Preemption of Taxation of Insurance Companies by State; Exceptions; Collection of License Fees by Municipal Corporations

1. Law
2. Georgia Code
3. Insurance
4. Fees and Taxes
5. Preemption of Taxation of Insurance Companies by State; Exceptions; Collection of License Fees by Municipal Corporations

1. Except as otherwise provided in this chapter, the State of Georgia preempts the field of imposing taxes, except taxes on real property and tangible personal property taxed ad valorem, upon insurance companies and their agents and other representatives, including, but not limited to, excise, privilege, franchise, income, license, permit, registration, and similar taxes and fees measured by premiums, income, or volume of transactions; and no county or unincorporated area of such county, city, municipality, district, school district, or other political subdivision or agency of this state shall impose, levy, charge, or require the same, except as provided in this chapter.
2. Municipal corporations are authorized, in conformity with the requirements of their charters, to impose and collect the following license fees upon insurance companies for the privilege of engaging in the business of insurance within said municipal corporation:
   1. An annual license fee on each insurance company doing business within the municipal corporate limits not to exceed the following schedule:

      and an additional annual license fee in the same amount for each separate business location in excess of one operated and maintained by such company within the same municipality; and

   2. An additional annual license fee of $10.00 or 35 percent of the schedule set forth in paragraph (1) of this subsection, whichever amount is greater, on each insurance company for each separate business location not otherwise subject to a license fee under this Code section, which company is operated and maintained by a business organization which is engaged in the business of lending money or transacting sales involving term financing and which, in connection with the loans or sales involving term financing, offers, solicits, or takes applications for insurance through a licensed agent of the insurance company for insurance.
3. Within 45 days after the date of their enactment, each municipal corporation shall file with the Commissioner a certified copy of the pertinent parts of all ordinances and amendments thereto which impose any such license fee, and such filing shall be a condition to the validity and enforceability of such an ordinance.
4. Insurance agencies which are maintained and operated by a company may not be separately licensed by municipal corporations except under the provisions of this Code section; but nothing contained in this Code section shall prevent municipal corporations from separately imposing and collecting business licenses from independent insurance agencies or brokers doing an insurance business not otherwise taxed under this Code section. No such license may be imposed on such independent agents or brokers, which license is measured by the premiums of insurance companies.
5. Life insurance companies may deduct from premium taxes otherwise payable to this state under Code Section 33-8-4, in addition to all credits and abatements allowed by law, the license fees imposed pursuant to this Code section and paid to any municipal corporation during the preceding calendar year.
6. As used in this Code section, the term "life insurance company" means a company which is authorized to transact only the class of insurance designated in Code Section 33-3-5 as class (1).

Population of Municipal Corporation Amount ----------------------------------- ------ Under 1,000 $ 15.00 1,000 - 1,999 25.00 2,000 - 4,999 40.00 5,000 - 9,999 50.00 10,000 - 24,999 75.00 25,000 - 49,999 100.00 50,000 and over 150.00

(Code 1933, § 56-1310, enacted by Ga. L. 1964, p. 122, § 2; Ga. L. 1967, p. 631, § 1; Ga. L. 1968, p. 1396, § 1; Ga. L. 1981, p. 380, § 1; Ga. L. 1982, p. 3, § 33; Ga. L. 1983, p. 1595, § 1; Ga. L. 1984, p. 1284, § 2.)

Editor's notes.

- Ga. L. 1983, p. 1595, § 5 not codified by the General Assembly, provided that that Act would apply to all tax years beginning on or after January 1, 1984.

Law reviews.

- For article surveying developments in Georgia insurance law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 143 (1981).

JUDICIAL DECISIONS

Classification for tax on gross insurance premiums is constitutionally permissible.

- General Assembly may classify different businesses for the purpose of taxation and may make subclassifications within one type of business. These classifications have been held constitutional where there was a business tax involved as opposed to a property tax. A tax on gross insurance premiums is a business tax. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Section not "irrevocable" in violation of Constitution.

