  L     -.-




Honorable 0. P. Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir:                    Opini~onNo. O-4735
                             Re: Does the Board of Insurance
                                  Commissioners have the power
                                  to enforce collection of oc-
                                  cupation tax upon gross pre-
                                  miums from foreign life in-
                                  aurance companies and from
                                  similar domestic companies
                                  under facts submftted?
          The material portions of your recent letter in con-
nectlon with the above question are set out below:
            We desire your opinion a8 to whether under
      these Articles, and any other applicable statutory
      provisions, this Board has the power to enforce
      collection from PoreLgn life insurance companies,
      and from elmilar domestic companies, of occupation
      taxes upon premiums paid upon life insurance pol-
      icies Issued In favor of officers and men who at
      the date of issuance of such policies w.ereand
      still are, or subsequently thereto became and still
      are, citizens of and domiciled in the State of Texas
      and who are aervlng in mllltary or naval services
      of the United States in federal military or naval
      areas and elsewhere (a) within Texas and (b) without
      Texas; and as to the Board's powers likewise with
      respect,to such classes of companies upon premiums
      collected from policies issued to officers and men
      who, at the time of Issuance of such policies, were
      not and still are not citizens of or,domiciled In the
      State of Texas butsare serving In the military or
      naval forces of the United States in federal military
      or naval areas and elsewhere in the State of Texas
      and who might by virtue thereof be merely residing
      temporarily in the State of Texas. Also, as to
      whether, and to what extent, this Board has the power
      to promulgate and enforce rules and regulations
      governing the assessment and collection of premium
      taxes in the various situations hereinabove outlined."
Honorable 0. P. Lockhart, Chairman, page 2         o-4735


          The Articles referred to in your letter are Arti-
cles 7064a and 4769, Vernon's Annotated Civil Statutes. Art-
icle 7064a reads as follows:
          "Art. 7064a:
          %ery   group of individuals, society, association,
or corporation domiciled in the State of Texas transacting
the business of life, accident, or lifeand acident, health
and accident insurance for profit, or for mutual benefit or
protection, shall at the time of filing its annual statement
report to the Board of Insurance Commissioners the gross a-
mount of premiums received from ,orupon the lives of persons
residing or domiclled In this State during the preceding
year and each of such groups of lndlvlduals, society, associ-
ation, or corporation shall pay an annual tax of five eighths
(5/8) of one (1) per cent of such gross premium receipts,
provided, however, that this tax shall not apply to local
mutual aid associations, or fraternal benefit societies or
organizations. Such gross premium receipts so reported shall
not include premlums received from other licensed companies
for reinsurance, but there shall be no deduction made for
premiums paid for reinsurance. If any such group'of in-
dividuals, society, association, or corporation does more than
one kind of insurance business, then it shall pay the tax
herein levied upon the gross,premium for'each klna of lnsur-
ante written; the provisions of this Act shallnot' apply to
fraternal insurance organizations nor societies that limit
their membership.to one occupation. The report of the gross
premium receipts shall be made upon the'swornstatement of
two (2) principal officers. Deductions from thc'gross
premium receipts shall be allowed any group of individuals,
society, association, or corporation of'an acquisition cost
of all of the first gear's premiums, except that on lndus-
trial business such companies shall be permitted to deduct
one and one half (la) times the amount of the,first gear's
premiums as acquisition costs. Upon receipt by it of the
sworn statements above provided for, the Board of Insurance
Commissioners shall certify to the State Treasurer the'amount
of taxes due by each of such group of individuals, society,
association, or corporation, which tax shall be paid to the
State Treasurer on or before the 1st of March following and
the Treasurer shall issue his receipt'therefor as evidence of
the payment of such taxes. NO such group of individuals,
society, association, or corporation'shall receive a permit
to do business until all such taxes'are paid. The taxes a-
foresaid shall constitute all taxes and license fees col-
lectible under the laws.of this State against any such in-
surance organizations, except the fees provided for under
Article 3920, Revised Civil Statutes of Texas of 1925, as
amended by Acts of the Forty-second Legislature of 1931,
L




Honorable 0. P. Lockhart, Chairman, page 3        cl -4735



Chapter 152, Section 1, and no other taxes shall be levied
or collected by any county, city, or town except State, county
and municipal ad valorem taxes upon the real and personal
property of such Insurance organizations."
          Article 4769 reaas as follows:
          "Art. 4769 :
          "Each life insurance company not organized
    under the laws of this State, transacting business
    in this State, shall annually, on or before the
    1st day of March, make a report to the Commissioner,
    which report shall be sworn to by either the president
    or vice president and secretary or treasurer of such
    company, which shall show the gross amount of premiums
    collected aurlng the year edding on December 31st,
    preceding, from citizens of this State upon policies
    of insurance. Each such company shall pay annually
    a tax equal to four and sixty-five hundredths (4.65)
    per cent of such gross premium receipts. When the
    report of the investment in Texas securities, as de-
    fined.by law, of any such companies as of December
    31st of any year shall show that it has invested on
    said date as much as thirty (30) per cent of its total
    Texas reserves as deflnea by law, In promissory notes
    or other obligations secured by mortgage, deed of trust,
    or other lien on Texas real estate and/or %n loans
    to residents or citizens of Texas sedred bg the legal
    reserve on the respective policies held by such bor-
    rowers, the rate of occupation tax shall be reduced
    to four and five one hundredths (4.05) per cent; and
    when such report shall show that such company has so
    invested on said date as much as sixty (60) per cent
    of its~total Texas reserve, the rate of such tax shall
    be reduced to three and six tenths (3.6) per cent; and
    when such report shall show that such company has so
    invested, on said date, as much as seventy-five (75)
    per cent of its total Texas reserve, the rate of such
    tax shall be re&uced to three and one tenth (3.1) per
    cent. All such companies shall, In any event, make
    the investments in Texas securities in proportIon to
    the amount of Texas reserves as required by law. Such
    taxes shall be for and on account of the business
    transacted within this State during the calendar year
    in which such premiums were collected, or for that
    portion thereof during which the company shall have
    transacted business In this State. This Act shall not
    in any manner affect the obligation for the payment of
    any taxes that have accrued and that are now due or owing,
Honorable 0. P. Lockhart, Chairman, page 4         O-4735


