INSURANCE CODE - NOT CODIFIED
CHAPTER 4. TAXES AND FEES
SUBCHAPTER A. IMPOSITION AND COLLECTION OF TAXES AND FEES
Art. 4.01. Tax Other Than Premium Tax
All insurance companies incorporated under the laws of this state
shall hereafter be required to render for county and municipal
taxation all of their real estate and all furniture, fixtures,
automobiles, equipment, and data processing systems, as other such
real estate and tangible personal property is rendered in the city
and county where such property is located.
All other personal property owned by such insurance companies,
except fire insurance companies and casualty insurance companies,
shall be valued as other such property is valued for assessment by
the taxing authority in the following manner:
From the total valuation of the entire assets of each insurance
company shall be deducted:
(a) All the debts of every kind and character owed by such insurance
company;
(b) All intangible personal property owned by such insurance
company;
(c) All reserves, being the amount of the debts of such insurance
company by reason of its outstanding policies in gross.
From the remainder shall be deducted the assessed value of all real
estate and the assessed value of all furniture, fixtures,
automobiles, equipment, and data-processing systems, rendered for
taxation, and the remainder, if any there be, shall be taxable as
personal property by the city and county where the principal
business office of any such company is fixed by its charter.
All other personal property of fire insurance companies and
casualty insurance companies incorporated under the laws of this
state shall be valued as other such property is valued for
assessment by the taxing authority in the following manner:
From the total valuation of the entire assets of each insurance
company shall be deducted:
(a) All the debts of every kind and character owed by such insurance
company;
(b) All intangible personal property owned by such insurance
company;
(c) All reserves, which reserves shall be computed in such manner as
may be prescribed by the rules and regulations of the State Board of
Insurance, for unearned premiums and for all bona fide outstanding
losses.
From the remainder shall be deducted the assessed value of all real
estate and the assessed value of all furniture, fixtures,
automobiles, equipment, and data-processing systems, rendered for
taxation, and the remainder, if any there be, shall be taxable as
personal property by the city and county where the principal
business office of any company is fixed by its charter.
Acts 1951, 52nd Leg., p. 868, ch. 491. Amended by Acts 1957, 55th
Leg., p. 812, ch. 344, Sec. 3; Acts 1969, 61st Leg., p. 2470, ch.
831, Sec. 1, eff. Jan. 1, 1970.
Amended by Acts 2001, 77th Leg., ch. 763, Sec. 1, eff. Sept. 1,
2001.
Art. 4.02. Insurance Companies Other Than Life, Other Than
Fraternal Benefit Associations, and Other Than Non-Profit Group
Hospital Service Plans; Tax on Gross Premiums
Sec. 1. Each such insurance organization shall be subject to the
provisions of Articles 4.13, 4.14, and 4.15 of this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1981, 67th Leg., p.
1784, ch. 389, Sec. 37(b), eff. Jan. 1, 1982.
Art. 4.03. Tax on Insurance Organizations Not Organized Under Laws
of Texas
Sec. 1. This article shall not in any manner affect the obligation
of any such insurance organization to make investments in Texas
securities in proportion to the amount of Texas reserves as
required by Article 3.33 of Subchapter C, Chapter 3 of this code.
Acts 1951, 52nd Leg., ch. 491.
Art. 4.04. Tax on Domestic Insurance Organizations
Sec. 1. This article shall not in any manner affect the obligation
of any such insurance organization to make investments in Texas
securities in proportion to the amount of Texas reserves as
required by Article 3.33 of Subchapter C, Chapter 3 of this code.
Acts 1951, 52nd Leg., ch. 491.
Art. 4.05. Taxes to be Paid Before Certificate Is Issued
No life insurance company shall receive a certificate of authority
to do business in this State until all taxes imposed under this code
or another insurance law of this state are paid. If, upon the
examination of any company, or in any other manner, the
commissioner shall be informed that the gross premium receipts of
any year exceed in amount those shown by the report thereof,
theretofore made as above provided, the commissioner shall report
this fact to the comptroller. The comptroller shall institute a
collection action, as the comptroller considers appropriate in
accordance with Subtitles A and B, Title 2, Tax Code, and their
subsequent amendments, to collect taxes due on unreported gross
premium receipts. The comptroller shall deposit taxes collected
under this article to the credit of the general revenue fund.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 3.10, eff. Sept. 1,
1993.
Art. 4.06. Taxes Imposed Exclusive
(a) This chapter applies to insurance organizations authorized to
do insurance business in this state other than eligible surplus
lines insurers.
(b) An insurance organization subject to a tax levied by this
chapter may not be required to pay any additional tax in proportion
to its gross premium receipts levied by this state or any county or
municipality except as otherwise provided by this code or the Labor
Code. This exemption may not be construed to limit the
applicability of other taxes, fees, and assessments that are
imposed by other chapters of this code. This exemption may not be
construed to prohibit the levy and collection of state, county, and
municipal taxes on the real and personal property of insurance
organizations, or the levy and collection of state, county, and
municipal taxes that are imposed by other laws of this state, unless
a specific exemption for insurance organizations is provided in
those laws.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 2001, 77th Leg., ch. 763, Sec. 2, eff. Sept. 1,
2001.
Art. 4.07. Fees of Texas Department of Insurance
A. With respect to all authorized insurers writing classes of
insurance in this State, the Texas Department of Insurance shall
charge and receive for the use of the State fees in an amount to be
determined by the department not to exceed the following:
(1) For filing an amendment to a certificate of authority if the
charter is not amended, $100.00.
(2) For affixing the official seal and certifying to the seal,
$20.00.
(3) For reservation of name, $200.00.
(4) For renewal of reservation of name, $50.00.
(5) For filing an application for admission of a foreign or alien
company, $4,000.00.
(6) For filing an original charter of a company including issuance
of a certificate of authority, $3,000.00.
(7) For filing an amendment to a charter if a hearing is held,
$500.00.
(8) For filing an amendment to a charter if a hearing is not held,
$250.00.
(9) For filing a designation of an attorney for service of process
or amendment of the designation, $50.00.
(10) For filing a copy of a total reinsurance agreement, $1,500.00.
(11) For filing a copy of a partial reinsurance agreement, $300.00.
(12) For accepting a security deposit, $200.00.
(13) For substitution or amendment of a security deposit, $100.00.
(14) For certification of statutory deposits, $20.00.
(15) For filing a notice of intent to relocate books and records
pursuant to Article 1.28 of this code, $300.00.
(16) For filing a statement pursuant to Section 5, Article 21.49-1
of this code, for the first $9,900,000.00 of the purchase price or
consideration, $1,000.00.
(17) For filing a statement pursuant to Section 5, Article 21.49-1
of this code, if the purchase price or consideration exceeds
$9,900,000.00, an additional $500.00 for each $10,000,000.00
exceeding $9,900,000.00, but not more than $10,000.00 total fee
under this subdivision and the preceding subdivision.
(18) For filing a registration statement pursuant to Section 3,
Article 21.49-1 of this code, $300.00.
(19) For filing for review pursuant to Section 4, Article 21.49-1 or
Article 22.15 of this code, $500.00.
(20) For filing of a direct reinsurance agreement pursuant to
Article 22.19 of this code, $300.00.
(21) For filing for approval of a merger pursuant to Article 21.25
of this code, $1,500.00.
(22) For filing for approval of reinsurance pursuant to Article
21.26 of this code, $1,500.00.
(23) For filing of restated articles of incorporation for domestic,
foreign or alien companies, $500.00.
(24) For filing a joint control agreement, $100.00.
(25) For filing a substitution or amendment to a joint control
agreement, $40.00.
(26) For filing a change of attorney in fact, $500.00.
B. For an authorized insurer writing a class of insurance in this
state that is subject to Chapter 3 of this code, the Texas
Department of Insurance shall charge and the comptroller shall
collect for the use of the state fees in an amount to be determined
by the commissioner not to exceed the following:
(1) For valuing policies of life insurance, and for each one million
dollars of insurance or fraction thereof, $10.00.
(2) For filing the annual statement, $500.00.
The provisions of Subtitles A and B, Title 2, Tax Code, and their
subsequent amendments, apply to fees collected by the comptroller
under this section.
C. The department shall, within the limits fixed by this Article,
prescribe the fees to be charged under this Article.
D. Except as provided by Section B of this Article, the insurers
subject to the fees imposed by this Article shall include any and
all stock and mutual insurance companies, local mutual aid
associations, statewide mutual assessment companies, group
hospital service plan corporations, and stipulated premium
insurance companies.
E. The Texas Department of Insurance shall set and collect a sales
charge for making copies of any paper of record in the Texas
Department of Insurance, such charge to be in an amount deemed
sufficient to reimburse the State for the actual expense;
provided, however, that the department may make and distribute
copies of papers containing rating information without charge or
for such charge as the commissioner shall deem appropriate to
administer the premium rating laws by properly disseminating such
rating information; and provided further that Article 5.29, Texas
Insurance Code, shall remain in full force and effect without
amendment.
F. All fees collected by virtue of Section A of this Article shall
be deposited in the State Treasury to the credit of the Texas
Department of Insurance operating fund and appropriated to the use
and benefit of the department to be used in the payment of salaries
and other expenses arising out of and in connection with the
examination of insurance companies and/or the licensing of
insurance companies and investigations of violations of the
insurance laws of this State in such manner as provided in the
general appropriation bill.
G. All fees collected by the comptroller under Section B of this
Article shall be deposited in the general revenue fund. Those
amounts are available for appropriation to the Texas Department of
Insurance for its use in paying salaries and other expenses arising
out of the examination or licensing of insurance companies and
investigations of the violations of this code or other insurance
laws of this State as provided by the General Appropriations Act.
H. Notwithstanding any other provision of this article, any insurer
to which this article applies and whose gross premium receipts are
less than $450,000.00, according to its annual statement for the
preceding year ending December 31, shall be required to pay only
one-half the amount of the fees required to be paid under this
article and as set by the commissioner.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1965, 59th Leg., p.
1260, ch. 578, Sec. 1, eff. June 17, 1965.
