1-1 By: Brimer (Senate Sponsor - Ratliff) H.B. No. 1837
1-2 (In the Senate - Received from the House April 23, 1999;
1-3 April 26, 1999, read first time and referred to Committee on
1-4 Finance; May 12, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; May 12, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1837 By: Ratliff
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to certain insurance taxes.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 12, Article 1.14-1, Insurance Code, is
1-13 amended by adding Subsection (f) to read as follows:
1-14 (f) In this section, "premium" includes any premium,
1-15 membership fee, dues, or other consideration for insurance.
1-16 SECTION 2. Section 10, Article 4.10, Insurance Code, is
1-17 amended to read as follows:
1-18 Sec. 10. RATE OF TAX. There is imposed on each [such]
1-19 insurance carrier subject to this article an annual tax equal to
1-20 1.6 percent [3.5%] of its premium receipts. [Any insurance carrier
1-21 may qualify for a tax rate lower than the 3.5% imposed by this
1-22 article. Such qualification for a lower rate can be accomplished
1-23 in the following two ways:]
1-24 [(a) If such insurance carrier for the year ending
1-25 December 31 preceding owns Texas investments in an amount in total
1-26 value which is not less than 85% nor more than 90% of the amount
1-27 such insurance carrier owned in the comparison state in similar
1-28 investments as herein defined, the tax imposed shall be equal to
1-29 2.4% of its gross premium receipts.]
1-30 [(b) If such insurance carrier for the year ending
1-31 December 31 preceding owns Texas investments in an amount in total
1-32 value which is in excess of 90% of the amount such insurance
1-33 carrier owned in the comparison state in similar investments as
1-34 herein defined, the tax imposed shall be equal to 1.6% of its gross
1-35 premium receipts.]
1-36 SECTION 3. Section 4, Article 9.59, Insurance Code, is
1-37 amended to read as follows:
1-38 Sec. 4. RATE OF TAX. There is imposed on all premium on
1-39 title insurance an annual tax equal to 1.35 [two] percent [(2.0%)].
1-40 [Any title insurance company may remit on a tax rate lower
1-41 than the two percent (2.0%) imposed by this article. If such title
1-42 insurance company as of the preceding December 31 owns Texas
1-43 investments in an amount in total value which is in excess of
1-44 ninety percent (90%) of the amount such title insurance company
1-45 owned in the comparison state in similar investments as herein
1-46 defined, the tax imposed shall be equal to 1.3 percent (1.3%) of
1-47 premium.]
1-48 SECTION 4. Article 21.46, Insurance Code, is amended to read
1-49 as follows:
1-50 Art. 21.46. RETALIATORY PROVISIONS; PAYMENT OF TAXES, FINES,
1-51 PENALTIES, ETC.; CONDITION PRECEDENT TO DOING BUSINESS IN STATE;
1-52 EXEMPTIONS[.]
1-53 Sec. 1. RETALIATORY TAX [A. Retaliatory tax]. (a) Whenever
1-54 by the laws of any other state or territory of the United States
1-55 any taxes, including maintenance or similar regulatory fees, income
1-56 and corporate franchise, licenses, fees, fines, penalties, deposit
1-57 requirements or other obligations, prohibitions or restrictions are
1-58 imposed upon any insurance company that is organized in this State
1-59 and licensed and is [actually] doing business or that may do
1-60 business in such other state or territory which, in the aggregate
1-61 are in excess of the aggregate of the taxes, including maintenance
1-62 or similar regulatory fees, income and corporate franchise,
1-63 licenses, fees, fines, penalties, deposit requirements or other
1-64 obligations, prohibitions or restrictions directly imposed upon a
2-1 similar insurance company of such other state or territory doing
2-2 business in this State, the comptroller shall impose upon and
2-3 collect from any similar company of such state or territory in the
2-4 same manner and for the same purpose, the same taxes, licenses,
2-5 fees, fines, penalties, deposit requirements or other obligations,
2-6 prohibitions or restrictions; provided, however, the aggregate of
2-7 taxes, licenses, fees, fines, penalties or other obligations
2-8 imposed by this State pursuant to this Article on an insurance
2-9 company of another state or territory shall not exceed the
2-10 aggregate of such charges imposed by such other state or territory
2-11 on a similar insurance company of this State that may be [actually]
2-12 licensed and doing business.
2-13 (b) Whenever under the law of any state or territory the
2-14 rate of taxation is reduced or a tax credit is granted to any such
2-15 company making investments in the state or territory, having
2-16 maintained offices in the state or territory, or meeting some other
2-17 similar requirements of the state or territory, those laws shall be
2-18 applied in the same manner in this state in the determination of
2-19 the aggregate obligations under this Article.
2-20 (b-1) Whenever [therein; provided, further, that wherever]
2-21 under any law of this State the basic rate of taxation of any
2-22 insurance company of another state or territory is reduced if any
2-23 such insurance company has made investments in Texas securities
2-24 then in computing the aggregate Texas premium tax burdens of any
2-25 such insurance company of any other state or territory each shall
2-26 for purposes of comparison with the premium tax laws of its home
2-27 state be considered to have assumed and paid an aggregate premium
2-28 tax burden equal to the basic rate. This subsection expires
2-29 December 31, 1999.
