1-1 By: Montford S.B. No. 641
1-2 (In the Senate - Filed February 17, 1995; February 20, 1995,
1-3 read first time and referred to Committee on Finance;
1-4 April 3, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; April 3, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 641 By: Montford
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to administration and collection of certain insurance
1-11 taxes.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 12, Article 1.14-1, Insurance Code, as
1-14 amended by Section 3.05, Chapter 685, and Section 7, Chapter 999,
1-15 Acts of the 73rd Legislature, 1993, is reenacted to reconcile the
1-16 amendments made by those acts and amended to read as follows:
1-17 Sec. 12. Independently procured insurance tax. (a) Every
1-18 insured who procures <or causes to be procured or continues or
1-19 renews> insurance in accordance with Section 2(b)4 of this Article
1-20 must <with any unauthorized insurer, or any insured or self-insurer
1-21 who so procures or continues excess loss, catastrophe or other
1-22 insurance, upon a subject of insurance resident, located or to be
1-23 performed within this state, other than insurance procured through
1-24 a surplus lines agent pursuant to the surplus lines law of this
1-25 state shall, within 60 days after the date such insurance was so
1-26 procured, continued or renewed or before a date prescribed by the
1-27 comptroller,> file a report <of the same> with the comptroller and
1-28 pay an independently procured insurance tax of 4.85 percent <in
1-29 writing and upon forms designated by the comptroller and furnished
1-30 to such an insured upon request. The report shall show the name
1-31 and address of the insured or insureds, name and address of the
1-32 insurer, the subject of the insurance, a general description of the
1-33 coverage, the amount of premium currently charged therefor, and
1-34 such additional pertinent information as is reasonably requested by
1-35 the comptroller>.
1-36 (b) <A report must be filed with the comptroller within 60
1-37 days after the date the insurance was independently procured or
1-38 before a date prescribed by the comptroller. The report must be
1-39 made in writing on forms provided by the comptroller. The report
1-40 must contain the name and address of the insured or insureds, the
1-41 name and address of the insurer, the subject of the insurance, a
1-42 general description of the coverage, the amount of premium charged,
1-43 and any additional information which the comptroller requests.>
1-44 <(c)> The report shall be filed and any tax due shall be
1-45 paid by the insured or by any other person designated by the
1-46 insured. The report and tax are due on or before March 1 of the
1-47 calendar year after the calendar year in which the insurance was
1-48 procured, continued, or renewed or on another date prescribed by
1-49 the comptroller <There is hereby levied upon the obligation, chose
1-50 in action, or right represented by the premium charged for such
1-51 insurance, a premium receipts tax of 3.85 percent of gross premiums
1-52 charged for such insurance. The term "premium" shall include all
1-53 premiums, membership fees, assessments, dues and any other
1-54 consideration for insurance. Such tax shall be in lieu of all
1-55 other insurance taxes. The insured shall, before March 1 next
1-56 succeeding the calendar year in which the insurance was so
1-57 procured, continued or renewed or another date prescribed by the
1-58 comptroller, pay the amount of the tax to the comptroller, on a
1-59 form prescribed by the comptroller. In event of cancellation and
1-60 rewriting of any such insurance contract the additional premium for
1-61 premium receipts tax purposes shall be the premium in excess of the
1-62 unearned premium of the canceled insurance contract>.
1-63 (c) <(d)> If a policy covers risks or exposures only
1-64 partially in this state, the tax payable shall be computed on the
1-65 portions of the premium which are properly allocated <allocable> to
1-66 the risks or exposures located in this state<. In determining the
1-67 amount of premiums taxable in this state, all premiums written,
1-68 procured or received in this state and all premiums on policies
2-1 negotiated in this state shall be deemed written on property or
2-2 risks located or resident in this state, except such premiums as
2-3 are properly allocated or apportioned and reported as taxable
2-4 premiums of any other state or states. Premiums on risks or
2-5 exposures which are properly allocated to federal waters,
2-6 international waters or under the jurisdiction of a foreign
2-7 government shall not be taxable>.
