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.