Amended by Acts 1983, 68th Leg., p. 3911, ch. 622, Sec. 16, eff.
Sept. 1, 1983; Acts 1987, 70th Leg., ch. 249, Sec. 4, eff. Aug. 31,
1987; Acts 1993, 73rd Leg., ch. 685, Sec. 3.10, eff. Sept. 1, 1993.
Art. 4.10. Insurance Companies Other Than Life, Other Than
Fraternal Benefit Associations, and Other Than Nonprofit Group
Hospital Service Plans; Tax on Gross Premiums
Payment of Tax
Sec. 1. Every insurance carrier, including Lloyd's and reciprocal
or interinsurance exchanges and any other organization or concern
receiving gross premiums from the business of fire, marine, marine
inland, accident, credit, livestock, fidelity, guaranty, surety,
casualty, workers' compensation, employers' liability, or any other
kind or character of insurance, except title insurance and except
as provided in Sections 2, 3, and 4 of this article, shall pay to the
comptroller a tax upon such gross premium receipts as provided in
this article. Any such insurance carrier doing other kinds of
insurance business shall pay the tax levied upon its gross premiums
received from such other kinds of business as provided in Articles
4.03 and 4.11 of this code.
Inapplicability of Article
Sec. 2. This article shall not apply to premium receipts received
from the business of life insurance, personal accident insurance,
life and accident insurance, or health and accident insurance for
profit, written by life insurance companies, life and accident
insurance companies, health and accident insurance companies, or
for mutual benefit or protection of this state.
Inapplicability of Article
Sec. 3. This article shall not apply to fraternal benefit
associations or societies in this state, to nonprofit group
hospital service plans, to stipulated premium companies nor to
mutual assessment associations, companies, or corporations
regulated by Chapter 14, Insurance Code, as amended.
Inapplicability of Article
Sec. 4. (a) Except as provided by Subsection (b) of this section,
this article shall not apply to purely cooperative or mutual fire
insurance companies carried on by the members thereof solely for
the protection of their own property and not for profit.
(b) This article applies to crop insurance premiums only written by
a farm mutual insurance company on or after January 1, 1994.
Gross Premium Receipts Defined
Sec. 5. Gross premium receipts referred to herein are the total
gross amount of premiums actually written during the taxable year
on each and every kind of insurance or risk written upon property or
risks located in the State of Texas (except premium receipts under
Section 2), except premiums actually written by other licensed
companies for reinsurance, less return premiums and dividends paid
policyholders with no deduction for premiums paid for reinsurance.
Time of Filing and Payment
Sec. 6. (a) A premium tax return for each taxable year ending the
31st day of December preceding shall be filed and the total amount
of the tax due under this article shall be paid on or before the 1st
day of March of each year.
(b) A semiannual prepayment of premium tax must be made on March 1st
and August 1st by all insurers with net tax liability for the
previous calendar year in excess of $1,000. The tax paid on each
date must equal one-half of the total premium tax paid for the
previous calendar year. Should no premium tax have been paid during
the previous calendar year, the semiannual payment shall equal the
tax which would be owed on the aggregate of the gross premium
receipts for the two previous calendar quarters at the minimum tax
rate specified by law. The comptroller is authorized to refund any
overpayment of premium taxes that results from the semiannual
prepayment system herein established.
(c) The comptroller by rule may change the dates for reporting and
payment of taxes to improve operating efficiencies within the
agency, so long as a system of semiannual prepayment of taxes
imposed by this article is maintained.
Secs. 7 to 9. Repealed by Acts 1999, 76th Leg., ch. 852, Sec. 5(1),
eff. June 18, 1999.
Rate of Tax
Sec. 10. There is imposed on each insurance carrier subject to this
article an annual tax equal to 1.6 percent of its premium receipts.
Sec. 10A. Expired.
Annual Tax Return
Sec. 11. Each insurance carrier which is liable under this article
for tax on premiums shall file a tax return annually on forms
prescribed by the comptroller.
Sec. 12. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(2),
eff. Sept. 1, 1993.
Examination and Evaluation Fee Credits
Text of section effective until January 1, 2004
Sec. 13. The amount of all examination and evaluation fees paid in
each taxable year to or for the use of the State of Texas by an
insurance carrier shall be allowed as a credit on the amount of
premium taxes due under this article except as provided by Article
1.28 of this code. Any credit allowed by the provisions of this
section is in addition to any other credits allowable by statute.
Text of section effective January 1, 2004
Sec. 13. The amount of all examination and evaluation fees paid in
each taxable year to the State of Texas by an insurance carrier
shall be allowed as a credit on the amount of premium taxes due
under this article. The limitations provided by Sections 803.007(1)
and (2)(B) of this code for domestic insurance companies apply to
foreign insurance companies. Any credit allowed by the provisions
of this section is in addition to any other credits allowable by
statute.
Exceptions
Sec. 14. Farm mutuals, local mutual aid associations and burial
associations are not subject to the franchise tax.
Failure to Pay Taxes
Sec. 15. Any insurance carrier failing to pay all taxes imposed by
this article shall, in addition, be subject to the provisions of
Article 4.05, Insurance Code.
Sec. 16. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(2),
eff. Sept. 1, 1993.
Secs. 17, 18. Repealed by Acts 1989, 71st Leg., ch. 232, Sec.
25(b)(1) and (b)(2), eff. Sept. 1, 1989.
Acts 1907, 1st C.S., p. 479; Acts 1911, p. 216. Amended by Acts
1936, 44th Leg., 3rd C.S., p. 2040, ch. 495, art. 4, Sec. 5; Acts
1937, 45th Leg., p. 525, ch. 258, Sec. 1; Acts 1939, 46th Leg., p.
638, Sec. 1; Acts 1941, 47th Leg., p. 269, ch. 184, art. XVIII, Sec.
1; Acts 1945, 49th Leg., p. 574, ch. 341, Sec. 1; Acts 1951, 52nd
Leg., p. 695, ch. 402, Sec. XV (Sec. 1). Transferred from Vernon's
Ann.Civ.St. art. 7064 and amended by Acts 1981, 67th Leg., p. 1780,
ch. 389, Sec. 36, eff. Jan. 1, 1982. Amended by Acts 1981, 67th
Leg., p. 3212, ch. 844, Sec. 1, eff. Jan. 1, 1982.
Sec. 6 amended by Acts 1983, 68th Leg., p. 1367, ch. 283, Sec. 1,
eff. Sept. 1, 1983; Sec. 18 amended by Acts 1983, 68th Leg., p.
1368, ch. 283, Sec. 2, eff. Sept. 1, 1983; Sec. 13 amended by Acts
1985, 69th Leg., ch. 161, Sec. 3, eff. May 24, 1985; Sec. 1 amended
by Acts 1987, 70th Leg., ch. 1073, Sec. 23, eff. Sept. 1, 1987; Sec.
10A added by Acts 1987, 70th Leg., 2nd C.S., ch. 5, art. 7, Sec. 4,
eff. Dec. 31, 1987; Secs. 7, 8, 10 amended by Acts 1989, 71st Leg.,
ch. 242, Sec. 3, eff. June 12, 1989; Sec. 17 amended by Acts 1989,
71st Leg., ch. 232, Sec. 25(b)(1), eff. Sept. 1, 1989; Sec. 18
amended by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(2), eff. Sept.
1, 1989; Sec. 1 amended by Acts 1993, 73rd Leg., ch. 685, Sec. 3.11,
eff. Sept. 1, 1993; Sec. 4 amended by Acts 1993, 73rd Leg., ch. 685,
Sec. 20.06, eff. Sept. 1, 1993; Sec. 6 amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 3.11, eff. Sept. 1, 1993; Sec. 6(b) amended by
Acts 1993, 73rd Leg., ch. 486, Sec. 6.01, eff. Sept. 1, 1993; Sec.
11 amended by Acts 1993, 73rd Leg., ch. 685, Sec. 3.11, eff. Sept.
1, 1993; Sec. 12 repealed by Acts 1993, 73rd Leg., ch. 685, Sec.
3.29(2), eff. Sept. 1, 1993; Sec. 14 amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 3.11, eff. Sept. 1, 1993; Sec. 16 repealed by
Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(2), eff. Sept. 1, 1993;
Sec. 5 amended by Acts 1995, 74th Leg., ch. 279, Sec. 3, eff. Sept.
1, 1995; Sec. 1 amended by Acts 1997, 75th Leg., ch. 1423, Sec.
11.17, eff. Sept. 1, 1997; Sec. 6(b) amended by Acts 1997, 75th
Leg., ch. 1423, Sec. 11.18, eff. Sept. 1, 1997; Secs. 7 to 9
repealed by Acts 1999, 76th Leg., ch. 852, Sec. 5(1), eff. June 18,
1999; Sec. 10 amended by Acts 1999, 76th Leg., ch. 852, Sec. 2, eff.
June 18, 1999; Sec. 14 amended by Acts 2001, 77th Leg., ch. 763,
Sec. 3, eff. Sept. 1, 2001; Sec. 1 amended by Acts 2003, 78th Leg.,
ch. 209, Sec. 3, eff. Oct. 1, 2003; Sec. 13 amended by Acts 2003,
78th Leg., ch. 209, Sec. 4, eff. Jan. 1, 2004.
Art. 4.11. Life, Health, and Accident Insurance Companies; Premium
Tax
Article repealed effective April 1, 2005.
Insurance Carriers Required to Pay Premium Tax
Sec. 1. Every insurance carrier receiving premiums from the
business of life insurance, accident insurance, health insurance,
life and accident insurance, life and health insurance, health and
accident insurance, or life, health, and accident insurance,
including variable life insurance, credit life insurance, and
credit accident and health insurance for profit or otherwise or for
mutual benefit or protection, in this state, shall pay to the
comptroller a tax upon its gross premiums as provided in this
article.
