Law:Title 3. Department Funds, Fees, And Taxes. Subtitle B. Insurance Premium Taxes from Chapter 225. Surplus Lines Insurance Premium Tax (Texas)

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Subtitle B. Insurance Premium Taxes

Contents

Chapter 225. Surplus Lines Insurance Premium Tax

Section  225.001.  Definition.

In this chapter, "premium" includes:

(1)  a premium;

(2)  a membership fee;

(3)  an assessment;

(4)  dues; and

(5)  any other consideration for surplus lines insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.002.  Applicability Of Chapter.

This chapter applies to a surplus lines agent who collects gross premiums for surplus lines insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.003.  Applicability Of General Provisions Of Other Law.

The provisions of Chapter 981, including provisions relating to the applicability and enforcement of that chapter, rulemaking authority under that chapter, and definitions of terms applicable in that chapter, apply to this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.004.  Tax Imposed; Rate.

(a) A tax is imposed on gross premiums for surplus lines insurance. The rate of the tax is 4.85 percent of the gross premiums.

(b)  Taxable gross premiums under this section are based on gross premiums written or received for surplus lines insurance placed through an eligible surplus lines insurer during a calendar year.

(c)  If a surplus lines insurance policy covers risks or exposures only partially located in this state, the tax is computed on the portion of the premium that is properly allocated to a risk or exposure located in this state.

(d)  In determining the amount of taxable premiums under Subsection (c), a premium, other than a premium properly allocated or apportioned and reported as a premium that may be subject to taxation by another state, is considered to be written on property or risks located or resident in this state if the premium:

(1)  is written, procured, or received in this state; or

(2)  is for a policy negotiated in this state.

(d-1) Notwithstanding Subsections (b) through (d), the comptroller by rule may establish that all premiums are considered to be on risks located in this state:

(1)  if the insured's home office or state of domicile or residence is located in this state; or

(2)  to accommodate changes in federal statutes or regulations that would otherwise limit the comptroller's ability to directly collect the taxes due under this section.

(e)  The following premiums are not taxable in this state:

(1)  premiums properly allocated to another state that are specifically exempt from taxation in that state; and

(2)  premiums on risks or exposures that are properly allocated to federal or international waters or are under the jurisdiction of a foreign government.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 932, Sec. 4, eff. June 15, 2007.



Section  225.005.  Tax Exclusive.

The tax imposed by this chapter is in lieu of all other insurance taxes.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.006.  Collection Of Tax By Agent.

The surplus lines agent shall collect from the insured the tax imposed by this chapter at the time of delivery of the cover note, certificate of insurance, policy, or other initial confirmation of insurance and the full amount of the gross premium charged by the eligible surplus lines insurer for the insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.007.  Collected Taxes Held In Trust.

A surplus lines agent holds taxes collected under this chapter in trust.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.008.  Tax Payment, Report, And Due Date.

(a) The tax imposed by this chapter is due and payable on or before March 1. A surplus lines agent shall file a tax report with the tax payment.

(b)  A surplus lines agent shall pay the tax imposed by this chapter and file the report using forms prescribed by the comptroller.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.009.  Prepayment Of Tax.

(a) A surplus lines agent shall prepay the tax imposed by this chapter when the amount of the accrued taxes due is equal to at least $70,000.

(b)  A surplus lines agent shall prepay the taxes using a form prescribed by the comptroller. The prepayment is due on or before the 15th day of the month following the month in which the amount of taxes described by this section accrues.

(c)  The comptroller by rule may change the accrued tax amount for which prepayment is required under Subsection (a) and the prepayment deadline under Subsection (b).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 932, Sec. 5, eff. June 15, 2007.



Section  225.010.  Tax Absorption And Rebates Prohibited.

(a) A surplus lines agent may not absorb the tax imposed by this chapter.

(b)  A surplus lines agent may not rebate all or part of the tax or the agent's commission as an inducement for insurance or for any other reason.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.011.  Canceled Or Rewritten Insurance Contract.

If a surplus lines insurance contract is canceled and rewritten, the additional premium for purposes of the tax imposed by this chapter is the premium amount that exceeds the unearned premium of the canceled contract.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.012.  State As Preferred Creditor.

If the property of a surplus lines agent is seized as the result of an intermediate or final decision of a court in this state, or if the business of a surplus lines agent is suspended by the action of a creditor or turned over to an assignee, receiver, or trustee, the tax imposed by this chapter and penalties due the state from the agent are preferred claims and the state is a preferred creditor and must be paid in full.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section  225.013.  Failure To Pay Taxes; Criminal Penalty.

(a) A surplus lines agent who does not pay the tax imposed by this chapter on or before the due date required by this chapter or who fraudulently withholds, appropriates, or otherwise uses any portion of the tax commits the offense of theft, regardless of whether the surplus lines agent has or claims an interest in the tax.

(b)  An offense under this section is punishable as provided by law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.



Section 225.014.  Limitation On Rulemaking.

In adopting rules under this chapter, the comptroller may not adopt a rule that exceeds the requirements of this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch. 932, Sec. 6, eff. June 15, 2007.


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