80R8816 AJA-F
 
  By: Duncan S.B. No. 1850
 
 
 
   
 
 
A BILL TO BE ENTITLED
AN ACT
relating to the imposition and collection of certain insurance
taxes and the adoption of certain reciprocal or multistate
agreements relating to those taxes.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Section 221.002(b), Insurance Code, is amended
to read as follows:
       (b)  Except as provided by Subsection (c), in determining an
insurer's taxable premium receipts, the insurer shall include the
total gross amounts of premiums, membership fees, assessments,
dues, revenues, and any other considerations received by the
insurer [written by the insurer] in a calendar year from any kind of
insurance written by the insurer on each kind of property or risk
[risks] located in this state, including:
             (1)  fire insurance;
             (2)  ocean marine insurance;
             (3)  inland marine insurance;
             (4)  accident insurance;
             (5)  credit insurance;
             (6)  livestock insurance;
             (7)  fidelity insurance;
             (8)  guaranty insurance;
             (9)  surety insurance;
             (10)  casualty insurance;
             (11)  workers' compensation insurance;
             (12)  employers' liability insurance; [and]
             (13)  crop insurance written by a farm mutual insurance
company; and
             (14)  home warranty insurance.
       SECTION 2.  Section 222.002(b), Insurance Code, is amended
to read as follows:
       (b)  Except as otherwise provided by this section, in
determining an insurer's taxable gross premiums or a health
maintenance organization's taxable gross revenues, the insurer or
health maintenance organization shall include the total gross
amounts of premiums, membership fees, assessments, dues, revenues,
and other considerations received by the insurer or health
maintenance organization in a calendar year from any kind of health
maintenance organization certificate or contract or insurance
policy or contract covering risks on individuals or groups [a
person] located in this state and arising from the business of a
health maintenance organization or the business of life insurance,
accident insurance, health insurance, life and accident insurance,
life and health insurance, health and accident insurance, 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.
       SECTION 3.  Section 223.003(a), Insurance Code, is amended
to read as follows:
       (a)  An annual tax is imposed on all [each title insurance
company that receives] premiums from the business of title
insurance. The rate of the tax is 1.35 percent of [the] title
insurance [company's] taxable premiums for a calendar year,
including any premiums retained by a title insurance agent as
provided by Section 223.005. For purposes of this chapter, a person
engages in the business of title insurance if the person engages in
an activity described by Section 2501.005.
       SECTION 4.  Section 225.004, Insurance Code, is amended by
adding Subsection (d-1) to read as follows:
       (d-1) Notwithstanding Subsections (b) through (d), the
comptroller by rule may establish that all premiums are considered
to be on risks located in this state:
             (1)  if the insured's home office or state of domicile
or residence is located in this state; or
             (2)  to accommodate changes in federal statutes or
regulations that would otherwise limit the comptroller's ability to
directly collect the taxes due under this section.
       SECTION 5.  Section 225.009, Insurance Code, is amended by
adding Subsection (c) to read as follows:
       (c)  The comptroller by rule may change the accrued tax
amount for which prepayment is required under Subsection (a) and
the prepayment deadline under Subsection (b).
       SECTION 6.  Section 226.003, Insurance Code, is amended by
adding Subsection (d-1) to read as follows:
       (d-1) Notwithstanding Subsections (b) through (d), the
comptroller by rule may establish that all premiums are considered
to be on risks located in this state:
             (1)  if the insured's home office or state of domicile
or residence is located in this state; or
             (2)  to accommodate changes in federal statutes or
regulations that would otherwise limit the comptroller's ability to
directly collect the taxes due under this section.
       SECTION 7.  Section 226.053, Insurance Code, is amended by
adding Subsection (b-1) to read as follows:
       (b-1) Notwithstanding Subsections (a) and (b), the
comptroller by rule may establish that all premiums are considered
to be on risks located in this state:
             (1)  if an insured's home office or state of domicile or
residence is located in this state; or
             (2)  to accommodate changes in federal statutes or
regulations that would otherwise limit the comptroller's ability to
directly collect the taxes due under this section.