2-8 (d) <(e)> If the insured fails to withhold from the premium
2-9 the amount of tax herein levied, the insured shall be liable for
2-10 the amount thereof and shall pay the same to the comptroller within
2-11 the time stated in Subsection (b) <Paragraph (c)>. If the tax
2-12 prescribed by this subsection is not paid within the time stated in
2-13 Subsection (b) <Paragraph (c)>, Subtitles A and B, Title 2, Tax
2-14 Code, <and their subsequent amendments,> apply.
2-15 (e) <(g)> This section shall not be construed or deemed to
2-16 abrogate or modify any provision of this Article. This section
2-17 does not apply as to individual life or individual disability
2-18 insurance.
2-19 SECTION 2. Subsection (a), Section 12, Article 1.14-2,
2-20 Insurance Code, is amended to read as follows:
2-21 (a) The premiums charged for surplus lines insurance are
2-22 subject to a premium receipts tax of 4.85 percent of gross premiums
2-23 charged for such insurance. The term premium includes all
2-24 premiums, membership fees, assessments, dues or any other
2-25 consideration for insurance. Such tax shall be in lieu of all
2-26 other insurance taxes. The surplus lines agent shall collect from
2-27 the insured the amount of the tax at the time of delivery of the
2-28 cover note, certificate of insurance, policy or other initial
2-29 confirmation of insurance, in addition to the full amount of the
2-30 gross premium charged by the insurer for the insurance. No agent
2-31 shall absorb such tax nor shall any agent, as an inducement for
2-32 insurance or for any other reason, rebate all or any part of such
2-33 tax or his commission. The surplus lines agent shall report to the
2-34 comptroller on or before March 1 <within 30 days from the 1st day
2-35 of January and July> of each year the amount of gross premiums
2-36 received <paid> for such insurance placed through an eligible
2-37 surplus lines insurer during the calendar year ending on the
2-38 preceding December 31 <him in nonlicensed insurers,> and shall pay
2-39 to the comptroller the tax as provided for by this Article. If a
2-40 surplus lines policy covers risks or exposures only partially in
2-41 this state, the tax payable shall be computed on the portions of
2-42 the premium which are properly allocated <allocable> to the risks
2-43 or exposures located in this state. In determining the amount of
2-44 premiums taxable in this state, all premiums written, procured, or
2-45 received in this state and all premiums on policies negotiated in
2-46 this state shall be deemed written on property or risks located or
2-47 resident in this state, except such premiums as are properly
2-48 allocated or apportioned and reported as premiums which may be
2-49 subject to taxation by any other state or states <or by a foreign
2-50 jurisdiction>. Premiums that are properly allocated to any other
2-51 state or states that are specifically exempt from taxation under
2-52 the regulations of that state or states are not taxable in this
2-53 state. Premiums on risks or exposures which are properly allocated
2-54 to federal waters, international waters or under the jurisdiction
2-55 of a foreign government shall not be taxable by this state. In
2-56 event of cancellation and rewriting of any surplus lines insurance
2-57 contract the additional premium for premium receipts tax purposes
2-58 shall be the premium in excess of the unearned premium of the
2-59 canceled insurance contract.
2-60 SECTION 3. Section 5, Article 4.10, Insurance Code, is
2-61 amended to read as follows:
2-62 Sec. 5. GROSS PREMIUM RECEIPTS DEFINED. Gross premium
2-63 receipts referred to herein are the total gross amount of premiums
2-64 actually written during <received for> the taxable year on each and
2-65 every kind of insurance or risk written upon property or risks
2-66 located in the State of Texas (except premium receipts under
2-67 Section 2), except premiums actually written by <received from>
2-68 other licensed companies for reinsurance, less return premiums and
2-69 dividends paid policyholders with no deduction for premiums paid
2-70 for reinsurance.
