Case Information

*1 THE A~BXORNEY GENERAL TEXAS Arwrrniu 11. -rexAn

GROVER SELLERS

A'ITORNWCY DsN*:RAx.

Honorable George B. Butler, Chairman

Board of Insurance Commissioners

Austin, Texas

Dear Sir: Opinion No. 0-6536

Re: Whether ta'x levied 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- pollcles exclusively, or ante

(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

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 ,the decision 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,t the 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

Answering your second question, i.t is 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 g'ro;*p, club or class;, bowever, may not 'be used to paji such 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