Court Opinion

ID: 4135495
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:02:55.058639+00
Date Added: 2024-06-11T12:30:03.131607
License: Public Domain

William         A.    Harrison                                 Opinion          No.     WW-            1484
Commissioner                 of Insurance
State     Board        of Insurance                            Re:       Basis        for    taxes            collected      under
Austin,         Texas                                                    Articles           3. 25 and            3. 59 of the
                                                                         Texas        Insurance                Code.

Dear      Mr.        Harrison:

          In your        recent          letter       you request              an opinion              of this     office        con-
struing      Articles            3.25      and 3. 59 of the              Texas         Insurance               Code,       to deter-
mine      the correct            basis         for    taxes    due from             foreign            life    insurance          com-
panies      seeking          to be re-admitted                  to Texas.              For        many          years      the Insur-
ance      Department             has      construed           Articles          3.25        and 3.59            to require
foreign      life     insurance            companies            seeking            re-admission                  to do business
in Texas          to pay taxes             on the basis             of premiums                  collected         from       citizens
of Texas          only    on policies             written      by such             company             during         the period           of
time     that     such       company            formerly           was    authorized               to do business                in
Texas.          Rec.ently,         according             to your         letter,       the question                has     arisen
whether         the foreign             life    insurance           company           seeking            re-admission                 should
also    have      to pay       taxes           on its    policies        of insurance                  on lives         of persons
who have          moved        to Texas              subsequent          to the       departure                from     Texas         of
the particular            life     insurance             company.

          It is the opinion                of this        office     that the long-standing                           construction
of Articles           3.25      and 3. 59 is             correct,         --    that the tax              owing        by a foreign
life    insurance            company            seeking       re-admission                  is    computed             on the basis
of premiums              collected             from      citizens        of Texas           only        on policies          written
by such         company          during          the period          of time        that         such     company           formerly
was     authorized            to do business               in Texas.

          Article        3.59      reads          as follows:

                       “Any      life     insurance           company           which            has    heretofore           been,
          may        now be,        or may            hereafter          be,     engaged           in writing             policies
          of insurance             upon         the lives       of citizens            of this          State,        which       has
          heretofore             ceased,             or may    hereafter              cease        writing         such      poli-
          ties,       and which            does         not now      or may           not hereafter                have      a
    William         A.    Harrison,               page       2      (WW-1484)

              certificate            of authority                to transact         the business              of life
              insurance             in this        State,          but which         has     continued             or may
              continue            to collect          renewal             or other        premiums            upon       such
              policies,            shall,         before         it may      again        obtain         a certificate
              of authority            to transact                 the business             of life       insurance         in
              this       State,      report         under          oath to the Board                 of Insurance
              Commissioners                       the gross          amount          of premiums               so    collec-
              ted from            citizens          of this        State     upon     policies            of insurance
              during        each       calendar             year      since       the end of the pe,riod
              covered         by the last              preceding             report        by such          company          of
              gross        premium              receipts           upon      which     it paid           an occupation             tax,
              and shall            pay      to the State            a sum         equal      to the percentage                    of its
.
              gross        premium                receipts         for     each     such      year        that was        re-
              quired        by law          to be paid             as occupation             taxes         by companies
              doing        business             in this      State,         during     such        year      or years;
              and,        upon      the payment                  of such      sum     and securing                 a certifi-
              cate       of authority              to do business                 in this     State,        the penal-
              ties       provided           for    the failure             to pay     such      taxes        and make
              such        report       in the past                shall     be remitted.             ”

              Alticle        3.25        reads        as follows:

                           “Each         life     insurance               company         not organized              under
              the laws            of this         State,         hereafter         granted      a certificate              of
              authority            to transact              business         in this        State,        shall     be
              deemed          to have             accepted          such      certificate            and to transact
              such        business           hereunder              subject        to the conditions                and re-
              quirements              that,         after        it shall     cease        to transact             new    busi-
              ness        in this        State      under          a certificate           of authority,             and so
              long       as it shall            continue           to collect        renewal             premiums          from
              citizens            of this       State,       it shall        be subject         to the payment                    of
              the    same          occupation              tax in proportion                 to its       gross      premiums
              during         any year,              from         citizens        of this     State,         as is    or may
              be imposed              by law          on such             companies          transacting            new busi-
              ness        within      this        State,         under      certificates             of authority          during
              such        year.          The       rate     of such         tax    to be so paid             by any        such
              company              shall     never          exceed         the rate        imposed           by law upon
              insurance             companies               transacting             business             in this    State.
              Each         such      company               shall     make        the same          reports          of its      gross
              premium              receipts          for      each        such     year     and within             the    same
              period         as is or may                  be required             of such      companies                holding
.   -