3-1 SECTION 4. Article 8.21, Insurance Code, is amended to read
3-2 as follows:
3-3 Art. 8.21. FEES. The department <Board> shall charge for
3-4 filing the annual statement required by this chapter, a fee of
3-5 Twenty ($20.00) Dollars. The comptroller shall collect the fee.
3-6 SECTION 5. Article 16.22, Insurance Code, is amended to read
3-7 as follows:
3-8 Art. 16.22. FEES. (a) For the renewal and extension of the
3-9 granting of any charter, the department <Board> shall charge and
3-10 collect a filing fee of Ten ($10.00) Dollars and a like amount for
3-11 any amendment to the charter of any such company.
3-12 (b) The department <Board> shall charge and collect a fee of
3-13 One ($1.00) Dollar for the issuance of a certificate of authority
3-14 or renewal thereof to all companies operating under this chapter.
3-15 The department<, and for filing such annual statement required by
3-16 the Board, it> shall charge a filing fee of Twenty ($20.00) Dollars
3-17 for filing an annual statement required by the department. The
3-18 comptroller shall collect the annual statement filing fee. <Fees
3-19 collected under this article shall be deposited in the State
3-20 Treasury to the credit of the State Board of Insurance operating
3-21 fund. Article 1.31A of this code applies to fees collected under
3-22 this article.>
3-23 SECTION 6. Article 17.21, Insurance Code, is amended to read
3-24 as follows:
3-25 Art. 17.21. FEES. (a) The department <Board> shall charge
3-26 and collect a fee of One ($1.00) Dollar for the issuance of a
3-27 certificate of authority or renewal thereof to all companies
3-28 operating under this chapter.
3-29 (b) The department<, and for filing each annual statement,
3-30 it> shall charge a filing fee of Twenty ($20.00) Dollars for filing
3-31 each annual statement. The comptroller shall collect the filing
3-32 fee.
3-33 SECTION 7. Article 19.11, Insurance Code, is amended to read
3-34 as follows:
3-35 Art. 19.11. FEES AND TAXES. The schedule of fees set out in
3-36 Article 4.07 of this Code, so far as pertinent, shall apply to
3-37 reciprocal exchanges and their attorneys in fact. Said exchanges
3-38 shall be subject to the provisions of Articles <Article 7064 and of
3-39 Article 7064a of the Revised Civil Statutes of Texas and of
3-40 Article> 4.02, <and of Article> 4.04, 4.10, 4.11, <and of Article>
3-41 5.12, <and of Article> 5.24, <and of Article> 5.49, and <of
3-42 Article> 5.68 of this Code. The comptroller shall collect the
3-43 taxes and the annual statement filing fee.
3-44 SECTION 8. Subsection (a), Section 32, Texas Health
3-45 Maintenance Organization Act (Article 20A.32, Vernon's Texas
3-46 Insurance Code), is amended by adding Subdivision (4) to read as
3-47 follows:
3-48 (4) Notwithstanding Subdivision (1) of this
3-49 subsection, the comptroller shall collect the annual report filing
3-50 fee prescribed by Subdivision (1)(B) of this subsection.
