R-817
November 3, 1947
Hon. George B, Butler, Chairman
Board or Insurance Commissioners
Austin, Texas
Opinion No.,v-422.
Re: The liability of Yexloan
Insurance Companies to
Pay a gross premiums tax'
on polloiss lssurd In
Texas.
Dear Sir:
Your latter of October 1, 1947, reads as fol-
lows:
WPlease advise me whether lnsuranar
compa%les domlclled In the Rapubllo of
Mexloo, doing buslnasa In the State or
lkxas under the authority of Senate Bill
357, Aots 4.Sth~Laglslatura, Vernon's Art-
icle 5012a, are liable ror the tax lm-
pwsd by Article 7064, Revlaed Clrll stat-
utrs aa amended.
'"I? your answer is In the afilrma-
tlve, I assume that each aompang shall
pay the tax upon its gross prbmlum ln-
come from pollcles lrausd In Texas less
the deduotlone permitted by Artiale 7064.
Plsase oonrirm or corr6Ct me as to thla."
Artlolr 5012a, V. C. 5, maker aomprrhanslvs
prwlslons ror Maxlcan Insurancra Eompanlas to writ6 ln-
suranoe poll&s ln Texas aovaring parson8 ,a,nd their
property but only while suoh parsons or property ,aro
physloaUy within the boundaries or the Republlo or Mex-
loo. It authorizes suah oompanirs to write pollolra of
lnrruranos affording "any and all kinds of! automobile
corerags, aooldent lnsuranae and/or other oaaualty cover-
age*. Sao Section 1 at Artlols 5012a. Thla artlolr also
oontamplattrr the payment of taxae by such lnsuranor com-
panfas; provides that the deposit which Is required of
Hon. George B. Butler, Page 2, V-422.
such companies shall be liable for taxes due the Stats
or Texas; and provides In Seatlon 1 (a) as follows:
Wach oarrler siall pay the 8tatr
of Texas annually a premium or oooupl-
tlon tax upon Its gross premium lnaome
from pollcl~es issued In Texas acoording
to the reports made to the Board eaoh
yaar, and shall pay suoh other tees
ohargea and taxee upon the same baa i s
as like Insurers llosnsed to do the same
klnds or basins88 in the State or Texas
,are required by law to pay; and shall
make the same reports a8 such other ll-
oensed ca,rrlers, but in such adaptsd
forms as may be prescribed by suoh Board
for such purposes.W
We aonstrUe Section 1 (e) to reqnira the
payment by such companies of a premium or oooupatlon
tax upon its gross premium income from ~oliciss lr-
upon the same basis as like Insurers
the sama kinds of business in the
Btate of Texas are required by law to pay. The “same
kinds of businessn means, to our minds, *automobile
ooreragr , accident insurance and/or othrr casualty
ooverags*. Those classes of business are taxed Under
Article 7064, V. C. S., and Article .&769a, V. C. So
The %aels~ upon whioh nllke Insurer8w pay a tax 1s
3.5 per cent o? the groe8 premiums which, however,
is subjeot to aertain reductions depending upon the
lnvrstment of assets in Texas seaurltles. It would
appear that Artlole 7064., V, C. S., would apply to
all of the lines of insurance authorized by ArtitiLa
5012a, lxaept personal aocldsnt insurande, which by
the ‘terms or the last paragra h of Artlolo 7064 Is
lxoludid from that article an i will be f'onnd to be
taxed under Artlols f+769p.,
It has barn oontrndsd that Artioh 7064
does not apply to the MIxloan Companlel rrgulated
by Article 5012a, ainor Article 7061, prwldrs for
the payment or a tex upon *the grors amOUIlt Of prrm-
i~ms received upon property located in this State
or on risks looated in this State;” HowePar, suah
a construotlon would have the eiieot of nUlIlfYl%Ii!
t&r provisions or Section (01 of Artiole 5012a where-
ln It requires the payment Of a tax upon “8rOs8 Praa-
luar income from pollales issued in Texas” end arrsumes
Hon. George B. Butler; Page 3, V-422.
that the "basis" of the tax necessarily includes the
limitations of Artlole 7064 that the tax be paid only
on premiums -collected on policies Issued on property
and risks looated in this state. By enaoting Article
5012a, the Legislature obviously Intended to~levg a
tax, and In order to give its provisions meaning,~and
to carry out the leglslatlvs Intent, we attribute to
the word "basis" the meaning of,%ate*~together with
the formula, for reductions in that rate depending upon
the insursd~a'lnvestment in Texas mcui’itles.~ The con-
struction oontended for to the aontrary, would hare the
effect of exempting such oompanirs from taxatlon,oon-
trary to the al,ear intention of the Legislature when
the&e acts are oonstrued together.
A.slm.llar contention might be made.that prem-
. lums from pers,onal accident lnsuranoe written in Texas
upon persons residing or domiciled in othe~r, states are
not aontemplated by Article 50i2a slnae Article 4769a
levies 'a tax only upon premiums aolleoted "iran ,persons
residing or domiciled in this State.* But ,here;agaln,
In giving efrect to the obvious intentof Article 5012a,
it, Is ou? opinion that Article 5012a prescribes that
premiums on policlea writt,en In Texa,a.rhaLl be taxad,
and that Article &'769a,d~etermines the rate and iormula
for ieduation of that rate v&m the prescribed portion
or the assets of the Insurer are investsd In Texas ae-
auritlss.
SuMNbtiY
Mexican Insurance Companies operating
undar Artiole 5012a, V. C, S., and writing
pollalea In Taras ~affording automoblle cover-
'age, accident lnsuranoe and/or oasualty oover-
age, to be in force only. while such ~pe~rsons
,'or propaTty are ,physloally within t.he Repub;
lit dr Mexloo, are required to pay atax upon
the ,gross premiums from all such
the rate presorlbbd by ,Article 7CPaiea,
4, V.G.S.,at
exce t as to person31 accident lnsuranae,
Ohio % rate is prescribed by Article 4769a,
v. C.,,S.
Vary truly four8 :.
Wa:jap:jmo