Definitions
Sec. 2. The following definitions shall apply to this article:
(a) "Carrier" means any insurer, managed care organization, or
group hospital service plan transacting any such insurance business
in this state including companies operating under the provisions of
Chapters 841, 842, 843, 861, 881, 882, 883, 884, 941, 942, and 982,
Insurance Code, Chapter 533, Government Code, or Title XIX of the
federal Social Security Act. The term does not include local mutual
aid associations, fraternal benefit societies or associations, and
societies that limit their membership to one occupation. For
purposes of computing the premium tax under this article, a managed
care organization shall be treated in the same manner as a health
maintenance organization.
(b) "Comparison state" is defined as the state other than Texas in
which a carrier owns the largest amount of similar investments to
those qualified and enumerated in Section 4 of this article.
(c) "Gross premiums" are the total gross amount of all premiums,
membership fees, assessments, dues, and any other considerations
for such insurance received during the taxable year on each and
every kind of such insurance policy or contract covering persons
located in the State of Texas and arising from the types of
insurance specified in Section 1 of this article, but deducting
returned premiums, any dividends applied to purchase paid-up
additions to insurance or to shorten the endowment or premium
payment period, and excluding those premiums received from
insurance carriers for reinsurance and there shall be no deduction
for premiums paid for reinsurance. For purposes of this article, a
stop-loss or excess loss insurance policy issued to a health
maintenance organization, as defined under the Texas Health
Maintenance Organization Act (Chapter 20A, Vernon's Texas
Insurance Code), shall be considered reinsurance. Such gross
premiums shall not include premiums received from the Treasury of
the United States for insurance contracted for by the federal
government in accordance with or in furtherance of the provisions
of Title XVIII of the Federal Social Security Act (42 U.S.C. Section
1395c et seq.) and its subsequent amendments. The gross premiums
receipts so reported shall not include the amount of premiums paid
on group health, accident, and life policies in which the group
covered by the policy consists of a single nonprofit trust
established to provide coverage primarily for employees of:
(1) a municipality, county, or hospital district in this state; or
(2) a county or municipal hospital, without regard to whether the
employees are employees of the county or municipality or another
entity operating the hospital on behalf of the county or
municipality.
(d) "Similar investments" means the same character of property and
investments described in Section 4 of this article, located in a
state other than Texas and originating and existing with the same
relationship to such state as the location and relationship of such
property is to the State of Texas.
(e) "Tax rate" means that rate specified in Section 5 of this
article as determined by the carrier's Texas investment comparison
state similar investments asset ratio.
(f) "Tax year" is the calendar year, January 1 to December 31.
(g) "Texas investments" are those investments described and
enumerated in Section 4 of this article.
Date for Filing Return and Paying Tax
Sec. 3. A premium tax return for each tax year ending the 31st day of
December preceding shall be filed and the total amount of the tax
due under this article shall be paid on or before either March 1 of
each year, the date the annual statement for such carrier is
required to be filed with the commissioner, or another date
prescribed by the comptroller.
Allocation of Investments
Sec. 4. (a) For the purposes of this article, Texas investments and
similar investments of comparison states are to be attributed as
follows:
(1) bonds and other obligations of the United States are to be
allocated proportionately to each state in the same ratio as its
gross direct premium income is received from each state;
(2) mortgage loans are to be allocated to the state in which the
real property securing the loan is located;
(3) bonds and other obligations of governmental units are to be
allocated to the state in which such units are located;
(4) corporate stocks, bonds, or other obligations are to be
allocated to the state of domicile of such corporation;
(5) deposits, loans to, or investments in any bank, savings and
loan, or other financial institution shall be allocated to the
state in which such institution is located; the amount of "demand
deposits" in such institution for the purposes of this article
shall be the average of each of the 12 months' ending balances as
determined from the carrier's books and records;
(6) policy loans shall be allocated to the policy address of the
policyholder;
(7) collateral loans shall be allocated to the state of address of
the borrower; and
(8) real property, or any interest therein, shall be allocated to
the state in which it is located.
(b) The value of loans under Subsections (a)(2), (6), and (7) of
this section is determined by dividing the sum of the unpaid
principal balance of those loans as shown on the books of the
insurance carrier at the close of each calendar quarter by four.
(c) The value of stocks, bonds, and other obligations of
governmental units and corporations under Subsections (a)(1), (3),
and (4) of this section is determined by dividing the sum of the
amortized value of those investments as shown on the books of the
insurance carrier at the close of each calendar quarter by four.
(d) The value of real property and any interest in real property
under Subsection (a)(8) of this section is determined by dividing
the sum of the value of that real estate and other interests in real
property as shown on the books of the insurance carrier at the close
of each calendar quarter by four.
Tax rate--1989
Sec. 5. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, for the 1989 tax year and tax years
preceding the 1989 tax year, there is imposed on each insurance
carrier an annual tax equal to 2.5 percent of its gross premiums.
Any insurance carrier may qualify for a tax rate lower than the 2.5
percent imposed by this article. Such qualification for a lower
rate can be accomplished in the following manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.8
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.10 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, for the tax years specified by Subsection (a) of this
section, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1990
Sec. 5A. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Article 5H of this article, for the 1990 tax year, there is imposed
on each insurance carrier an annual tax equal to 2.4 percent of its
gross premiums. Any insurance carrier may qualify for a tax rate
lower than the 2.4 percent imposed by this article. Such
qualification for a lower rate can be accomplished in the following
manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.85
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.3 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, for the tax year specified by Subsection (a) of this
section, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1991
Sec. 5B. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, for the 1991 tax year, there is imposed
on each insurance carrier an annual tax equal to 2.3 percent of its
gross premiums. Any insurance carrier may qualify for a tax rate
lower than the 2.3 percent imposed by this article. Such
qualification for a lower rate can be accomplished in the following
manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.85
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.4 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, for the tax year specified by Subsection (a) of this
section, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1992
Sec. 5C. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, for the 1992 tax year, there is imposed
on each insurance carrier an annual tax equal to 2.2 percent of its
gross premiums. Any insurance carrier may qualify for a tax rate
lower than the 2.2 percent imposed by this article. Such
qualification for a lower rate can be accomplished in the following
manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.85
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.5 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, for the tax year specified by Subsection (a) of this
section, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1993
Sec. 5D. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, for the 1993 tax year, there is imposed
on each insurance carrier an annual tax equal to 2.1 percent of its
gross premiums. Any insurance carrier may qualify for a tax rate
lower than the 2.1 percent imposed by this article. Such
qualification for a lower rate can be accomplished in the following
manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.85
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.6 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, for the tax year specified by Subsection (a) of this
section, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1994
Sec. 5E. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, for the 1994 tax year, there is imposed
on each insurance carrier an annual tax equal to 2.0 percent of its
gross premiums. Any insurance carrier may qualify for a tax rate
lower than the 2.0 percent imposed by this article. Such
qualification for a lower rate can be accomplished in the following
manner:
(1) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of less
than or equal to 100 percent but more than or equal to 90 percent of
similar investments such insurance carrier owned in the comparison
state as herein defined, the tax imposed shall be equal to 1.85
percent of its gross premiums; or
(2) if such insurance carrier for the year ending December 31
preceding owned Texas investments with admitted asset value of more
than 100 percent of the amount such insurance carrier owned in the
comparison state in similar investments as herein defined, the tax
imposed shall be equal to 1.7 percent of its gross premiums.
(b) Except for gross revenues taxed under Section 5H of this
article, there is imposed on each health maintenance organization
operating under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code) an annual tax on its
gross amount of revenues collected for issuance of health
maintenance certificates or contracts at the rate provided by
Subsection (a)(2) of this section.
Tax rate--1995 and afterwards
Sec. 5F. (a) Except for gross premiums on life insurance taxed under
Section 5G of this article and gross revenues of health maintenance
organizations taxed under Subsection (b) of this section and
Section 5H of this article, beginning with tax year 1995, there is
imposed on each insurance carrier an annual tax equal to 1.75
percent of its gross premiums.
(b) Beginning with tax year 1995, there is imposed on each health
maintenance organization operating under the Texas Health
Maintenance Organization Act (Chapter 20A, Vernon's Texas
Insurance Code) an annual tax equal to 1.75 percent of its gross
amount of its revenues collected for issuance of health maintenance
certificates or contracts.
Tax rate on certain life insurance
Sec. 5G. There is imposed on each insurance carrier a tax on the
first $450,000 of its gross premiums on life insurance at a rate
equal to one-half of the rate paid by that insurance carrier under
Section 5, 5A, 5B, 5C, 5D, 5E, or 5F of this article, as
appropriate, for the same tax year.
Tax rate on certain gross revenues of health maintenance
organizations
Sec. 5H. There is imposed on each health maintenance organization a
tax on the first $450,000 of its gross amount of revenues collected
for issuance of health maintenance certificates or contracts at a
rate equal to one-half of the rate paid by that health maintenance
organization under Section 5, 5A, 5B, 5C, 5D, 5E, or 5F of this
article, as appropriate, for the same tax year.
Annual Sworn Returns; Forms; Additional Information
Sec. 6. Each insurance carrier which is liable under this article
for tax on premiums shall file a tax return annually on forms
prescribed by the comptroller. The comptroller may require such
carrier to file any relevant additional information reasonably
necessary to verify the amount of tax due.
Sec. 7. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(3),
eff. Sept. 1, 1993.
Examination and Valuation Fees Allowed as Credits
Sec. 8. The amount of all examination and evaluation fees paid in
each taxable year to the State of Texas by an insurance carrier
shall be allowed as a credit on the amount of premium taxes due
under this article. The limitations provided by Sections 803.007(1)
and (2)(B) of this code for domestic insurance companies apply to
foreign insurance companies. Any credit allowed by the provisions
of this section is in addition to any other credits allowable by
statute.
Sec. 9. Repealed by Acts 2001, 77th Leg., ch. 763, Sec. 5, eff.
Sept. 1, 2001.
Failure to Pay Taxes
Sec. 10. Any insurance carrier failing to pay all taxes imposed by
this article shall be subject to the provisions of Article 4.05,
Insurance Code, and of Subtitles A and B, Title 2, Tax Code, and
their subsequent amendments.
