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Official Opinion 93-6

Official Opinion 93-6

March 12, 1993
To: 

Commissioner of Insurance

 

Re: 

County and Municipal taxes otherwise properly assessed pursuant to O.C.G.A. § 33-8-8.1 based on a pre-1991 contract year (i.e. any contract year beginning before January 1, 1991) between an insurance company and the Federal Employees Health Benefits Fund are not prohibited by 5 U.S.C. § 8909(f) regardless of when such tax is payable and/or collected.

This is in response to your January 29, 1993 request for my official opinion regarding the impact of 5 U.S.C. § 8909(f) on certain county and municipal taxes imposed pursuant to O.C.G.A. § 33-8-8.1.

Issue:

The limited issue raised in your request is based on the following facts and assumptions.  The county and municipal taxes at issue were assessed pursuant to O.C.G.A. § 33-8-8.1.  These taxes, which were payable in 1991, were assessed based on 1990 contracts between insurance companies and the Federal Employees Health Benefits Fund.  Insofar as it would be relevant to the issue discussed herein, it is assumed that the county [*2]  and municipal taxes at issue are properly assessed and payable pursuant to O.C.G.A.  § 33-8-8.1 if not specifically prohibited by 5 U.S.C. § 8909(f).  Further, it is assumed, for the limited purpose of the following discussion, that if 5 U.S.C. § 8909(f) applies to the taxes at issue, such section would prohibit the enforcement or collection of such taxes.  Therefore, the limited issue presented by your inquiry is whether, given the effective date of § 8909(f), this section applies to the county and municipal taxes at issue.

Relevant Statutes:

O.C.G.A. § 33-8-8.1(b)(1) and (b)(2) provide that county and municipal corporation taxes on life insurance companies "shall be based solely upon gross direct premiums . . . which are received during the preceding calendar year." Pursuant to this statute, the taxes at issue, which were payable in 1991, are based on gross direct premiums received by the insurance companies in 1990 pursuant to 1990 contracts with the Federal Employees Health Benefits Fund.

The Omnibus Reconciliation Act of 1990 (P L. 101-508, Title VII, Subtitle A, § 7002(b), (c); 104 Stat. 1388-330), amended section 8909 of title 5, United States Code, by adding a [*3]  new subsection (f) to that section.  This new subsection provides in relevant part that:

No tax, fee, or other monetary payment may be imposed, directly or indirectly, on a carrier or an underwriting or plan administration subcontractor of an approved health benefits plan by any State, . . . or by any political subdivision or other governmental authority thereof, with respect to any payment made from the [Federal Employees Health Benefits Fund].

The Federal Employees Health Benefits Fund contract year is a calendar year. The state and municipal tax exemption enacted by subsection (f) was intended to be similar in nature and application to the existing premium tax exemption applicable to the Employees' Life Insurance Fund (5 U.S.C. § 8714(c)).  See Administrative News, p. 2184.

The effective date provision controlling § 8909(f) is § 7002(g) of Pub. L. 101-508 which provides that: "the amendments made by this section [amending 5 U.S.C. §§ 8902, 8909 and 8910] shall apply with respect to contract years beginning on or after January 1, 1991."

Discussion:

Seciton 7002(g) of Pub. L. 101-508 controls whether new subsection (f) of § 8909 applies to prohibit the collection [*4]  or enforcement of any particular tax.  Section 7002(g) is clear on its face.  Read together, § 8909(f) and 7002(g) provide that "No tax, fee, or other monetary payment may be imposed . . ." (§ 8909(f)) ". . . with respect to contract years beginning on or after January 1, 1991." (§ 7002(g)).

Pursuant to the unambiguous meaning of § 7002(g), § 8909(f)'s tax prohibition is not triggered by when the tax is collected. Which contract year the premium being taxed relates to is the only determinative factor controlling whether subsection (f) applies to a particular tax.  Therefore, § 8909(f) applies to a tax assessed or collected with respect to a premium related to a contract year that begins on or after January 1, 1991.  However, § 8909(f) does not apply to prohibit the collection or enforcement of a tax that is assessed with respect to a premium related to a contract year that begins before January 1, 1991, even if the collection of the tax itself occurs after January 1, 1991.

The conclusion that when the tax is paid is irrelevant to the determination of whether § 8909(f) applies is supported by the similar effective provision which applies to 5 U.S.C. § 8714(c).  As stated above,  [*5]  new subsection 8909(f) was intended to be similar in nature and application to the existing premium tax exemption applicable to the Employees' Life Insurance Fund pursuant to 5 U.S.C. § 8714(c).  Like § 8909(f), whether the tax prohibition is § 8714(c) applies is not determined by when the tax was assessed or paid.  Section 8714(c) is effective to prohibit a tax "with respect to premiums paid on or after [a given date]."

Conclusion:

Therefore, it is my official opinion that county and municipal taxes otherwise properly assessed pursuant to O.C.G.A. § 33-8-8.1 based on a pre-1991 contract year (i.e. any contract year beginning before January 1, 1991) between an insurance company and the Federal Employees Health Benefits Fund are not prohibited by 5 U.S.C. § 8909(f) regardless of when such tax is, payable and/or collected.

Prepared by:

BARBARA E. NELAN

Staff Attorney