                                 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




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