Sec. 11. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(3),
eff. Sept. 1, 1993.
Sec. 12. Repealed by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(3),
eff. Sept. 1, 1989.
Prepayment of Tax; Rules, Regulations, Standards, Limitations
Sec. 13. (a) A semiannual prepayment of premium tax must be made on
March 1 and August 1 by all insurers with net tax liability for the
previous calendar year in excess of $1,000. The tax paid on each
date must equal one-half of the total premium tax paid for the
previous calendar year. Should no premium tax have been paid during
the previous calendar year, the semiannual payment shall equal the
tax which would be owed on the aggregate of the gross premium
receipts for the two previous calendar quarters at the minimum tax
rate specified by law. The comptroller is authorized to refund any
overpayment of premium taxes that results from the semiannual
prepayment system herein established.
(b) The comptroller by rule may change the dates for reporting and
payment of taxes to improve operating efficiencies within the
agency, so long as a system of semiannual prepayment of taxes
imposed by this article is maintained .
Added by Acts 1936, 44th Leg., 3rd C.S., p. 2040, ch. 495, art. 4,
Sec. 5b. Amended by Acts 1937, 45th Leg., p. 525, ch. 258, Sec. 1b;
Acts 1939, 46th Leg., p. 640, Sec. 1; Acts 1949, 51st Leg., p. 1365,
ch. 620, Sec. 1; Acts 1951, 52nd Leg., p. 695, ch. 402, Sec. XVIII
(Sec. 1); Acts 1971, 62nd Leg., p. 1535, ch. 406, Sec. 1, eff. May
26, 1971. Transferred from Vernon's Ann.Civ.St. art. 7064a and
amended by Acts 1981, 67th Leg., p. 1780, ch. 389, Sec. 36, eff.
Jan. 1, 1982. Amended by Acts 1981, 67th Leg., p. 2731, ch. 746,
Sec. 1, eff. Jan. 1, 1982.
Sec. 3A added by Acts 1983, 68th Leg., p. 3996, ch. 622, Sec. 86,
eff. Sept. 1, 1983; Sec. 5 added by Acts 1983, 68th Leg., p. 1369,
ch. 283, Sec. 3, eff. Sept. 1, 1983. Amended by Acts 1984, 68th
Leg., 2nd C.S., ch. 31, art. 4, Sec. 1, eff. Jan. 1, 1985. Sec. 2(c)
amended by Acts 1985, 69th Leg., ch. 839, Sec. 1, eff. June 15,
1985; Sec. 8 amended by Acts 1985, 69th Leg., ch. 161, Sec. 4, eff.
May 24, 1985; Sec. 5A added by Acts 1987, 70th Leg., 2nd C.S., ch.
5, art. 7, Sec. 5, eff. Dec. 31, 1987; Secs. 4 to 5A amended by Acts
1989, 71st Leg., ch. 237, Sec. 1, eff. Aug. 28, 1989; Secs. 5B to 5H
added by Acts 1989, 71st Leg., ch. 237, Sec. 1, eff. Aug. 28, 1989;
Sec. 12 amended by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(3),
eff. Sept. 1, 1989; Sec. 1 amended by Acts 1993, 73rd Leg., ch. 685,
Sec. 3.12, eff. Sept. 1, 1993; Sec. 2(c) amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 13.02, eff. Sept. 1, 1993; Secs. 3, 6, amended
by Acts 1993, 73rd Leg., ch. 685, Sec. 3.12, eff. Sept. 1, 1993;
Sec. 7 repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 3.29(3), eff.
Sept. 1, 1993; Sec. 10 amended by Acts 1993, 73rd Leg., ch. 685,
Sec. 3.12, eff. Sept. 1, 1993; Sec. 11 repealed by Acts 1993, 73rd
Leg., ch. 685, Sec. 3.29(3), eff. Sept. 1, 1993; Sec. 13 amended by
Acts 1993, 73rd Leg., ch. 685, Sec. 3.12, eff. Sept. 1, 1993; Sec.
13(a) amended by Acts 1993, 73rd Leg., ch. 486, Sec. 6.02, eff.
Sept. 1, 1993; Sec. 1 amended by Acts 1997, 75th Leg., ch. 1423,
Sec. 11.19, eff. Sept. 1, 1997; Sec. 13(a) amended by Acts 1997,
75th Leg., ch. 1423, Sec. 11.20, eff. Sept. 1, 1997; Sec. 2(c)
amended by Acts 1999, 76th Leg., ch. 575, Sec. 1, eff. Jan. 1, 2000;
Sec. 9 repealed by Acts 2001, 77th Leg., ch. 763, Sec. 5, eff. Sept.
1, 2001; Secs. 2(a), (c), amended by Acts 2003, 78th Leg., ch. 198,
Sec. 2.119(a), eff. Sept. 1, 2003; Sec. 8 amended by Acts 2003,
78th Leg., ch. 209, Sec. 5, eff. Jan. 1, 2004.
Art. 4.11A. Administrative Services Tax
Tax payment requirement
Sec. 1. Each insurance carrier receiving any form of administrative
or service fee, consideration, payment, premium, fund,
reimbursement, or compensation for performing or providing any
service, function, or duty, or acting in any administrative,
clerical, management, advisory, or technical capacity, or
providing any claims or expense review, service, administration,
management, payment, indemnification, or reimbursement, under an
administrative service contract to be performed in this state, or
on behalf of persons in this state, or for risks located in this
state, and relating to any employer-employee, multiple
employer-employee, self-insurance group, member, or other medical,
accident, sickness, injury, indemnity, death, or health benefit
plan, including but not limited to any medical, surgical,
orthopedic, chiropractic, physical therapy, speech pathology,
audiology, mental health, dental, hospital, workers' compensation,
optometric, or health maintenance organization plan or program, but
excluding any portion of such plan for which premiums for insurance
are received by the carrier and are otherwise subject to taxation by
this state under Article 1.14-1, 1.14-2, 4.10, or 4.11, Insurance
Code, or Section 33, Texas Health Maintenance Organization Act
(Article 20A.33, Vernon's Texas Insurance Code), shall pay to the
State Board of Insurance as provided by this article for
transmittal to the comptroller an annual tax on the gross amount of
administrative or service fees received by the carrier. This
section does not apply to a person to the extent he receives an
administrative or service fee, consideration, payment, premium,
fund, reimbursement, or compensation, as provided by this section,
from a unit or units of local government, or from units of local
government that have organized under Chapter 791, Government Code,
or Chapter 119, Local Government Code, to provide group workers'
compensation, health, accident, dental, disability, and life
insurance solely to local government employees. This section does
not apply to local mutual aid associations or fraternal benefit
societies or associations.
Other tax payment requirement
Sec. 2. Each person, except an insurance carrier subject to Section
1 of this article, receiving any form of administrative or service
fee, consideration, payment, premium, fund, reimbursement, or
compensation for performing or providing any service, function, or
duty, or acting in any administrative, clerical, management,
advisory, or technical capacity, or providing any claims or expense
review, service, administration, management, payment,
indemnification, or reimbursement, under an administrative service
contract to be performed in this state, or on behalf of persons in
this state, or for risks located in this state, and relating to any
employer-employee, multiple employer-employee, self-insurance
group, member, or other medical, accident, sickness, injury,
indemnity, death, or health benefit plan, including but not limited
to any medical, surgical, orthopedic, chiropractic, physical
therapy, speech pathology, audiology, mental health, dental,
hospital, workers' compensation, optometric, or health maintenance
organization plan or program, but excluding any portion of such
plan for which premiums for insurance are received by an insurance
carrier and are otherwise subject to taxation by this state under
Article 1.14-1, 1.14-2, 4.10, or 4.11, Insurance Code, or Section
33, Texas Health Maintenance Organization Act (Article 20A.33,
Vernon's Texas Insurance Code), shall pay to the State Board of
Insurance as provided by this article for transmittal to the
comptroller an annual tax on the gross amount of administrative or
service fees received by the person. This section does not apply to
a person to the extent he receives an administrative or service fee,
consideration, payment, premium, fund, reimbursement, or
compensation, as provided by this section, from a unit or units of
local government, or from units of local government that have
organized under Chapter 791, Government Code, or Chapter 119, Local
Government Code, to provide group workers' compensation, health,
accident, dental, disability, and life insurance solely to local
government employees. This section does not apply to local mutual
aid associations or to fraternal benefit societies or associations.
Definitions
Sec. 3. In this article:
(1) "Insurance carrier" or "carrier" means:
(A) every type of foreign and domestic insurer engaged in the
business of insurance;
(B) every insurer that is licensed or operates under, or is required
to be licensed or to operate under, Chapter 2, 3, 8, 11, 13, 14, 15,
16, 17, 18, 19, 20, or 22, Insurance Code, or Article 1.14-2,
Insurance Code.
(C) a health maintenance organization that is licensed or operates
under the Texas Health Maintenance Organization Act (Chapter 20A,
Vernon's Texas Insurance Code); and
(D) an unauthorized insurer within the meaning of Article 1.14-1,
Insurance Code.
(2) "Gross amount of administrative or service fee" includes:
(A) the total gross amount of all consideration, fees, payments,
reimbursements, and all compensation received by the carrier or
other person during the taxable year for each and every kind of such
service, activity, or function described either in Section 1 or
Section 2 of this article; and
(B) the total amount of all claims and benefits paid to or on behalf
of employers, multiple employers, employees, unions,
beneficiaries, trusts, members, spouses, dependents, or other
persons under a plan described in either Section 1 or Section 2 of
this article.
(3) "Taxable year" is the calendar year, January 1 through December
31.
(4) "Person" includes an individual, corporation, organization,
government or governmental subdivision or agency, business trust,
estate, trust, partnership, association, plan, or any other legal
entity.
(5) "Administrative service contract" means a management contract,
agency contract, or other written or oral contract or agreement
under which the management, administration, or servicing of a plan
or any portion of a plan, is provided by an insurance carrier or
other person.
