Untitled Texas Attorney General Opinion ( 1962 )

William A. Harrison Opinion No. WW- 1484
Commissioner of Insurance
State Board of Insurance Re: Basis for taxes collected under
Austin, Texas Articles 3. 25 and 3. 59 of the
Texas Insurance Code.
Dear Mr. Harrison:
In your recent letter you request an opinion of this office con-
struing Articles 3.25 and 3. 59 of the Texas Insurance Code, to deter-
mine the correct basis for taxes due from foreign life insurance com-
panies seeking to be re-admitted to Texas. For many years the Insur-
ance Department has construed Articles 3.25 and 3.59 to require
foreign life insurance companies seeking re-admission to do business
in Texas to pay taxes on the basis of premiums collected from citizens
of Texas only on policies written by such company during the period of
time that such company formerly was authorized to do business in
Texas. Rec.ently, according to your letter, the question has arisen
whether the foreign life insurance company seeking re-admission should
also have to pay taxes on its policies of insurance on lives of persons
who have moved to Texas subsequent to the departure from Texas of
the particular life insurance company.
It is the opinion of this office that the long-standing construction
of Articles 3.25 and 3. 59 is correct, -- that the tax owing by a foreign
life insurance company seeking re-admission is computed on the basis
of premiums collected from citizens of Texas only on policies written
by such company during the period of time that such company formerly
was authorized to do business in Texas.
Article 3.59 reads as follows:
“Any life insurance company which has heretofore been,
may now be, or may hereafter be, engaged in writing policies
of insurance upon the lives of citizens of this State, which has
heretofore ceased, or may hereafter cease writing such poli-
ties, and which does not now or may not hereafter have a
William A. Harrison, page 2 (WW-1484)
certificate of authority to transact the business of life
insurance in this State, but which has continued or may
continue to collect renewal or other premiums upon such
policies, shall, before it may again obtain a certificate
of authority to transact the business of life insurance in
this State, report under oath to the Board of Insurance
Commissioners the gross amount of premiums so collec-
ted from citizens of this State upon policies of insurance
during each calendar year since the end of the pe,riod
covered by the last preceding report by such company of
gross premium receipts upon which it paid an occupation tax,
and shall pay to the State a sum equal to the percentage of its
.
gross premium receipts for each such year that was re-
quired by law to be paid as occupation taxes by companies
doing business in this State, during such year or years;
and, upon the payment of such sum and securing a certifi-
cate of authority to do business in this State, the penal-
ties provided for the failure to pay such taxes and make
such report in the past shall be remitted. ”
Alticle 3.25 reads as follows:
“Each life insurance company not organized under
the laws of this State, hereafter granted a certificate of
authority to transact business in this State, shall be
deemed to have accepted such certificate and to transact
such business hereunder subject to the conditions and re-
quirements that, after it shall cease to transact new busi-
ness in this State under a certificate of authority, and so
long as it shall continue to collect renewal premiums from
citizens of this State, it shall be subject to the payment of
the same occupation tax in proportion to its gross premiums
during any year, from citizens of this State, as is or may
be imposed by law on such companies transacting new busi-
ness within this State, under certificates of authority during
such year. The rate of such tax to be so paid by any such
company shall never exceed the rate imposed by law upon
insurance companies transacting business in this State.
Each such company shall make the same reports of its gross
premium receipts for each such year and within the same
period as is or may be required of such companies holding
. -
William A. Harrison, page 3 (WW-1484)
certificates of authority and shall at all times be subject
to examination by the Board of Insurance Commissioners
or some one selected by it for that purpose, in the same
way and to the same extent as is or may be required of
companies transacting new business under certificates of
authority in this State, the expenses of such examination to
be paid by the company examined. The respective duties
of the Board in certifying to the amount of such taxes and
of the State Treasurer and Attorney General in their
collection shall be the same as are or may be prescribed
respecting’taxes due from companies authorized to trans-
act new business within this State. I’
As stated previously, the Insurance Department has long con-
strued these articles and their predecessors to mean that an insurance
company seeking re-admission must pay taxes on all of those pre-
miums paid on policies sold to citizens of Texas during the time that
the particular’company had a permit to do business in Texas. Of
course, under this interpretation, the basis for this tax would not
include premiums paid on policies of persons who moved to Texas
after the particular insurance company had left the state.
The phrase in Article 3. 59, ‘I. . .which has continued or may
continue to collect renewal on other premiums upon such policies, I’
apparently refers to those policies sold to citizens of Texas by the
foreign life insurance company during the time it was doing business
in Texas. A close study of the legislative history and interpretation
of Articles 3.25 and 3. 59 do not reveal a contrary intention. See
Attorney General Opinion O-5438, p. 12. The long-standing depart-
mental construction of Articles 3.25 and 3. 59 is entitled to consider-
able weight in this decision. It is also significant that the construc-
tion by the Insurance Department was uniform prior to and subse-
quent to the adoption of the Texas Insurance Code in 1951, since an
elementary rule is that re-enactment or re-codification of a statute
after adoption of an administrative construction gives legislative
sanction to the administrative construction and tends to strengthen
that construction. Heaton V. Bristol, 317 S.W.2d 86, (Civ.App.,
error ref., 1958); Texas Employers Insurance Association v. Holmes,
145 Tex. 158, 196 S.W.2d 390 (1946).
William A. Harrison, page 4 (WW-1484)
SUMMARY
Under Articles 3.25 and 3.59, a
foreign life insurance company seeking
re-admission to do business in Texas
must pay a sum in taxes on the basis of
premiums collected from citizens of
Texas only on policies written by such
company during the period of time that
the company was formerly authorized to
do business in Texas.
Very truly yours,
WILL WILSON
Attorney General of Texas
BY
Assistant Attorney General
BES:lmc
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
Pat Bailey
L. P. Lollar
Tom Peterson
REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore