CHAPTER 225. SURPLUS LINES INSURANCE PREMIUM TAX

INSURANCE CODE

TITLE 3. DEPARTMENT FUNDS, FEES, AND TAXES

SUBTITLE B. INSURANCE PREMIUM TAXES

CHAPTER 225. SURPLUS LINES INSURANCE PREMIUM TAX

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.