(6) "Plan" means any plan, fund, trust, or other program to the
extent that the plan, fund, trust, or program is established or
maintained for the purpose of providing persons, including spouses
and beneficiaries, through insurance or otherwise, the benefits or
coverage specified in Section 1 or Section 2 of this article.
Tax rate
Sec. 4. (a) There is imposed on each insurance carrier subject to
Section 1 of this article and on each person subject to Section 2 of
this article an annual tax equal to 2.5 percent of the gross amount
of administrative or service fees respecting that carrier or
person, but that insurance carrier or person is not liable for the
payment of the gross amount of administrative or service fees as
defined in Section 3(2)(B) of this article to the extent that funds
from which the insurance carrier or person is able to collect or
retain that tax as provided by Subsection (c) of this section do not
come into the possession or under the control of the carrier or
person, or to the extent collection or retention is preempted by
federal law. An insurance carrier subject to Section 1 of this
article and a person subject to Section 2 of this article may not,
on or after the effective date of this article, enter into any
administrative service contract with any plan that does not provide
for the retention or collection by the insurance carrier or person
of the tax imposed on and required to be paid to the State Board of
Insurance under this article.
(b) An insurance carrier subject to Section 1 of this article or a
person subject to Section 2 of this article shall remit any tax owed
under this section as specified in Subsection (a) of this section on
behalf of itself and the plan or person for whom the service,
administration, activity, management, or similar function is
performed, and for that purpose is authorized and directed to
collect or retain the amount of tax imposed by this article from
funds, assessments, dues, premiums, or other money coming into its
hands or under its control.
(c) Except to the extent preempted by federal law, there is imposed
on each plan of the type described in Section 1 or 2 of this article
an annual tax equal to 2.5 percent of the gross amount of
administrative or service fees and that plan shall pay the tax to
the State Board of Insurance for transmittal to the comptroller.
The tax provided by this subsection is imposed and is owed only to
the extent a tax is not paid under Subsection (a) of this section.
(d) Notwithstanding any other provision of this article, the tax
imposed under this article creates no duty and shall not be
collected to the extent preempted or prohibited under the
constitution of this state or the United States. It is the intent
of the legislature that this article not apply to any person, risk,
or transaction to which it may not lawfully apply under the
constitution of this state or the United States.
Date for filing tax return and paying tax
Sec. 5. (a) Except as provided by Subsection (b) of this section, a
tax return for each tax year ending the 31st day of December
preceding shall be filed and the total amount of the tax due under
this article shall be paid on or before March 1 of each year to the
State Board of Insurance.
(b) If an insurance carrier is required to file its annual statement
later than March 1 of each year, the total amount of tax due under
this article must be paid on or before the date the annual statement
is due.
Annual sworn returns; forms; additional information
Sec. 6. Each insurance carrier or other person that is liable under
this article for a tax on the gross amount of administrative or
service fees shall file a sworn tax return annually on forms
prescribed by the State Board of Insurance. The commissioner of
insurance may require that carrier or other person to file any
relevant additional information reasonably necessary to verify the
amount of tax due.
Certification of taxes paid
Sec. 7. After receipt by the commissioner of insurance of each tax
return and tax payments, the commissioner shall certify to the
comptroller the amount of taxes paid by each insurance carrier or
other person. The commissioner's certification shall be
authorization for the comptroller to transfer those certified
amounts from the insurance suspense account to the general revenue
fund unless there is a lawful reason for maintaining the payment in
the insurance suspense account.
Supplemental certification of taxes due; suspension of time
period; suit by commissioner
Sec. 8. (a) Except as otherwise provided by this article, the amount
of any tax imposed by this article if determined on examination of
any carrier or other person liable for that tax, or if determined by
any other manner, shall be filed by the commissioner of insurance
with the comptroller by supplemental certificate showing the amount
of any taxes due by that carrier or other person within four years
after the return was filed, whether or not the return was filed on
or after the date due.
(b) When an administrative review or a judicial proceeding is
pending in a court of competent jurisdiction prior to the
expiration of the time presented in Subsection (a) of this section,
the time period prescribed by Subsection (a) of this section shall
be suspended with respect to the amount of tax in issue in that
proceeding until such matters are finally determined, whereupon the
running of that period of time shall resume until finally expired.
(c) In the case of failure to file a return or pay the taxes due, the
commissioner of insurance may notify the comptroller of the failure
and the amount of taxes due, and the commissioner of insurance may
proceed in a court of competent jurisdiction for collection of the
tax at any time.
Sec. 9. Repealed by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(4),
eff. Sept. 1, 1989.
Quarterly prepayment of taxes
Sec. 10. A quarterly prepayment of the tax must be made on March 1,
May 15, August 15, and November 15 by all carriers or other persons
with net tax liability for the previous calendar year in excess of
$1,000. The tax paid on each date must equal one-fourth of the total
tax paid for the previous calendar year. Should no tax have been
paid during the previous calendar year, the quarterly payment shall
equal the tax which would be owed on the gross amount of
administrative or service fees received during the previous
calendar quarter ending March 31, June 30, September 30, or
December 31 at the tax rate specified by law. The State Board of
Insurance is authorized to certify for refund to the comptroller
any overpayment of taxes that results from the quarterly prepayment
system herein established.
Rules, regulations, standards, limitations
Sec. 11. The State Board of Insurance may establish any rules,
regulations, minimum standards, or limitations that are fair and
reasonable as may be appropriate for the augmentation and
implementation of this article.
Application of other laws
Sec. 12. The taxes imposed by this article, the insurance carrier,
and each person subject to this article, are also subject to
Articles 4.12, 4.13, 4.14, 4.15, and 4.16 of this code in the same
manner and to the same extent as they apply to taxes and taxpayers
subject to other provisions of this code to which those articles
apply.
Tax additional
Sec. 13. The tax imposed by this article is in addition to, and not
in lieu of, any other taxes imposed by law, and shall not be deemed
to be in conflict with any other such tax unless specifically
repealed by the legislature.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 5, art. 8, Sec. 1. Sec.
9 amended by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(4), eff.
Sept. 1, 1989; Secs. 1 and 2 amended by Acts 1997, 75th Leg., ch.
1423, Sec. 11.21, eff. Sept. 1, 1997; Sec. 4(c) amended by Acts
1997, 75th Leg., ch. 1423, Sec. 11.22, eff. Sept. 1, 1997; Secs. 7,
8 and 10 amended by Acts 1997, 75th Leg., ch. 1423, Sec. 11.23, eff.
Sept. 1, 1997.
Art. 4.11B. Reciprocal or Interinsurance Exchange
Sec. 1. In this article, "reciprocal exchange" means a reciprocal
or interinsurance exchange licensed to transact business in this
state.
Sec. 2. (a) There is imposed on each reciprocal exchange
transacting business in this state an annual tax equal to 1.7
percent of its gross premium receipts.
(b) Except for the tax rate, the amount of taxes imposed, and the
investment provisions, Article 4.10 of this code applies to the
imposition, computation, and administration of the tax imposed
under this article in the same manner that Article 4.10, Insurance
Code, applies to the taxes imposed under that article.
Added by Acts 1989, 71st Leg., ch. 242, Sec. 4, eff. June 12, 1989.
Art. 4.11C. Determination of Tax Applicable to Reciprocal Exchange;
Election
Sec. 1. In this article, "reciprocal exchange" has the meaning
assigned by Article 4.11B of this code.
Sec. 2. A reciprocal exchange may elect to be subject to the tax
imposed under Article 4.10 of this code, or to be subject to the tax
imposed under Article 4.11B of this code. A reciprocal exchange
that elects to be taxed under Article 4.10 of this code must file
with the comptroller not later than the 31st day before the day on
which the tax year for which the election is to be effective begins
a written statement on a form adopted by the comptroller stating
that an election has been made. If a reciprocal exchange does not
file an election as provided by this article or has withdrawn the
election, the reciprocal exchange is subject to the tax imposed
under Article 4.11B of this code.
Sec. 3. A reciprocal exchange that elects to be taxed under Article
4.10 of this code will continue to be taxed under that article for
each tax year until written notice is given to the comptroller that
the election to be taxed under that article is withdrawn. The
notice of withdrawal must be filed with the comptroller not later
than the 31st day before the beginning of the tax year for which the
withdrawal is to be effective.
Sec. 4. The comptroller by rule may adopt necessary forms and
procedures to carry out this article. The comptroller by rule may
change the dates for reporting and payment of taxes to improve
operating efficiencies within the agency, so long as a system of
semiannual prepayment of taxes imposed by this article is
maintained.
Sec. 5. The gross premiums of a reciprocal exchange are not subject
to a tax under Article 4.11B of this code if the premiums are taxed
under Article 4.10 of this code, and the gross premiums are not
subject to a tax under Article 4.10 of this code if the premiums are
taxed under Article 4.11B of this code.
Added by Acts 1989, 71st Leg., ch. 242, Sec. 4, eff. June 12, 1989.
Secs. 2 to 4 amended by Acts 1993, 73rd Leg., ch. 685, Sec. 3.13,
eff. Sept. 1, 1993.
Art. 4.12. Disposition of Certain Revenue
Receipts from the taxes imposed by Articles 4.10, 4.11, and 4.11B
and Sections 11 and 12 of Article 1.14-1 of this code shall be
deposited in the general revenue fund. An amount equal to
one-fourth (1/4) of this revenue shall be transferred to the
foundation school fund, and an amount equal to three-fourths (3/4)
of this revenue shall be credited to the general revenue fund.
Added by Acts 1981, 67th Leg., p. 1769, ch. 389, Sec. 4, eff. Jan. 1,
1982. Amended by Acts 1981, 67th Leg., p. 2778, ch. 752, Sec. 9(g),
eff. Jan. 1, 1982.
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 28, art. II, part B,
Sec. 11, eff. Sept. 1, 1984; Acts 1989, 71st Leg., ch. 242, Sec. 5,
eff. June 12, 1989.
