe calendar creates an emergency and an imperative public necessity that the constitutional rule requiring bills tobe read on three several days in each House be suspended, and the same is hereby suspended, andthis Act shall take effect andbe in’force from and after the first day of September, A.D..1951.” [Emphasis added.] House Bill 285 was passed by both Houses as aa emergency measure andwas signed by the Governor onthe 8th day of June,1951, and absent the underlined portion thereof, w, would have be-Hon. George ,B. Butler, ,Page 2,(V-1,249) ~~

come effective and been inforce from and after that date. However, the Legislature specifically provided that the Act should become effective from and after September 1, 1951. See Attorney General Opinion V-1246 (1951) to the Honorable Robert S. Calvert, Comptroller ofPublic Accounts.

Your second conclusion is that Sections 1, 2,and 3of Article XVII ofHouse Bill 3, Acts 50th Leg., 1st C.S., codified respectively as Articles 70644, 7064a-1, and 47694, Vernon’s Civil Statutes, are repealed by House Bill 285 in so far as each ofthese articles levies an additional tax for the calendar year 1951 andtherefore no tax is to be levied under Sections 1, 2, and 3ofArticle XVII ofHouse Bill 3, supra, onpremiums collected during 1951, irrespective ofwhether they were collected before or after September 1, 1951.

Section 1ofArticle XVII, House Bill 3, Acts 51st Leg., 1st C.S. 1950, added the following Article:

“Article 70649. Inaddition to all other taxes, there is levied hereby an additional tax for the years 1950 and 1951, on every insurance corporation, Lloyd’s, or reciprocals, and on any other organization or concern upon which atax is levied byArticle 7064, Revised Civil Statutes of Texas, 1925, as amended. “The tax shall be paid atthe same time, inthe same manner, and subject to all the same terms, conditions, obligations andpenalties as is provided for the payment and collection ofthe tax levied inthe aforesaid Article 7064. “The tax hereby levied for the year 1950, shall be ten per cent (10%) ofthree-fourths (3/4) ofthe amount oftax levied and due for the callendar.~year 1950 under the aforesaid Article 7064. The tax hereby levied for 1951 shall be two-thirds (2/3) often per cent (10%) ofthe amount oftax levied and due for the calendar year 1951 under the aforesaid Article 7064.” Sections 2and 3ofArticle XVII use similar language in enacting Article 7064a-1 and Article 4769i.

However, Articles XV, XVIII, andXXI ofHouse Bill 285,Hon. George B. Butler, Page 3(V-1249)

which respectively amend Article 7064, 7064a, and 4769, V.C.S., each contain asection which, as relates toArticle 7064, reads as follows:

“Section 2. Section 1ofArticle XVII ofHouse Bill No. 3, Chapter 2, Acts ofthe First Galled Session **of**the Fifty-first Legislature, (which is codified as Article 7064i. Vernon’s Annotated Civil Statutes of Texas), is hereby repealed insofar, and only insofatt as it levies atax onpremium receipts for the year 1951.” The identical language ofthis repealing clause, except as to the specific references to the section numbers ofHouse Bill 3 andthe articles to be repealed, is contained inSection 2ofArticles XVIII and XXI ofHouse Bill 285. This language, as quoted above, clearly andunmistakeably repeals those provisions of Sections 1, 2, and 3, Article XVII, House Bill 3, Acts 51st Leg., 1st C.S., which levy atax upon premium receipts for the year 1951, and hence your conclusion is correct.

Your third conclusion is that Articles 7064a and 4769, V.C.S., now in effect, will control the premium taxes ofthe companies affected, measured by the premiums collected during the period January 1, 1951,to August 31, 1951, both inclusive. Your , fourth conclusion is that Articles 7064s: anti4769, Vernon’s Civil Statutes, as amended by House Bill No. 285, which amendments will become effective September 1, 1951, will control the tax levied against the companies affected, measured by the premiums collected during the period September 1, 1951, to December 31, 1951, both inclusive.

Articles 7064~1and 4769 tax respectively the gross premiums received by domestic life, health, and accident companies and foreign life, health, and accident companies. Article 7064a, now, and as amended by House Bill 285, reads inpart as follows:

u

. . . Such taxes shall be for and on account of business transacted within this State during the calendar year ending December 31st, inwhich such premiums were collected, or for that portion ofthe year during which the insurance organization transacted business inthis State.

. . .”Hon. George B. Butler, Page 4 (V-1249)

The same provision also appears inArticle 4769, now, and as amended by House Bill 285.