- Neither Ga. Const. 1976, Art. I, Sec. I, Para. VII, nor Art. VII, Sec. I, Para. I (see Ga. Const. 1983, Art. I, Sec. I, Para. X, and Art. VII, Sec. I, Para. I), is applicable to this section, because the constitutional provisions contain the words "irrevocable" and "irrevocably," respectively. Webster's Third New International Dictionary defines the word "irrevocable" as "incapable of being recalled or revoked." Statutes passed by the General Assembly such as this section are clearly revocable at the will of the Legislature. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Enactment of section held constitutional.

- The Act enacting this section, Ga. L. 1964, p. 122, which empowered only municipal corporations to levy life insurance taxes and fees and prohibited all other political subdivisions from doing so, did not prevent there being uniformity of the laws. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966) (decided prior to 1981 amendment to this section and enactment of O.C.G.A. § 33-8-8.1)

The Act enacting this section, Ga. L. 1964, p. 122, did not refer to more than one subject matter even though it dealt with the powers of both county and municipal government, since the act dealt with the taxing of insurance company premiums and that alone was the subject matter of the act. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Even though the title of Ga. L. 1964, p. 122, enacting this section, did not indicate that the Act dealt with business licenses issued by the county, the words "fees and taxes" as used in the title were sufficient to include those various and specific types which were set out in detail in the body of the Act, including business licenses. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Even though no reference was made in the title that the purpose of Ga. L. 1964, p. 122, which enacted this section, was to preempt to the state the field of imposing taxes upon life insurance companies, the title did state that the Act was to "provide a uniform policy," and there could be no such uniform policy established in this field unless total authority in this matter was preempted and placed into one policy-making body, in this case the General Assembly. The fact that the body of the Act mentioned preemption did not violate the Constitution because it was incidental and necessary to carry out the purpose of establishing a uniform policy. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Even though there was no reference in the title to the provision in Ga. L. 1964, p. 122, enacting this section, that no county or unincorporated area should be permitted to impose, levy, or charge any of the taxes and fees mentioned therein, no reference in the title had to be specifically made to the fact that no county or unincorporated area thereof could impose such taxes and fees under the Act, since the title sufficiently covered this provision by stating that the Act involved the "exercise of the powers of municipal corporations and other political subdivisions." This phrase was sufficient to cover both the granting and the taking of power from the various political subdivisions in the establishment of a uniform policy. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

Independent agencies held not subject to assessment of multiple license fees.

- Independent insurance agencies which furnished and paid for their own offices and supplies, and retained a percentage of the premiums on the policies they sold, were not subject to the assessment of multiple license fees as agencies "operated and maintained" by an insurer. Columbus v. Stanton, 189 Ga. App. 251, 375 S.E.2d 503 (1988).

Municipalities may impose both license fees and gross premium taxes on life insurance companies.

- Subsection (b) of this section authorizes only municipalities to levy a license fee and divides all municipalities into seven population categories with fees ranging from $15.00 to $150.00 per annum depending upon which classification a municipality falls within. This subsection also authorizes municipalities to impose a tax based upon gross direct premiums received by life insurance companies. Nash v. National Preferred Life Ins. Co., 222 Ga. 14, 148 S.E.2d 402 (1966).

OPINIONS OF THE ATTORNEY GENERAL

Municipal tax cannot be based upon premiums received in current year.

- Under this section, a municipality may not collect premium taxes upon the premiums received by a life insurance company during the current calendar year rather than the preceding calendar year from policies upon the lives of persons residing within the municipal limits. 1963-65 Op. Att'y Gen. p. 673.

Tax paid upon current year premiums, cannot be deducted from state taxes.

- If an insurance company pays municipal taxes assessed upon the current rather than the preceding calendar year's business, the Insurance Commissioner may not allow such payment to be deducted from the premium taxes otherwise payable to this state under former Code 1933, § 56-1303 (see O.C.G.A. § 33-8-4). 1963-65 Op. Att'y Gen. p. 673.

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