Request By:
Donald E. Skeeters, Esq.
Skeeters and Bennett
705 North Dixie Boulevard
Radcliff, Kentucky 40160
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter stating that Radcliff, a city of the fourth class, "has a business privilege license fee which is based on the gross receipts of the business, and in the case of life insurance companies, this would be the premiums received for policies." The city has received a letter from a foreign insurance company doing business in Kentucky stating that the company pays a state tax on insurance premiums pursuant to KRS 136.330. The company maintains that KRS 92.285 does not authorize a tax on insurance companies based on "gross receipts" and that it is not subject to the provisions of the business privilege license fee ordinance with respect to its operations.
While you have not furnished us with a copy of the specific ordinance involved, you have raised the following question:
"Does KRS 92.285 prevent the city from collecting a business privilege license fee pursuant to KRS 86.120?"
KRS 86.120 provides in part that the city council of a fourth class city may license, tax and regulate, within the city, insurance offices.
KRS 92.285 deals with license fees or taxes imposed against insurance companies for the privilege of engaging in the business of insurance. Subsection (1) thereof states that the legislative body of each city authorized to impose and collect license fees or taxes upon insurance companies for the privilege of engaging in the insurance business shall file with the Commissioner of Insurance a copy of all ordinances and amendments thereto imposing any such license fees or taxes.
KRS 92.285(2) deals with a license fee or tax imposed by a city upon any fire insurance company. KRS 92.285(3), concerning life insurance, provides:
"Any license fee or tax imposed by such a city upon a life insurance company may be based upon premiums received, and if so based shall be applied to premiums from new policies written within the preceding calendar year upon the lives of persons residing within the corporate limits of such city."
Under subsection (4) of KRS 92.285 a license fee or tax imposed by a city upon any insurance company, other than fire insurance or life insurance, shall be based upon a percentage of the premiums received by the company within the preceding calendar year on risks located within the corporate limits of the city on those classes of business which such company is authorized to transact, less all premiums returned to policyholders; except that any such fee or tax shall not include premiums received for insuring employers against liability for personal injuries to their employes, or death caused thereby, under the provisions of the Workmen's Compensation Act.
KRS 136.330 provides for a state tax on foreign life insurance company premiums. KRS 136.320 deals with the state tax on the property of domestic life insurance companies. Subsection (3) of KRS 136.320 states in part that the state tax imposed against domestic life insurance companies shall be in lieu of all excise, license, occupational or other taxes imposed by a city except, as provided in subsection (5) of the statute, where the principal office of the company is located in the city. Unlike KRS 136.320 exempting domestic life insurance companies generally from a city license tax, KRS 136.330 does not restrict a city from imposing a license tax against a foreign life insurance company.
Therefore, in conclusion, it is our opinion that where a foreign life insurance company is maintaining an office in the city, and is writing insurance policies and collecting premiums from such office, a city of the fourth class may levy a license fee or tax on such company based upon premiums received. See KRS 92.285(3). Since we have not been furnished with a copy of the specific ordinance involved, we cannot comment upon its validity and whether it has been prepared in compliance with the applicable statutes referred to above. Our opinion can only address, generally, the question you have presented and direct your attention to those statutes governing such a factual situation.