Art. 4.17. Maintenance Tax on Gross Premiums
(a) The commissioner shall annually determine the rate of
assessment of a maintenance tax to be paid on an annual, semiannual,
or other periodic basis, as determined by the comptroller. The rate
of assessment may not exceed .04 percent of the correctly reported
gross premiums of life, health, and accident insurance coverages
and the gross considerations for annuity and endowment contracts
collected by all authorized insurers writing life, health, and
accident insurance, annuity, or endowment contracts in this state.
The comptroller shall collect the maintenance tax. For purposes of
this article, the gross premiums on which an assessment is based may
not include premiums received from the United States for insurance
contracted for by the United States in accordance with or in
furtherance of Title XVIII of the federal Social Security Act (42
U.S.C. Section 1395c et seq.) and its subsequent amendments.
(b) The tax required by this article is in addition to all other
taxes now imposed or that may be subsequently imposed and that are
not in conflict with this article.
(c) The commissioner, after taking into account the unexpended
funds produced by this tax, if any, shall adjust the rate of
assessment each year to produce the amount of funds that it
estimates will be necessary to pay all the expenses of regulating
life, health, and accident insurers during the succeeding year. In
making an estimate under this subsection, the commissioner shall
take into account the requirement that the general revenue fund be
reimbursed under Article 4.19 of this code.
(d) The taxes collected shall be deposited in the state treasury to
the credit of the general revenue fund to be reallocated to the
Texas Department of Insurance operating fund and shall be spent as
authorized by legislative appropriation on warrants issued by the
comptroller pursuant to duly certified requisitions of the
commissioner. Amounts reallocated to the Texas Department of
Insurance operating fund under this subsection may be transferred
to the general revenue fund in accordance with Article 4.19 of this
code.
(e) The comptroller may collect the tax assessed under this article
on a semiannual or other periodic basis from those insurers whose
tax liability under this article for the previous year was $2,000 or
more.
(f) The insurers subject to the tax imposed by this article include
stock and mutual insurance companies, local mutual aid
associations, statewide mutual assessment companies, group
hospital service plan corporations, and stipulated premium
insurance companies collecting those gross premiums and
considerations from residents of this state.
(g) The commissioner shall advise the comptroller of the applicable
rate of assessment no later than the date 45 days prior to the due
date of the tax return for the period for which such taxes are due.
If the commissioner has not advised the comptroller of the
applicable rate by such date, the applicable rate shall be the rate
applied in the previous tax period. If the commissioner advises the
comptroller of the applicable rate of assessment after taxes have
been assessed pursuant to this subsection, the comptroller shall:
(1) advise each taxpayer in writing of the amount of any additional
taxes due; or
(2) refund any excess taxes paid.
Added by Acts 1987, 70th Leg., ch. 249, Sec. 5, eff. Aug. 31, 1987.
Subsecs. (a), (c) to (e) amended and Subsec. (g) added by Acts 1993,
73rd Leg., ch. 685, Sec. 3.14, eff. Sept. 1, 1993; Subsec. (a)
amended by Acts 1997, 75th Leg., ch. 1040, Sec. 71, eff. Sept. 1,
1997; Subsec. (a) amended by Acts 2003, 78th Leg., ch. 198, Sec.
2.120(a), eff. Sept. 1, 2003.
Art. 4.18. Tax Administration Functions; Cooperation Between
Department and Comptroller
(a) The commissioner and the comptroller shall cooperate fully in
performing their respective duties under this code and other
insurance laws of this state.
(b) The department shall comply with all reasonable requests of the
comptroller relating to the sharing of information gathered or
compiled in connection with functions carried out under this code
or other insurance laws of this state.
(c) The department shall maintain the federal identification number
of all entities subject to regulation under this code or another
insurance law of this state and shall include the appropriate
number in any communication to or information shared with the
comptroller.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 3.15, eff. Sept. 1,
1993.
Art. 4.19. Tax Administration Functions; Reimbursement of General
Revenue Fund
(a) The department shall reimburse the general revenue fund for the
amount of expenses incurred by the comptroller in administering the
taxes imposed under this code or another insurance law of this state
in accordance with this article.
(b) The comptroller shall certify to the commissioner the total
amount of expenses estimated to be required to perform the
comptroller's duties under this code or another insurance law of
this state for each fiscal biennium. The comptroller shall provide
copies of the certification to the budget division of the
governor's office and to the Legislative Budget Board.
(c) The amount certified by the comptroller under Subsection (b) of
this article shall be transferred from the Texas Department of
Insurance operating fund to the general revenue fund. It is the
intent of the legislature that the money in the department's
operating fund that is to be transferred into the general revenue
fund under this subsection should reflect the revenues from the
various maintenance taxes paid by insurers under this code or other
insurance laws of this state.
(d) In setting the maintenance taxes for each fiscal year, the
commissioner shall ensure that the amount of the taxes imposed is
sufficient to fully reimburse the general revenue fund for the
expenses incurred by the comptroller in administering the taxes
imposed under this code and other insurance laws of this state. If
the amount of maintenance taxes collected is insufficient to
reimburse the general revenue fund for the expenses incurred by the
comptroller in administering the taxes imposed under this code and
other insurance laws of this state, other money in the department's
operating fund shall be used to reimburse the general revenue fund
in accordance with Subsection (b) of this article.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 3.15, eff. Sept. 1,
1993.
SUBCHAPTER B. PREMIUM TAX CREDIT FOR INVESTMENT IN CERTIFIED
CAPITAL COMPANY
Art. 4.51. Definitions
In this subchapter:
(1) "Affiliate" of another person means:
(A) a person who is an affiliate for purposes of Section 2, Article
21.49-1 of this code;
(B) a person who directly or indirectly:
(i) beneficially owns 10 percent or more of the outstanding voting
securities or other voting or management interests of the other
person, whether through rights, options, convertible interests, or
otherwise; or
(ii) controls or holds power to vote 10 percent or more of the
outstanding voting securities or other voting or management
interests of the other person;
(C) a person 10 percent or more of the outstanding voting securities
or other voting or management interests of which are directly or
indirectly:
(i) beneficially owned by the other person, whether through rights,
options, convertible interests, or otherwise; or
(ii) controlled or held with power to vote by the other person;
(D) a partnership in which the other person is a general partner;
or
(E) an officer, director, employee, or agent of the other person, or
an immediate family member of the officer, director, employee, or
agent.
(2) "Allocation date" means the date on which the certified
investors of a certified capital company are allocated premium tax
credits by the comptroller under this subchapter.
(3) "Certified capital" means an investment of cash by a certified
investor in a certified capital company that fully funds the
purchase price of an equity interest in the company or a qualified
debt instrument issued by the certified capital company.
(4) "Certified capital company" means a partnership, corporation,
or trust or limited liability company, whether organized on a
profit or not-for-profit basis, that has as its primary business
activity the investment of cash in qualified businesses and that is
certified as meeting the criteria of this subchapter.
(5) "Certified investor" means an insurance company or other person
that has state premium tax liability, other than a title insurance
company, that contributes certified capital pursuant to an
allocation of premium tax credits under this subchapter.
(6) "Early stage business" means a qualified business that
satisfies at least one of the following criteria:
(A) is involved, at the time of a certified capital company's first
investment, in activities related to the development of initial
product or service offerings, such as prototype development or
establishment of initial production or service processes;
(B) was initially organized less than two years before the date of
the certified capital company's first investment; or
(C) during the fiscal year immediately preceding the year of the
certified capital company's first investment had, on a consolidated
basis with its affiliates, gross revenues of not more than $2
million as determined in accordance with generally accepted
accounting principles.
(7) "Person" means a natural person or entity, including a
corporation, general or limited partnership, or trust or limited
liability company.
(8) "Premium tax credit allocation claim" means a claim for
allocation of premium tax credits.
(9) "Qualified business" means a business that, at the time of a
certified capital company's first investment in the business:
(A) is headquartered in this state and intends to remain in this
state after receipt of the investment by the certified capital
company;
(B) has its principal business operations located in this state and
intends to maintain business operations in this state after receipt
of the investment by the certified capital company;
(C) has agreed to use the qualified investment primarily to:
(i) support business operations in this state, other than
advertising, promotion, and sales operations which may be conducted
outside of this state; or
(ii) in the case of a start-up company, establish and support
business operations in this state, other than advertising,
promotion, and sales operations which may be conducted outside of
this state;
(D) has not more than 100 employees and:
(i) employs at least 80 percent of its employees in this state; or
(ii) pays 80 percent of its payroll to employees in this state;
(E) is primarily engaged in:
(i) manufacturing, processing, or assembling products;
(ii) conducting research and development; or
(iii) providing services; and
(F) is not primarily engaged in:
(i) retail sales;
(ii) real estate development;
(iii) the business of insurance, banking, or lending; or
(iv) the provision of professional services provided by
accountants, attorneys, or physicians.
(10) "Qualified debt instrument" means a debt instrument issued by
a certified capital company, at par value or a premium, that:
(A) has an original maturity date of at least five years after the
date of issuance;
(B) has a repayment schedule that is not faster than a level
principal amortization over five years; and
(C) has no interest, distribution, or payment features that are
related to the profitability of the certified capital company or
the performance of the certified capital company's investment
portfolio.
(11) "Qualified distribution" means any distribution or payment
from certified capital by a certified capital company in connection
with:
(A) the reasonable costs and expenses of forming, syndicating,
managing, and operating the company, provided that the distribution
or payment is not made directly or indirectly to a certified
investor, including:
(i) reasonable and necessary fees paid for professional services,
including legal and accounting services, related to the formation
and operation of the company; and
(ii) an annual management fee in an amount that does not exceed two
and one-half percent of the certified capital of the company; and
(B) any projected increase in federal or state taxes, including
penalties and interest related to state and federal income taxes,
of the equity owners of the company resulting from the earnings or
other tax liability of the company to the extent that the increase
is related to the ownership, management, or operation of the
company.
(12) "Qualified investment" means the investment of cash by a
certified capital company in a qualified business for the purchase
of any debt, debt participation, equity, or hybrid security of any
nature or description, including a debt instrument or security that
has the characteristics of debt but that provides for conversion
into equity or equity participation instruments such as options or
warrants.
