Untitled Texas Attorney General Opinion

OFTEXAS 1,

AUSTIN. TEXAS 78731

August 22, 1974

The Honorable Robert S. Calvert Opinion No. H- 378
Comptroller of Public Accounts
State Finance Bldg. Re: Whether ‘unlicensed surety
Austin, Texas 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