    but the obligation as now prov~lded,by law for the
    payment of such taxes shall continue in :full force
    and effect."
          As we understand your letter three separate fact
situations are presented and our opinion is requested as to
the application of each of the above statutes to each of the
fact situations.
           In the first situation the premiums are received
from or upon the life of a person who, at the date of issuance
of a policy, was, or subsequently thereto became, a citizen
  , qr domiciled
Off               in, the State of Texas and so remained unless
the fact that such person is now fin the Army of the United
States and stationed in Texas by military authority has
changed his status underthe terms used in the above quoted
taxing statutes.
          The second situation IS exactly the same as the
first except that the personsis stationed by military author-
ity at some point outside of Texas.
          The rule is generally recognized that a person does
not lose his status as a citizen of Texas or his Texas domicile
merely because he enlists or is.drafted into the United States
Army and this is true even though he Is stationed by military
authority at some point outside of Texas. Such rule is stated
in Ruling Case Law, Volume 9, page 551 as follows:
          "The domicile of a person is in no way affect-
    ed by his enlistment or acceptance of employment in
    the civil, military or naval service of his country.
    Be does not thereby abandon or lose the domicile which
    he had when he entered the service, nor does he ac-
    quire one at the place where he serves. Accordingly,
    if one enters the military service and with his regi-
    ment goes beyond the limits of the State, remaining
    there for some time in such servlc'e,he does not be-
    come a non-resident of the state. o . *'
          It is the opinion of this department and you are so
advised that the premiums involved in both the first and second
fact situations above outlined should be included in computing
the tax levied by Article 7064a and should ,also be included in
computing the tax levied by Article 4769.
          In the third fact situation the premium is received
from or upon the life of a person who, at the'date of issuance
of the policy, was, and still Is, a citizen of or domiciled
in some state other than Te,xas,unless the fact that such per-
.   -_     -




    Honorable 0. P. Lockhart, Chairman, page 5         O-4735


    son is now in the Army of the United States and statloned by
    military authority In Texas has changed his status within the
    meaning of the above quoted taxing statutes.
              The mere fact that a soldier is stationed by mill-
    tary authority In this State does not make such soldier a
    citizen of or domiciled in Texas. It is also our opinion
    that such solaler is not "residing" here within the meaning
    of that term as used in Article 7064a. In the case of Kinsel
    et ux v. Pickens, 25 Fed. Sup. 455, the court in considering
    the question of removing a case to Federal Court made the fol-
    lowing statement in connection with the residence of a soldier
    in the Army:
               “(5)  However, if there be a,nyquestionas to
         this proposition, the :Court Is of the opinion that the
         residence spoken of In the statute could not possibly
         be of the character existing in this case. This man's
         location here Is dependent entirely upon the will of
         others. He came here under orders and he will leave
         under orders. Any intention that he may have in the
         matter must necessarily be qualified by the will of
         others superior to him in rank. Under the evidence,
         It ~111 be quite a number of years before he is en-
         titled to retire. In the meantime, he has practically
         no volition of his own with regard to where he will
         reside. To hold him to be a resident of Texas with the
         purview of the removal statutes under those clrcum-
         stances would be entirely outslae the purpose and spirit
         of the law."
              It is the opinion of this department and you are so
    advised that the premiums Involved in the third fact situ-
    ation above set out should not be included In computing the
    tax levied by Article 7064a and should not be included in
    computing the tax levied by Article 4769.
               This opinion Is llmlted to the facts hereln set
    out.
              It is further our opinion that the statutes them-
    selves provide the procedure for the collectlon of the tax
    therein levied. If the Board of Insurance Commissioners de-
    sires to promulgate some rule or regulation in connection
    with such procedure the submission to us of such proposed
    rule or regulation would be necessary to enable this depart-
    ment to formulate an opinion thereon.
                                         6
Honorable 0. P. Lookhart, Chairma?, ,pa.ge          o-4735



                                 Yours very truly
                               ATTORNEY &NERAL   OF TEXAS


                                 By s/Dpda   Gay
                                      Donald Gay
                                       Assistant

DG:mp:wc

APPROVED ElOV 19, 1942
 s/Gerald C. Mann
ATTORNBYGENNWAL OF TEXAS
This Opinion Considered and Approved in United Conference