(13) "State premium tax liability" means:
(A) any liability incurred by any person under Subchapter A of this
chapter; or
(B) if the tax liability imposed under Subchapter A of this chapter
on January 1, 2003, is eliminated or reduced, any tax liability
imposed on an insurance company or other person that had premium tax
liability under Subchapter A of this chapter on that date.
(14) "Strategic investment area" means an area of this state that
qualifies as a strategic investment area under Subchapter O,
Chapter 171, Tax Code, or, after the expiration of that subchapter,
an area that qualified as a strategic investment area under that
subchapter immediately before its expiration.
(15) "Strategic investment business" means a qualified business
that has its principal business operations located in one or more
strategic investment areas and intends to maintain business
operations in the strategic investment areas after receipt of the
investment by the certified capital company.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Subd. (2) amended by Acts 2003, 78th Leg., ch. 1310, Sec. 69, eff.
June 20, 2003; Subd. (13) amended by Acts 2003, 78th Leg., ch.
1310, Sec. 69, eff. June 20, 2003.
Art. 4.52. Duties of Comptroller; Rules; Implementation
The comptroller shall administer this subchapter and shall adopt
rules and forms as necessary to implement this subchapter. The
rules must provide that:
(1) the comptroller shall begin accepting applications for
certification as a certified capital company not later than the
30th day after the date the rules are adopted; and
(2) the comptroller shall accept premium tax credit allocation
claims on behalf of certified investors on a date not later than the
120th day after the date the rules are adopted.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 70, eff. June 20,
2003.
Art. 4.53. Certification
(a) The comptroller by rule shall establish the application
procedures for certified capital companies.
(b) An applicant must file an application in the form prescribed by
the comptroller accompanied by a nonrefundable application fee of
$7,500. The application must include an audited balance sheet of
the applicant, with an unqualified opinion from an independent
certified public accountant, as of a date not more than 35 days
before the date of the application.
(c) To qualify as a certified capital company:
(1) the applicant must have, at the time of application for
certification, an equity capitalization of at least $500,000 in the
form of unencumbered cash or cash equivalents;
(2) at least two principals or persons employed to manage the funds
of the applicant must have at least four years of experience in the
venture capital industry; and
(3) the applicant must satisfy any additional requirement imposed
by the comptroller by rule.
(d) The comptroller shall review the application, organizational
documents, and business history of each applicant and shall ensure
that the applicant satisfies the requirements of this subchapter.
(e) Not later than the 30th day after the date an application is
filed, the comptroller shall:
(1) issue the certification; or
(2) refuse to issue the certification and communicate in detail to
the applicant the grounds for the refusal, including suggestions
for the removal of those grounds.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.54. Management by Certain Entities Prohibited
(a) An insurance company, group of insurance companies, or other
persons who may have state premium tax liability or the affiliates
of the insurance companies or other persons may not, directly or
indirectly:
(1) manage a certified capital company;
(2) beneficially own, whether through rights, options, convertible
interests, or otherwise, more than 10 percent of the outstanding
voting securities of a certified capital company; or
(3) control the direction of investments for a certified capital
company.
(b) Subsection (a) of this article applies without regard to
whether the insurance company or other person or the affiliate of
the insurance company or other person is licensed by or transacts
business in this state.
(c) This article does not preclude a certified investor, insurance
company, or any other party from exercising its legal rights and
remedies, including interim management of a certified capital
company, if authorized by law, with respect to a certified capital
company that is in default of its statutory or contractual
obligations to the certified investor, insurance company, or other
party.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.55. Offering Material Used by Certified Capital Company
Any offering material involving the sale of securities of the
certified capital company must include the following statement:
By authorizing the formation of a certified capital company, the
State of Texas does not endorse the quality of management or the
potential for earnings of the company and is not liable for damages
or losses to a certified investor in the company. Use of the word
"certified" in an offering does not constitute a recommendation or
endorsement of the investment by the comptroller of public
accounts. If applicable provisions of law are violated, the State
of Texas may require forfeiture of unused premium tax credits and
repayments of used premium tax credits.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.56. Requirements for Continuance of Certification
(a) To continue to be certified, a certified capital company shall
make qualified investments according to the following schedule:
(1) before the third anniversary of its allocation date, a company
must have made qualified investments in an amount cumulatively
equal to at least 30 percent of its certified capital; and
(2) before the fifth anniversary of its allocation date, a company
must have made qualified investments in an amount cumulatively
equal to at least 50 percent of its certified capital, subject to
Subsection (b) of this article.
(b) At least 50 percent of the amount of qualified investments
required by Subsection (a)(2) of this article must be placed in
early stage businesses. At least 30 percent of the amount of
qualified investments required by Subsections (a)(1) and (2) of
this article must be placed in a strategic investment business.
(c) The aggregate cumulative amount of all qualified investments
made by the certified capital company after its allocation date
shall be considered in the computation of the percentage
requirements under this subchapter. Any proceeds received from a
qualified investment may be invested in another qualified
investment and count toward any requirement in this subchapter with
respect to investments of certified capital.
(d) Nothing in this subchapter shall limit an insurance company's
ownership of nonvoting equity interests in a certified capital
company.
(e) A business that is classified as a qualified business at the
time of the first investment in the business by a certified capital
company remains classified as a qualified business and may receive
follow-on investments from any certified capital company. Except
as provided by this subsection, a follow-on investment made under
this subsection is a qualified investment even though the business
may not meet the definition of a qualified business at the time of
the follow-on investment. A follow-on investment does not qualify
as a qualified investment if, at the time of the follow-on
investment, the qualified business no longer has its principal
business operations in this state.
(f) A qualified investment may not be made at a cost to a certified
capital company greater than 15 percent of the total certified
capital of the company at the time of investment.
(g) If, before the 90th day after the date that a certified capital
company makes an investment in a qualified business, the qualified
business moves its principal business operations from this state,
the investment may not be considered a qualified investment for
purposes of the percentage requirements under this subchapter.
(h) A certified capital company shall invest any certified capital
not invested in qualified investments only in the following:
(1) cash deposited with a federally insured financial institution;
(2) certificates of deposit in a federally insured financial
institution;
(3) investment securities that are obligations of the United States
or its agencies or instrumentalities or obligations that are
guaranteed fully as to principal and interest by the United States;
(4) debt instruments rated at least "A" or its equivalent by a
nationally recognized credit rating organization, or issued by, or
guaranteed with respect to payment by, an entity whose unsecured
indebtedness is rated at least "A" or its equivalent by a nationally
recognized credit rating organization, and which indebtedness is
not subordinated to other unsecured indebtedness of the issuer or
the guarantor;
(5) obligations of this state or any municipality or political
subdivision of this state; or
(6) any other investments approved in advance and in writing by the
comptroller.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.57. Evaluation of Business by Comptroller
(a) A certified capital company may, before making an investment in
a business, request from the comptroller a written opinion as to
whether the business in which it proposes to invest is a qualified
business, an early stage business, or a strategic investment
business.
(b) The comptroller shall, not later than the 15th business day
after the date of the receipt of a request under Subsection (a) of
this article, determine whether the business meets the definition
of a qualified business, an early stage business, or a strategic
investment business, as applicable, and notify the certified
capital company of the determination and an explanation of its
determination or notify the certified capital company that an
additional 15 days will be needed to review and make the
determination.
(c) If the comptroller fails to notify the certified capital
company with respect to the proposed investment within the period
specified by Subsection (b) of this article, the business in which
the company proposes to invest is considered to be a qualified
business, early stage business, or a strategic investment business,
as appropriate.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.58. Reports to Comptroller; Audited Financial Statement
(a) Each certified capital company shall report to the comptroller
as soon as practicable after the receipt of certified capital:
(1) the name of each certified investor from whom the certified
capital was received, including the certified investor's insurance
premium tax identification number;
(2) the amount of each certified investor's investment of certified
capital and premium tax credits; and
(3) the date on which the certified capital was received.
(b) Not later than January 31 of each year, each certified capital
company shall report to the comptroller:
(1) the amount of the company's certified capital at the end of the
preceding year;
(2) whether or not the company has invested more than 15 percent of
its total certified capital in any one business;
(3) each qualified investment that the company made during the
preceding year and, with respect to each qualified investment, the
number of employees of the qualified business at the time the
qualified investment was made; and
(4) any other information required by the comptroller, including
any information required by the comptroller to comply with Article
4.73 of this code.
(c) Not later than April 1 of each year, the company shall provide
to the comptroller an annual audited financial statement that
includes the opinion of an independent certified public accountant.
The audit shall address the methods of operation and conduct of the
business of the company to determine whether:
(1) the company is complying with this subchapter and the rules
adopted under this subchapter;
(2) the funds received by the company have been invested as required
within the time provided by Article 4.56(a) of this code; and
(3) the company has invested the funds in qualified businesses.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.59. Renewal
(a) Not later than January 31 of each year, each certified capital
company shall pay a nonrefundable renewal fee of $5,000 to the
comptroller. If a certified capital company fails to pay its
renewal fee on or before that date, the company must pay, in
addition to the renewal fee, a late fee of $5,000 to continue its
certification.
(b) Notwithstanding Subsection (a) of this article, a renewal fee
is not required within six months of the date on which the company's
certification is issued under Article 4.53 of this code.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.60. Distributions; Repayment of Debt
(a) A certified capital company may make a qualified distribution
at any time. To make a distribution or payment, other than a
qualified distribution, a company must have made qualified
investments in an amount cumulatively equal to 100 percent of its
certified capital.
(b) Notwithstanding Subsection (a) of this article, a company may
make repayments of principal and interest on its indebtedness
without any restriction, including repayments of indebtedness of
the company on which certified investors earned premium tax
credits.
