By: Paxton, Turner, Smith of Tarrant H.B. No. 2718
        (Senate Sponsor - Ellis)
         (In the Senate - Received from the House May 3, 2007;
  May 7, 2007, read first time and referred to Committee on State
  Affairs; May 15, 2007, reported favorably by the following vote:  
  Yeas 8, Nays 0; May 15, 2007, sent to printer.)
  relating to treatment of retrospective premiums for group life
  insurance issued through certain nonprofit membership
         SECTION 1.  Section 1131.503, Insurance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  For purposes of Sections 222.002, 257.001, and 281.004,
  only the final retrospectively determined premium amount remitted
  to the issuer by the group policyholder is taxable as gross
  premiums, without regard to whether membership contributions,
  fees, assessments, dues, revenues, or other considerations in
  excess of that final amount are also collected from members.  This
  subsection applies only to a nonprofit membership association that:
               (1)  qualifies under Section 501(c)(9), Internal
  Revenue Code of 1986;
               (2)  has been in existence for at least 50 years;
               (3)  limits association membership to:
                     (A)  members of the uniformed services of the
  United States serving on active duty;
                     (B)  members of the ready reserve forces of the
  United States, including the Army and Air National Guard;
                     (C)  retirees and separatees of:
                           (i)  the uniformed services of the United
  States; or
                           (ii)  the ready reserve forces of the United
  States, including the Army and Air National Guard;
                     (D)  cadets and midshipmen in the service
  academies of the United States and other officer candidates;
                     (E)  federal employees and contractors who are
  employed by the United States government or other related
  governmental entities or retired with pay from that employment;
                     (F)  employees or members of any state, county,
  municipal, or other local governmental body or other organized
  governmental entity who are involved in homeland defense and
  homeland security operations; and
                     (G)  any other category of membership established
  by the governing body of the association that falls within the scope
  of permissible membership authorized by Section 501(c)(9),
  Internal Revenue Code of 1986;
               (4)  has no separate membership enrollment or
  application requirement;
               (5)  collects member contributions, fees, or dues,
  including funds contributed specifically for insurance and
  remitted by the group policyholder to the issuer following a
  retrospective premium determination; and
               (6)  provides insurance and noninsurance membership
         SECTION 2.  The change in law made by this Act applies only
  to a premium remitted on or after the effective date of this Act. A
  premium remitted before the effective date of this Act is governed
  by the law as it existed immediately before the effective date of
  this Act, and that law is continued in effect for that purpose.
         SECTION 3.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2007.
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