                 THE   A~BXORNEY           GENERAL
                                   TEXAS

GROVER SELLERS             Arwrrniu11.-rexAn

A'ITORNWCY DsN*:RAx.




     Honorable George B. Butler, Chairman
     Board of Insurance Commissioners
     Austin, Texas
     Dear Sir:                Opinion No. 0-6536
                              Re: Whether ta'xlevied by Art. 7064a,
                                   V.A.C~.S.pard by statewide mutual
                                   assessment association3 operating
                                   under Art, 5068-l may be paid from
                                   their Mortuary Fund, and related
                                   questions.
             Your letter of April 16, 1945, requesting an opfnion of
     this department presents the following questions:
             "1 . May any part of the occupation tax levied
                  by Article 7064a paid by statewide mutual
                  assessment associations operating under
                  Article 5068a-1 be pald from their Mortu-
                  ary Fund?
             "2. May any part of the Federal Income Tax
                 assessed agatnst and collected from assess-
                 ment assoctations operating under Article
                 5068-l be paid from the Mortuary Fund of
                 such associations in the event that
                  (a) the premium income is from life insur-
             ante pollcles exclusively, or
                  (b) the premium income is from health and
             accident insurance policies exclusively, or

                  (cl a part of the premium income is from
             life insurance policies and apart from health and
             accident policies, or

                  (d) where the premuim income IS from health
             and accident policies which include life benefits
             or from life insurance policies which include health
             and accZdent benefits?"
             In your letter, opinions from this department - o-2988,
     O-5337, and O-5539 - are referred to in connection with the
                                                                       *   .




    Honorable George B. Butler, page 2         O-6536


    foregoing questions. In Opinion NO, o-2988 approved January
    30, 1941, this department held that no part of the premium tax
    imposed by 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,
            Opinion No, O-5337 holds that mortuary OP relief funds
    of mutual assessment associations subject to the rovisionsof
    S.B. 135, 46th Legislature (Art, 5068-1, V.A.C.S.F accumulated
    or contributions that may be made thereto, should Aot be treat84
    as taxable income under the Federal Revenue Act of 1936. This
    ruling is based upon and follows ,thedecision cited by you In
    General Life Insurance Company vs. Commissioner of Internal
    Revenue (5th Cir. Ct, of Appeals, 137 Fed. (2d) 185, decided
    July 8, 1943) o In Opinion No, O-5589 we follow the ruling in
    Opinion No. 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 statewide mutual assessment assocl-
    ations operating under and subject to the provisions of Art.
    5068-l.
            Answering your first question, therefore, you are re-
    spectfully advised that no part of the receipts tax levied under
    Art. 7064a may be paid by statewide mutual assessment associ-
    ations operating under and subject to the provisions of Art.
    5068-1, V.A.C.S,, from their mortuary funds.
            As to your second question, you doubtless have in mind
    the provisions of Art, 5068-4, V.A,C.S, enacted by the 48th~
    Legislature, effective May 1.8,1943. This statute was referred
    to in Opinion No, O-5337 and should not be given any greater
    import than the intent of the Legislature can be gathered from
    its language. This statute provides:
           'Any company or association operating
       under the provisions of Senate Bill No. 135,
       Acts of the Regular Session of the 46th Leg-
       islature, 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 association because of income to such funds."
.
            As recognized in the last above cited opinion, the fore-
    going statute would 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 tax-
    able as income under 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 operating under the provisions of Art. 5068-1, V,A.C.S.,
may be paid from such fund. Any portion of the funds of one
       club or class;,bowever, may not 'beused to pajisuch
g'ro;*p,
claims or obligations of any other group, club or class as pro-
vided In Set, 12 of said statute,
                                  Yours very truly,
                            ATTORNEY GENERAL OF TEXAS

                                  By s/Wm. J. R. King
                                       Wm. J, R. King
                                       Assistant
WmK:LJzwc

APPROVED MAY 3, 1945
s/Carlos C. Ashley
FIRST ASSISTANT
ATTORNEY GENERAL

Approved Opinion Committee By   s/BWB   Chairman