(c) If a business in which a qualified investment is made relocates
its principal business operations to another state during the term
of the certified capital company's investment in the business, the
cumulative amount of qualified investments made by the certified
capital company for purposes of satisfying the requirements of
Subsection (a) of this article only is reduced by the amount of the
certified capital company's qualified investments in the business
that has relocated. This subsection does not apply if the business
demonstrates that it has returned its principal business operations
to this state not later than the 90th day after the date of its
relocation.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.61. Annual Review; Decertification
(a) The comptroller shall conduct an annual review of each
certified capital company to:
(1) ensure that the company continues to satisfy the requirements
of this subchapter and that the company has not made any investment
in violation of this subchapter; and
(2) determine the eligibility status of its qualified investments.
(b) The cost of the annual review shall be paid by each certified
capital company according to a reasonable fee schedule adopted by
the comptroller.
(c) A material violation of Article 4.56, 4.58, or 4.59 of this code
is grounds for decertification of the certified capital company.
If the comptroller determines that a company is not in compliance
with Article 4.56, 4.58, or 4.59 of this code, the comptroller shall
notify the officers of the company in writing that the company may
be subject to decertification after the 120th day after the date of
mailing of the notice, unless the deficiencies are corrected and
the company returns to compliance with those articles.
(d) The comptroller may decertify a certified capital company,
after opportunity for hearing, if the comptroller finds that the
company is not in compliance with Article 4.56, 4.58, or 4.59 of
this code at the end of the period established by Subsection (c) of
this article. Decertification under this subsection is effective
on receipt of notice of decertification by the company. The
comptroller shall notify any appropriate state agency of the
decertification.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.62. Administrative Penalty
(a) The comptroller may impose an administrative penalty on a
certified capital company that violates this subchapter.
(b) The amount of the penalty may not exceed $25,000, and each day a
violation continues or occurs is a separate violation for the
purpose of imposing a penalty. The amount of the penalty shall be
based on:
(1) the seriousness of the violation, including the nature,
circumstances, extent, and gravity of the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
(c) Certified capital companies assessed penalties under this
subchapter may request a redetermination as provided in Chapter
111, Tax Code.
(d) The attorney general may sue to collect the penalty.
(e) A proceeding to impose the penalty is considered to be a
contested case under Chapter 2001, Government Code.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.63. Recapture and Forfeiture of Premium Tax Credits:
Decertification of Company
(a) Decertification of a certified capital company may cause the
recapture of premium tax credits previously claimed and the
forfeiture of future premium tax credits to be claimed by certified
investors with respect to the company, as follows:
(1) decertification of a company on or before the third anniversary
of its allocation date causes the recapture of any premium tax
credit previously claimed and the forfeiture of any future premium
tax credit to be claimed by a certified investor with respect to the
company;
(2) for a company that meets the requirements for continued
certification under Article 4.56(a)(1) of this code and
subsequently fails to meet the requirements for continued
certification under Article 4.56(a)(2) of this code, any premium
tax credit that has been or will be taken by a certified investor on
or before the third anniversary of the allocation date is not
subject to recapture or forfeiture, but any premium tax credit that
has been or will be taken by a certified investor after the third
anniversary of the allocation date of the company is subject to
recapture or forfeiture;
(3) for a company that has met the requirements for continued
certification under Articles 4.56(a)(1) and (2) of this code and is
subsequently decertified, any premium tax credit that has been or
will be taken by a certified investor on or before the fifth
anniversary of the allocation date is not subject to recapture or
forfeiture, but any premium tax credit to be taken after the fifth
anniversary of the allocation date is subject to forfeiture only if
the company is decertified on or before the fifth anniversary of its
allocation date; and
(4) for a company that has invested an amount cumulatively equal to
100 percent of its certified capital in qualified investments, any
premium tax credit claimed or to be claimed by a certified investor
is not subject to recapture or forfeiture under this article.
(b) The comptroller shall send written notice to the address of each
certified investor whose premium tax credit is subject to recapture
or forfeiture, using the address shown on the last premium tax
filing.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.64. Indemnity Agreements and Insurance Authorized
A certified capital company may agree to indemnify, or purchase
insurance for the benefit of, a certified investor for losses
resulting from the recapture or forfeiture of premium tax credits
under Article 4.63 of this code. Any guaranty, indemnity, bond,
insurance policy, or other payment undertaking made under this
article may not be provided by more than one certified investor of
the certified capital company or affiliate of the certified
investor.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.65. Premium Tax Credit
(a) A certified investor who makes an investment of certified
capital shall in the year of investment earn a vested credit against
state premium tax liability equal to 100 percent of the certified
investor's investment of certified capital, subject to the limits
imposed by this subchapter. Beginning with the tax report due March
1, 2009, for the 2008 tax year, a certified investor may take up to
25 percent of the vested premium tax credit in any taxable year of
the certified investor. The credit may not be applied to estimated
payments due in 2008.
(b) The credit to be applied against state premium tax liability in
any one year may not exceed the state premium tax liability of the
certified investor for the taxable year. Any unused credit against
state premium tax liability may be carried forward indefinitely
until the premium tax credits are used.
(c) A certified investor claiming a credit against state premium
tax liability earned through an investment in a company is not
required to pay any additional retaliatory tax levied under Article
21.46 of this code as a result of claiming that credit. An
investment made under this subchapter is a "Texas investment" for
purposes of Subchapter A of this chapter.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Subsec. (a) amended by Acts 2003, 78th Leg., ch. 1310, Sec. 71, eff.
June 20, 2003.
Art. 4.66. Premium Tax Credit Allocation Claim Form
(a) A premium tax credit allocation claim must be prepared and
executed by a certified investor on a form provided by the
comptroller. The certified capital company must file the claim
with the comptroller on the date on which the comptroller accepts
premium tax credit allocation claims on behalf of certified
investors under rules adopted under Article 4.52(2) of this code.
The premium tax credit allocation claim form must include an
affidavit of the certified investor under which the certified
investor becomes legally bound and irrevocably committed to make an
investment of certified capital in a certified capital company in
the amount allocated even if the amount allocated is less than the
amount of the claim, subject only to the receipt of an allocation
under Article 4.68 of this code.
(b) A certified investor may not claim a premium tax credit under
Article 4.65 of this code for an investment that has not been
funded, even if the certified investor has committed to fund the
investment.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Subsec. (a) amended by Acts 2003, 78th Leg., ch. 1310, Sec. 72, eff.
June 20, 2003.
Art. 4.67. Total Limit on Credits
(a) The total amount of certified capital for which premium tax
credits may be allowed under this subchapter for all years in which
premium tax credits are allowed is $200 million.
(b) The total amount of certified capital for which premium tax
credits may be allowed for all certified investors under this
subchapter may not exceed the amount that would entitle all
certified investors in certified capital companies to take total
credits of $50 million in a year.
(c) A certified capital company and its affiliates may not file
premium tax credit allocation claims in excess of the maximum
amount of certified capital for which premium tax credits may be
allowed as provided in this article.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 73, eff. June 20,
2003.
Art. 4.68. Pro Rata Allocation of Credits
(a) If the total premium tax credits claimed by all certified
investors exceeds the total limits on premium tax credits
established by Article 4.67(a) of this code, the comptroller shall
allocate the total amount of premium tax credits allowed under this
subchapter to certified investors in certified capital companies on
a pro rata basis in accordance with this article.
(b) The pro rata allocation for each certified investor shall be the
product of:
(1) a fraction, the numerator of which is the amount of the premium
tax credit allocation claim filed on behalf of the investor and the
denominator of which is the total amount of all premium tax credit
allocation claims filed on behalf of all certified investors; and
(2) the total amount of certified capital for which premium tax
credits may be allowed under this subchapter.
(c) Not later than the 15th day after the date on which the
comptroller accepts premium tax credit allocation claims on behalf
of certified investors under rules adopted under Article 4.52(2) of
this code, the comptroller shall notify each certified capital
company of the amount of tax credits allocated to each certified
investor. Each certified capital company shall notify each
certified investor of their premium tax credit allocation.
(d) If a certified capital company does not receive an investment of
certified capital equaling the amount of premium tax credits
allocated to a certified investor for which it filed a premium tax
credit allocation claim before the end of the 10th business day
after the date of receipt of notice of allocation, the company shall
notify the comptroller by overnight common carrier delivery service
and that portion of capital allocated to the certified investor
shall be forfeited. The comptroller shall reallocate the forfeited
capital among the certified investors in the other certified
capital companies that originally received an allocation so that
the result after reallocation is the same as if the initial
allocation under this article had been performed without
considering the premium tax credit allocation claims that were
subsequently forfeited.
(e) The maximum amount of certified capital for which premium tax
credit allocation may be allowed on behalf of any one certified
investor and its affiliates, whether by one or more certified
capital companies, may not exceed the greater of:
(1) $10 million; or
(2) 15 percent of the maximum aggregate amount available under
Article 4.67(a) of this code.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Subsec. (c) amended by Acts 2003, 78th Leg., ch. 1310, Sec. 74, eff.
June 20, 2003.
Art. 4.69. Treatment of Credits and Capital
In any case under this code or another insurance law of this state
in which the assets of a certified investor are examined or
considered, the certified capital may be treated as an admitted
asset, subject to the applicable statutory valuation procedures.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.70. Impact of Tax Credits Claimed by a Certified Investor on
Insurance Rates
A certified investor is not required to reduce the amount of premium
tax included by the investor in connection with ratemaking for any
insurance contract written in this state because of a reduction in
the investor's Texas premium tax derived from the credit granted
under this subchapter.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.71. Transferability of Credit
(a) The comptroller shall adopt rules to facilitate the transfer or
assignment of premium tax credits by certified investors. A
certified investor may transfer or assign premium tax credits only
in compliance with the rules adopted under this subsection.
(b) The transfer or assignment of a premium tax credit does not
affect the schedule for taking the premium tax credit under this
subchapter.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.72. Promotion
The Texas Department of Economic Development shall promote the
program established under this subchapter in the Texas Business and
Community Economic Development Clearinghouse.
Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.
Art. 4.73. Report to Legislature
(a) The comptroller shall prepare a biennial report with respect to
results of the implementation of this subchapter. The report must
include:
(1) the number of certified capital companies holding certified
capital;
(2) the amount of certified capital invested in each certified
capital company;
(3) the amount of certified capital the certified capital company
has invested in qualif
