Professional Investors Life Ins. Co. v. Oklahoma Tax Com'n

Professional Investors Life Ins. Co. v. Oklahoma Tax Com'n
1991 OK 128
825 P.2d 1292
62 OBJ 3669
Case Number: 75178
Decided: 12/03/1991
Supreme Court of Oklahoma

 
IN THE MATTER OF THE CLAIM FOR REFUND OF SALES TAX.

PROFESSIONAL INVESTORS LIFE INSURANCE COMPANY, APPELLANT,
v.
OKLAHOMA TAX COMMISSION, APPELLEE.

Appeal from the Oklahoma Tax Commission.

¶0 Insurance company filed for refund of sales tax paid on electricity claiming it was exempt under Okla. Stat. tit. 36, § 624 . Commission denied refund. Insurance company appealed.

AFFIRMED

James R. Lieber, Tulsa, for appellant.

Joe Mark Elkouri, General Counsel, Tony Mastin, Asst. General Counsel, Oklahoma Tax Com'n, Oklahoma City, for appellee.

HODGES, Vice Chief Justice.

¶1 This is an appeal from an order of the Oklahoma Tax Commission (Commission) for a refund of sales tax. The appellant, Professional Investors Life Insurance Company (Professional), underwrites insurance in Oklahoma. Professional pays an annual tax on premiums generated from the sale of insurance (premium tax) pursuant to Okla. Stat. tit. 36, § 624 .

¶2 On August 26, 1988, Oklahoma's Attorney General issued an opinion which stated:

It is, therefore, the official opinion of the Attorney General that the provisions of 36 O.S.Supp. 1988 § 624 do not exempt an insurance company from the payment of sales tax, where such insurance company is acting as the purchaser of goods or services and a sales tax would otherwise be imposed.

The Commission advised PSO of the attorney general's opinion. In turn, PSO advised Professional that Professional would be billed for sales tax on electric service provided by PSO.

¶3 Professional responded that it would delete the sales tax amount from its payment to PSO. Thereafter, PSO billed Professional for sales tax on electric service which Professional refused to pay. Then PSO notified Professional that electric service was scheduled to be cut-off on November 21, 1988, for non-payment of the sales tax amount.

¶4 On December 28, 1988, Professional filed suit against PSO and the Commission and obtained a temporary order restraining PSO from cutting off electrical service to Professional. Subsequently, the temporary restraining order was dissolved, and the suit was dismissed without prejudice. PSO requested a credit for sales tax paid to the Commission on behalf of Professional. The Commission denied the request. Then Professional formally requested a refund of sales tax paid on electricity and a determination that Professional was exempt from payment of all sales tax. The Commission denied Professional's refund request. Professional demanded a hearing. The administrative law judge denied the refund in her Findings, Conclusions, and Recommendations. The Tax Commission En Banc denied a request for oral hearing and adopted the Findings, Conclusions, and Recommendations of the administrative law judge.

¶5 The dispositive issue is whether insurance companies are exempt under section 624 of title 36 from paying sales tax. We agree with the Commission that insurance companies are not exempt.

¶6 The Commission relies on section 1354 of the Oklahoma Sales Tax Code (Tax Code)

¶7 Professional does not disagree that section 1354 of the Tax Code imposes a sales tax on the sale of electricity. Rather, Professional relies on section 1351 of the Tax Code which states, "[T]his Code shall be construed as imposing a tax upon the sale of tangible personal property and services, not otherwise exempted, to the consumer." Professional asserts that section 624 of title 36 is clear and provides the exemption provided for in section 1351. Therefore, it is exempted from the sales tax imposed by section 1354.

¶8 Section 624 provides that "annual license fee and tax . . . shall be in lieu of all other state taxes or fees." Section 624 has its [825 P.2d 1294] foundation in the Oklahoma Constitution.

¶9 This court first considered the "in lieu of" language in New York Life Ins. Co. v. Town of Comanche.

¶10 In 1932, this Court once again considered the "in lieu of" language of the premium tax statute in New York Life Ins. Co. v. Board of County Comm'rs.

The words of the statute are not exemptive words, but are limitations on the right of a city or any other municipality or subdivision of the state from levying and collecting any further license, privilege, occupation fee or tax on a foreign insurance company licensed to do business within the state.

¶11 In 1945, the Legislature adopted the decision of Board of County Commissioners and amended the "in lieu of" provisions to except ad valorem taxes.

¶12 On August 6, 1988, the Oklahoma Attorney General issued his opinion stating that insurance companies who pay premium taxes pursuant to section 624 are not exempt from the payment of sales tax on purchased goods or services when "a sales tax would otherwise be imposed."

¶13 Because we find that Professional is subject to the sales tax assessed by the Commission, we need not address the remaining arguments. The Commission correctly denied the refund.

¶14 AFFIRMED.

¶15 OPALA, C.J., and LAVENDER, SIMMS, DOOLIN, HARGRAVE, ALMA WILSON and SUMMERS, JJ., concur.

¶16 KAUGER, J., concurs in result by reason of stare decisis.

Footnotes:

1 Okla. Stat. tit. 36 § 624 (Supp. 1988) provides:

For all insurance companies or other entities taxed pursuant to this section, the annual license fee and tax and all required membership, application, policy, registration, and agent appointment fees shall be in lieu of all other state taxes or fees, except those taxes and fees provided for in the Insurance Code and in Sections 501 through 2510 of Title 63 of the Oklahoma Statutes, and the taxes and fees of any subdivision or municipality of the state, except ad valorem taxes and the tax required to be paid pursuant to Section 50001 of Title 68 of the Oklahoma Statutes. . . .

2 20 Op. Att'y Gen. 81, 85 (1988) (No. 88-34).

3 Okla. Stat. tit. 68, §§ 1301-1372 (Supp. 1988).

4 OKLA CONST. art. 19, §§ 1-2.

5 Comp. Laws of Okla. § 3742 (1909).

6 Currently Okla. Stat. tit. 36, § 624 (Supp. 1990), provides:

For all insurance companies or other entities taxed pursuant to this section, the annual license fee and tax and all required membership, application, policy, registration, and agent appointment fees shall be in lieu of all other state taxes or fees. . . .

7 62 Okl. 247, 162 P. 466 (Okla. 1916).

8 New York Life Ins. Co. v. Town of Comanche was brought under Okla.Rev.Laws § 3426 (1910), which is the predecessor to Okla. Stat. tit. 36, § 624 (Supp. 1990), and successor to Comp. Laws of Okla. § 3742 (1909).

9 New York Life Ins. Co. v. Town of Comanche, 162 P. at 468.

10 155 Okl. 247, 9 P.2d 936 (1932). In 1921, Comp. Laws of Okla. § 3742 (1909), was codified at Comp.Okla. Stat. § 6687 (1921).

11 New York Life Ins. Co. v. Board of County Comm'rs, 9 P.2d at 943.

12 Id.

13 1945 Okla. Sess. Laws tit. 36, ch. 1, § 1 (codified at Okla. Stat. tit. 36, § 104 (Supp. 1957).

14 See 1986 Okla. Sess. Laws ch 251, § 8; 1987 Okla.Sess. Laws c. 175, § 5; 1988 Okla. Sess. Laws c. 83, § 5 .

15 20 Op.Att'y Gen. 81, 85 (1988) (No. 88-34).

16 After the Attorney General rendered the opinion, the Legislature amended section 624 twice. Neither of the last two amendments created a new exception to the "in lieu of" provision or refuted the Attorney General's opinion.