3-51 SECTION 9. Subsection A, Article 21.46, Insurance Code, is
3-52 amended to read as follows:
3-53 A. RETALIATORY TAX: Whenever by the laws of any other state
3-54 or territory of the United States any taxes, including income and
3-55 corporate franchise, licenses, fees, fines, penalties, deposit
3-56 requirements or other obligations, prohibitions or restrictions are
3-57 imposed upon any insurance company organized in this State and
3-58 licensed and actually doing business in such other state or
3-59 territory which, in the aggregate are in excess of the aggregate of
3-60 the taxes, including income and corporate franchise, licenses,
3-61 fees, fines, penalties, deposit requirements or other obligations,
3-62 prohibitions or restrictions directly imposed upon a similar
3-63 insurance company of such other state or territory doing business
3-64 in this State, the comptroller <State Board of Insurance> shall
3-65 impose upon and collect from any similar company of such state or
3-66 territory in the same manner and for the same purpose, the same
3-67 taxes, licenses, fees, fines, penalties, deposit requirements or
3-68 other obligations, prohibitions or restrictions; provided, however,
3-69 the aggregate of taxes, licenses, fees, fines, penalties or other
3-70 obligations imposed by this State pursuant to this Article on an
4-1 insurance company of another state or territory shall not exceed
4-2 the aggregate of such charges imposed by such other state or
4-3 territory on a similar insurance company of this State actually
4-4 licensed and doing business therein; provided, further, that
4-5 wherever under any law of this State the basic rate of taxation of
4-6 any insurance company of another state or territory is reduced if
4-7 any such insurance company has made investments in Texas securities
4-8 then in computing the aggregate Texas premium tax burdens of any
4-9 such insurance company of any other state or territory each shall
4-10 for purposes of comparison with the premium tax laws of its home
4-11 state be considered to have assumed and paid an aggregate premium
4-12 tax burden equal to the basic rate; provided, further, that for the
4-13 purpose of this Section, an alien insurer shall be deemed a company
4-14 of the State designated by it wherein it has
4-15 (a) established its principal office or agency in the
4-16 United States, or
4-17 (b) maintains the largest amount of its assets held in
4-18 trust or on deposit for the security of its policyholders or
4-19 policyholders and creditors in the United States, or
4-20 (c) in which it was admitted to do business in the
4-21 United States.
4-22 The tax <Licenses and fees> collected by the comptroller
4-23 <State Board of Insurance> under this Article shall be deposited in
4-24 the State Treasury to the credit of the general revenue fund. The
4-25 comptroller shall prescribe the due date for the filing of the
4-26 report and payment of the tax under this Article.
4-27 The provisions of this Section shall not apply to ad valorem
4-28 taxes on real or personal property or to personal income taxes.
4-29 The provisions of this Act shall not apply to a company of
4-30 any other state doing business in this State if fifteen per cent
4-31 (15%) or more of the voting stock of said company is owned by a
4-32 corporation organized under the laws of this State, and domiciled
4-33 in this State; however, the prior provisions of this Act shall
4-34 apply without exception to any and all person or persons, company
4-35 or companies, firm or firms, association or associations, group or
4-36 groups, corporation or corporations, or any insurance organization
4-37 or organizations of any kind, which did not qualify as a matter of
4-38 fact, under the exception of this paragraph, on or before January
4-39 29, 1957.
4-40 SECTION 10. Article 23.08, Insurance Code, is amended to
4-41 read as follows:
4-42 Art. 23.08. FEES. The commissioner shall charge a fee
4-43 determined by the commissioner in an amount not to exceed $400 for
4-44 filing the annual statement of each corporation operating under
4-45 this chapter; an application fee determined by the commissioner in
4-46 an amount not to exceed $3,000 for each corporation applying under
4-47 this chapter which includes the fee for the issuance of a
4-48 certificate of authority; and a fee determined by the commissioner
4-49 in an amount not to exceed $100 for the issuance of each additional
4-50 certificate of authority and amendment of a certificate of
4-51 authority to the corporation. The commissioner shall, within the
4-52 limits fixed by this article, prescribe the fees to be charged
4-53 under this article. The comptroller shall collect the annual
4-54 statement filing fee <fees collected by the commissioner under this
4-55 article shall be deposited in the State Treasury to the credit of
4-56 the Texas Department of Insurance operating fund, and Article 1.31A
4-57 of this code applies to fees collected under this article>.
4-58 SECTION 11. This Act takes effect September 1, 1995, and
4-59 applies to a fee or tax that becomes due on or after that date. A
4-60 fee or tax imposed that becomes due before the effective date of
4-61 this Act is governed by the law in existence when the fee or tax
4-62 became due, and that law is continued in effect for that purpose.
4-63 SECTION 12. The importance of this legislation and the
4-64 crowded condition of the calendars in both houses create an
4-65 emergency and an imperative public necessity that the
4-66 constitutional rule requiring bills to be read on three several
4-67 days in each house be suspended, and this rule is hereby suspended.
4-68 * * * * *