        William           A.    Harrison,             page        3     (WW-1484)

                   certificates               of authority             and shall            at all     times       be subject
                   to examination                 by the Board                 of Insurance                Commissioners
                   or some             one selected               by it for          that purpose,                in the same
                   way         and to the same                 extent         as is or may               be required             of
                   companies              transacting                 new business               under       certificates              of
                   authority            in this       State,          the expenses               of such         examination                to
                  be paid          by the company                     examined.               The      respective              duties
                   of the Board                in certifying             to the amount                 of such          taxes     and
                   of the State               Treasurer               and Attorney               General         in their
                   collection            shall       be the same               as are         or may         be prescribed
                   respecting’taxes                   due from             companies              authorized             to trans-
                  act new          business            within          this    State.       I’

                  As      stated        previously,               the Insurance                  Department              has     long       con-
        strued      these         articles         and their            predecessors                 to mean            that    an insurance
        company           seeking         re-admission                   must        pay taxes           on all         of those        pre-
        miums          paid     on policies             sold      to citizens              of Texas         during         the time              that
        the particular’company                          had a permit                 to do business                in Texas.                Of
        course,         under          this     interpretation,                 the basis          for     this     tax would            not
        include        premiums               paid     on policies              of persons             who moved               to Texas
        after     the particular                insurance              company           had left          the    state.

                  The         phrase          in Article          3. 59,       ‘I.    . .which         has       continued            or may
        continue          to collect           renewal         on other              premiums            upon      such        policies,           I’
        apparently             refers         to those       policies            sold       to citizens           of Texas            by the
        foreign        life     insurance            company            during          the time         it was         doing     business
        in Texas.              A close         study     of the legislative                      history         and interpretation
        of Articles            3.25      and      3. 59 do not reveal                    a contrary              intention.            See
        Attorney          General             Opinion      O-5438,             p.     12.        The     long-standing                depart-
        mental         construction              of Articles             3.25        and      3. 59 is      entitled           to consider-
        able    weight          in this        decision.              It is also        significant              that    the     construc-
        tion    by the Insurance                  Department                  was     uniform          prior       to and subse-
        quent     to the adoption                 of the       Texas          Insurance            Code       in 1951,           since           an
        elementary              rule     is that       re-enactment                   or re-codification                   of a statute
        after     adoption         of an administrative                          construction              gives        legislative
        sanction        to the administrative                          construction              and tends          to strengthen
        that    construction.                  Heaton        V.       Bristol,          317 S.W.2d 86,            (Civ.App.,
        error     ref.,         1958);        Texas      Employers                   Insurance           Association             v.     Holmes,
        145 Tex. 158,        196 S.W.2d 390                 (1946).
       William        A.    Harrison,          page      4   (WW-1484)

                                              SUMMARY

                              Under      Articles        3.25    and     3.59,      a
                        foreign       life    insurance         company          seeking
                        re-admission             to do business            in Texas
                        must       pay   a sum        in taxes       on the basis          of
                        premiums             collected       from      citizens     of
                           Texas    only     on policies         written     by such
                        company          during       the period        of time      that
                        the company            was     formerly         authorized          to
                        do business           in Texas.

                                                                Very     truly     yours,

                                                                WILL       WILSON
                                                                Attorney         General         of Texas

                                                                BY

                                                                          Assistant         Attorney        General

BES:lmc

APPROVED:

OPINION         COMMITTEE:

W.    V.     Geppert,        Chairman
Pat   Bailey
L.    P.    Lollar
Tom        Peterson

REVIEWED              FOR     THE     ATTORNEY               GENERAL
BY:        Leonard      Passmore