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Click here for the full text of this decision FACTS:Foreign title insurance companies, like First American and Old Republic, were required to pay an additional “retaliatory tax” if their states of origin imposed financial burdens on Texas insurance companies selling title insurance in the foreign states that were higher than the financial burdens Texas imposed upon foreign insurance companies selling title insurance in Texas. Previously, title insurance companies were allowed to include 100 percent of the total premium tax paid as part of their imposed financial burden for the purpose of determining whether a retaliatory tax had to be paid. However, the comptroller changed that interpretation and concluded that, because insurance companies paid only 15 percent of the premium tax, insurance companies should include only 15 percent of the premium tax as part of their total imposed financial burden. Under the new interpretation, foreign title insurance companies were required to pay significantly more in retaliatory taxes. First American and Old Republic filed suit and claimed that the comptroller’s new interpretation was wrong. They attempted to recover taxes they claimed were unlawfully assessed under the comptroller’s new interpretation. The district court granted summary judgment in favor of the comptroller, and the insurers appealed. HOLDING:Affirmed. On appeal, the insurers argued that foreign-based insurers are entitled to include 100 percent of the premium taxes paid to the state of Texas in its calculation of the amount of retaliatory taxes owed; that agents do not, in fact, bear legal responsibility to pay 85 percent of the premium tax; and that the comptroller’s new interpretation of the retaliatory tax scheme is unconstitutional. In support of their assertions, the insurers point to Texas Tax Code �111.016(a) and (b) for the proposition that insurers will still have to pay 100 percent of the premium tax if agents do not transfer 15 percent of the premium to insurers. But the court disagrees and holds that neither of these sections states that an insurer would be liable for the full amount of premium tax if agents do not turn over their share of the premium tax. As further support for the assertion that there is no premium tax imposed on agents, the insurers point to the first sentence of Texas Insurance Code Article 9.59 �8(b), the premium tax statute. But the court holds that although the statute requires title insurers to remit all of the premium tax to the comptroller, the statute does not place all of the financial burden on the insurer. Additionally, the court points out, the comptroller amended 34 Tex. Admin. Code �3.831(4)(C) to codify the new interpretation that agents are proportionally liable for premium taxes. The comptroller also published a policy providing insurers a defense to being held responsible for all premium taxes if an agent does not remit its share of the premium tax due. The court finds that the comptroller’s interpretation, the amended rule 3.831, and the comptroller’s published policy, protect insurers from being responsible for the full amount of premium taxes if the agent does not remit its portion of the premium tax. Therefore, the court holds, the comptroller’s interpretation, policy, and rule do not lead to absurd conclusions or unjust discrimination; on the contrary, they protect insurers from being unfairly held liable for taxes they do not pay or owe. Contrary to the insurers’ assertions, the court also holds that the comptroller’s new interpretation and rule 3.831 do not impose additional restrictions, conditions, or burdens that are inconsistent with either the retaliatory tax statute or the premium tax statute. In addition to arguing that the comptroller’s new interpretation is incorrect, the insurers also assert that the comptroller’s application of the retaliatory tax is unconstitutional because it violates the equal protection clause. Specifically, the insurers contend that, because insurers will be allowed to include only 15 percent of the premium tax in the retaliatory tax calculation, foreign insurers will have to pay the difference between 15 percent of the premium tax imposed by Texas and the total premium tax the foreign state imposes, which would lead to foreign insurers paying significantly larger taxes than a comparable Texas insurer engaged in business in the foreign state. But the court finds that the comptroller’s interpretation allows foreign insurers selling title insurance in Texas to include only the portion of the premium tax they actually pay in the retaliatory tax calculation. It compares a foreign title insurer’s aggregate financial obligations in Texas to a Texas insurer’s aggregate financial obligations in a foreign state; it then requires a retaliatory tax from a foreign-based insurer only if its Texas counterpart pays more in the foreign state, and requires, as payment in retaliatory taxes, the amount that would equalize the financial burdens on foreign insurers doing business in Texas and Texas insurers doing business in the foreign state. Accordingly, the court holds that the comptroller’s interpretation serves the legitimate state purpose of deterring other states from imposing excessive taxes against Texas insurers. Therefore, the court concludes that both the retaliatory tax statute and the comptroller’s application of the retaliatory tax scheme are constitutional. OPINION:David Puryear, J., B. A. Smith, Puryear and Pemberton, JJ.

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