In anopinion by the Attorney General dated December 3, 1936, addressed to Hon. R. L. Daniel, Chairman,of the Board ofInsurance Commissioners, (Book 374, p. 496) itwas held that an occupation tax levied for and on account ofthe business ‘transacted during the year inwhich the premiums are collected upon which the tax is computed can be levied only upon the basis of the tax rate in effect atthe time such business was transacted and such premiums collected.‘

. This holding was affirmed by letter opinion ofthis office dated:August 14, 1949, addressed to Hon. George B. Butler, Chairman, Board ofInsurance Commissioners. Inasmuch as the amendments to Articles 7064a and 4769, enacted by House Bill 285, will not be effective until September 1, 1951, your conclusions are correct that the rates provided inArticles 7064a and 4769, prior to the effective date ofthe amendment on September 1, 1951, will control the premium taxes ofthe companies affected, measured by the premiums collected during the period January 1, 1951, toAugust 31, 195,1, both inclusive, and that the rates provided inArticles 7064a and 4769, as amended by House Bill 285, will control the premium taxes to be levied against the companies affected, measured by the premiums collected during the period September 1, 1951, to December 31, 1951, both inclusive.

Your fifth conclusion is that Article 7064, V,C.S., as amended by House Bill 285, will control the tax tobe paid by the companies affected, measured by the premiums collected during the entire peri.od January 1, 1951, to December 31,1951, both inclusive. Article 7064, as amended, imposes an occupa- . tion tax on all organizations transacting the business offire, marine, marine inland, accident, etc., insurance, other than the business oflife, personal accident, life and accident, and health and accident insurance, and is an occupation tax payable in advance for the privilege oftransacting such insurance business inthis State for aperiod ofone year commencing on March 1st ofthe year inwhich the tax is paid. The amount ofthe tax is measured by and is based upon the amount of gross premiums collected by the insurance organization during the preceding calendar year but the tax is not for the privilege ofhaving done business in Texas duringthe period inwhich such premiums were collected or atax upon the premiums so collected. Kansas City Life Ins. Co. v. Love, 101 Tex. 531, 109 S.W. 863j1908);- .

Hon. George B. Butler, Page 5 (V-1249)
Attorney General’s Opinions, supra.

Under the Supreme Court’s holding in Kansas City Life Ins. Co. v. Love, supra, the statutory tax rate in effect atthe time the tax is levied is applicable, irrespective ofthe tax rate in effect atthe time the premiums were collected. Your conclusion is correct inasmuch as the tax rate providebin Article 7064, as amended by House Bill 285, will be in effect from January 1,1952, to March 1, 1952, during which period the tax will be levied in accordance with the provisions thereof, andthe applicable rate will be measured by the premiums collected during the entire period January 1, 1951, to December 31, 1951, both inclusive, being the preceding year prescribed inthe statute.

Your sixth conclusion is that the provision contained for the first time inSection XV ofHouse Bill 285 which provides that

“examination and valuation fe,es paid insuch taxable year to or for the use ofthe State of Texas by any insurance organization hereby affected shall be allowed as acredit onthe amount ofpremium taxes tobe paid by any such insurance organization for such taxable year. . . .‘I may be deducted by such companies provided the examination and valuation fees were paid during the year 1951, Inthe letter opinion of,this office to Hon. George B. Butler, dated,- August 16, 1949, supra, in answer to asimilar question as to similar provisions contained inArticles 7064a and 4769, Vernon’s Civil Statutes, itwas held that:

a.

. . . The credits allowable for examination and valuation fees paid during the taxable year under the new measures are governed by the same principle. Those fees paid after the effective date ofthe Acts may be credited against those taxes accruing after the effective date oftheActs. *’ This holding is reaffirmed.

SUMMARY

House Bill 285, Acts 52nd Leg., 1951 (The Gmnibus Tax Bill) is effective from and after September 1, 1951, andthe tax rates therein provided by Articles XV, XVIII and XXI are the rates to be applied inthe4,. _a. Hon. George 8. Butler, Page 

## 6 (V-1249) L

collection ofgross premium taxes to be collected under the provisions ofArticles 7064, 7064a and 4769, Vernon’s Civil Statutes. APPROVED: Yours very truly, Everett Hutchinson? PRICE DANIEL Executive Assistant Attornev General Charles D. Mathews First Assistant Price Daniel Attorney General CKR:wb:mf C. K. Richards Assistant