       SECTION 8.  Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 228 to read as follows:
CHAPTER 228.  COOPERATIVE AGREEMENTS WITH OTHER STATES
       Sec. 228.001.  DEFINITIONS. In this chapter:
             (1)  "Agent" includes:
                   (A)  a surplus lines agent, as defined by Section
981.002;
                   (B)  a person licensed as a surplus lines agent by
another state; and
                   (C)  any other person who performs the acts of an
agent, whether through an oral, written, electronic, or other form
of communication, by soliciting, negotiating, procuring, or
collecting a premium on an insurance contract.
             (2)  "Insurer" has the meaning assigned by Section
101.002 and includes:
                   (A)  an insurer that does not hold a certificate
of authority in this state;
                   (B)  an eligible surplus lines insurer; and
                   (C)  an insurer that holds a certificate of
authority in this state but who performs acts outside the scope of
its authority under the certificate.
             (3)  "Premium" includes:
                   (A)  any consideration for insurance, including:
                         (i)  a premium;
                         (ii)  a membership fee;
                         (iii)  an assessment; and
                         (iv)  dues; or
                   (B)  any other meaning of the term adopted in a
cooperative agreement.
             (4)  "Processing entity" means a processing center or
clearinghouse established under a cooperative agreement.
             (5)  "Stamping office" means the Surplus Lines Stamping
Office of Texas or similar stamping offices in other states.
       Sec. 228.002.  COOPERATIVE AGREEMENTS WITH OTHER STATES.
(a)  The comptroller may enter into a cooperative agreement,
reciprocal agreement, or compact with another state for the
collection of insurance premium taxes imposed by Chapters 225 and
226 on a multistate basis. An agreement or amendment of an
agreement takes effect according to its terms, except that an
agreement or amendment may not take effect until the proposed
agreement or amendment is published in the Texas Register.
       (b)  An agreement may provide for:
             (1)  determining a base state and multistate allocation
of insurance premiums;
             (2)  tax reporting requirements;
             (3)  audit and refund claim procedures;
             (4)  exchange of information;
             (5)  requirements for reporting on a multistate basis;
             (6)  insurance and tax related terms and definitions;
             (7)  penalties, fees, administrative costs, and
interest rates;
             (8)  audit assessment and refund claim limitation
periods;
             (9)  procedures for collecting amounts due from
agents, insurers, or other persons and for collecting and
forwarding the amounts due to the jurisdiction to which the amount
is owed;
             (10)  procedures for verifying refund claims by agents,
insurers, or other persons and for collecting those amounts from
the jurisdiction owing the refund amount;
             (11)  the temporary remittal of funds equal to the
amounts due to another jurisdiction, subject to appropriation of
funds for that purpose; and
             (12)  other provisions to facilitate the
administration of the agreement.
       (c)  The comptroller may, as required by the terms of an
agreement, provide to an officer of another state any information
that relates to the solicitation, negotiation, procurement,
placement, issuance, receipt, or collection of premiums by an
agent, insurer, or other person for an insurance contract or policy
that may be subject to the premium taxes imposed by Chapter 225 or
226.
       (d)  An agreement may provide for each state to audit the
records of an agent, insurer, or other person based in this state to
determine if insurance premium taxes due each state that is a party
to the agreement are properly reported and paid. An agreement may
provide for each state to forward the findings of an audit performed
on an agent, insurer, or other person based in this state to each
other state in which the person has an allocation of taxable
premiums.
       (e)  For an agent, insurer, or other person who has an
allocation of taxable premiums in this state, the comptroller may
use an audit performed by another state that is a party to an
agreement with this state to make an assessment of insurance
premium taxes against the agent, insurer, or other person. An
assessment made by the comptroller under this subsection is prima
facie evidence that the amount shown as due is correct.