2-30 (c) For[; provided, further, that for] the purpose of this
2-31 Section, an alien insurer shall be deemed a company of the State
2-32 designated by it wherein it:
2-33 (1) has [(a)] established its principal office or
2-34 agency in the United States;
2-35 (2) [, or (b)] maintains the largest amount of its
2-36 assets held in trust or on deposit for the security of its
2-37 policyholders or policyholders and creditors in the United States;
2-38 [,] or
2-39 (3) [(c) in which it] was admitted to do business in
2-40 the United States.
2-41 (d) The tax collected by the comptroller under this Article
2-42 shall be deposited in the State Treasury to the credit of the
2-43 general revenue fund. The comptroller shall prescribe the due date
2-44 for the filing of the report and payment of the tax under this
2-45 Article. The comptroller may adopt rules concerning the
2-46 administration and collection of taxes under this Article.
2-47 (e) The provisions of this Section shall not apply to ad
2-48 valorem taxes on real or personal property, [or to] personal income
2-49 taxes, sales taxes, or to surcharges that insurers may recoup
2-50 directly from policyholders.
2-51 (f) The provisions of this Act shall not apply to a company
2-52 of any other state doing business in this State if fifteen per cent
2-53 (15%) or more of the voting stock of said company is owned by a
2-54 corporation organized under the laws of this State, and domiciled
2-55 in this State; however, the prior provisions of this Act shall
2-56 apply without exception to any and all person or persons, company
2-57 or companies, firm or firms, association or associations, group or
2-58 groups, corporation or corporations, or any insurance organization
2-59 or organizations of any kind, which did not qualify as a matter of
2-60 fact, under the exception of this paragraph, on or before January
2-61 29, 1957.
2-62 (g) The provisions of this Section shall not apply to
2-63 special purpose assessments, such as guaranty association
2-64 assessments, high risk health pool assessments, joint underwriting
2-65 association (JUA) assessments, windstorm association assessments,
2-66 or other similar assessments, both under the laws of this State and
2-67 under the laws of any other state or territory. Any tax offset or
2-68 credit related to such assessments that is offset or credited in
2-69 computing aggregate taxes under this Section for this State and any
3-1 other state or territory, shall, for purposes of this Section, be
3-2 treated as a tax paid both under the laws of this State and under
3-3 the laws of any other state or territory.
3-4 Sec. 2. OTHER RETALIATORY PROVISIONS [B]. Should the
3-5 insurance department, commissioner, director, or other similar
3-6 insurance regulatory official of any other state or territory of
3-7 the United States impose any sanctions, fines, penalties, financial
3-8 or deposit requirements, prohibitions, restrictions, regulatory
3-9 requirements, or other obligations of any kind upon any insurance
3-10 company organized or chartered in this state and licensed to
3-11 transact business in such other state or territory, because of the
3-12 failure of the Texas Department of Insurance to obtain, maintain,
3-13 or receive accreditation certification or any similar form of
3-14 approval, compliance, or acceptance from, by, or as a member of the
3-15 National Association of Insurance Commissioners, or any committee,
3-16 task force, working group, or advisory committee thereof, or
3-17 because of the failure of the Texas Department of Insurance to
3-18 comply with any directive, financial annual statement requirement,
3-19 model act or regulation, market conduct or financial examination
3-20 report or requirement, or any report of any kind of the National
3-21 Association of Insurance Commissioners, or any committee, task
3-22 force, working group, or advisory committee thereof, the Texas
3-23 Department of Insurance shall, without exception or exclusion,
3-24 impose upon any and all insurance companies organized or chartered
3-25 in such other state or territory and licensed to do business in
3-26 this state the same sanctions, fines, penalties, deposit
3-27 requirements, prohibitions, restrictions, or other obligations
3-28 imposed upon the insurance company of this state.
3-29 SECTION 5. The following laws are repealed:
3-30 (1) Sections 7, 8, and 9, Article 4.10, Insurance
3-31 Code; and
3-32 (2) Sections 13 and 14, Article 9.59, Insurance Code.
3-33 SECTION 6. Section 12(f), Article 1.14-1, Insurance Code, as
3-34 added by this Act, and Section 1(a), Article 21.46, Insurance Code,
3-35 as amended and redesignated by this Act, clarify the law as it
3-36 existed immediately before the effective date of this Act and may
3-37 not be interpreted to imply that the law as it existed immediately
3-38 before the effective date of this Act is inconsistent with the law
3-39 as amended by this Act.
3-40 SECTION 7. (a) The change in law made by Sections 2, 3, and
3-41 5 of this Act applies only to a premium tax imposed under Articles
3-42 4.10 and 9.59, Insurance Code, as amended by this Act, beginning
3-43 with the tax year that begins January 1, 2000. Taxes imposed under
3-44 those articles for tax years that begin before January 1, 2000, are
3-45 governed by the law that existed in the tax year in which those
3-46 taxes were imposed and that law is continued in effect for that
3-47 purpose.
3-48 (b) The change in law made by Section 1(b), Article 21.46,
3-49 Insurance Code, as added by this Act, and by the expiration of
3-50 Section 1(b-1), Insurance Code, as amended and redesignated by this
3-51 Act, applies only beginning with the tax year that begins on
3-52 January 1, 2000.
3-53 SECTION 8. The importance of this legislation and the
3-54 crowded condition of the calendars in both houses create an
3-55 emergency and an imperative public necessity that the
3-56 constitutional rule requiring bills to be read on three several
3-57 days in each house be suspended, and this rule is hereby suspended,
3-58 and that this Act take effect and be in force from and after its
3-59 passage, and it is so enacted.
3-60 * * * * *