       (f)  An agreement entered into under this section does not
affect the comptroller's authority to audit any person under any
other law.
       (g)  An agreement entered into under this section prevails
over an inconsistent rule of the comptroller. Except as otherwise
provided by this section, a statute of this state prevails over an
inconsistent provision of an agreement entered into under this
section.
       (h)  The comptroller may segregate in a separate fund or
account the amount estimated to be due to other jurisdictions,
amounts subject to refund during the fiscal year, fees, and other
costs collected under the agreement. On a determination of an
amount held that is due to be remitted to another jurisdiction, the
comptroller may issue a warrant or make an electronic transfer of
the amount as necessary to carry out the purposes of the agreement.
An auditing cost, membership fee, or other cost associated with the
agreement may be paid from interest earned on funds segregated
under this subsection. Any interest earnings in excess of the costs
associated with the agreement shall be credited to general revenue.
       (i)  The legislature finds that it is in the public interest
to enter into insurance tax and regulatory agreements with other
jurisdictions that may provide for the temporary remittal of
amounts due other jurisdictions that exceed the amounts collected
and for cooperation with other jurisdictions for the collection of
taxes imposed by this state under Chapters 225 and 226 and similar
taxes imposed under statutes of other jurisdictions on insurance
premiums. The comptroller shall ensure that reasonable measures
are developed to recover insurance taxes and other amounts due this
state during each biennium.
       (j)  The comptroller may enter into a cooperative agreement,
reciprocal agreement, or compact with another state to provide for
the collection of taxes imposed by this state and the other states
on insurances taxes that may be due the states and this state based
on a standardized premium allocation adopted by the states under
the agreement. The comptroller may also enter into other
cooperative agreements with surplus lines stamping offices located
in this state and other states in the reporting and capturing of tax
information related. In addition, the comptroller may enter into
cooperative agreements with processing entities located in this
state or other states related to the capturing and processing of
insurance premium and tax data.
       (k)  The comptroller may adopt rules as necessary to
implement this chapter.
       SECTION 9.  Section 252.003, Insurance Code, is amended to
read as follows:
       Sec. 252.003.  PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums [collected] from writing insurance in this
state against loss or damage by:
             (1)  bombardment;
             (2)  civil war or commotion;
             (3)  cyclone;
             (4)  earthquake;
             (5)  excess or deficiency of moisture;
             (6)  explosion as defined by Article 5.52;
             (7)  fire;
             (8)  flood;
             (9)  frost and freeze;
             (10)  hail, including loss by hail on farm crops;
             (11)  insurrection;
             (12)  invasion;
             (13)  lightning;
             (14)  military or usurped power;
             (15)  an order of a civil authority made to prevent the
spread of a conflagration, epidemic, or catastrophe;
             (16)  rain;
             (17)  riot;
             (18)  the rising of the waters of the ocean or its
tributaries;
             (19)  smoke or smudge;
             (20)  strike or lockout;
             (21)  tornado;
             (22)  vandalism or malicious mischief;
             (23)  volcanic eruption;
             (24)  water or other fluid or substance resulting from
the breakage or leakage of sprinklers, pumps, or other apparatus
erected for extinguishing fires, water pipes, or other conduits or
containers;
             (25)  weather or climatic conditions; [or]
             (26)  windstorm;
             (27)  an event covered under a home warranty insurance
policy; or
             (28)  an event covered under an inland marine insurance
policy.
       SECTION 10.  Section 254.003, Insurance Code, is amended to
read as follows:
       Sec. 254.003.  PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing motor vehicle insurance in
this state, including personal and commercial automobile
insurance.
       SECTION 11.  Section 257.001, Insurance Code, is amended to
read as follows:
       Sec. 257.001.  MAINTENANCE TAX IMPOSED.  (a) A maintenance
tax is imposed on each authorized insurer, including a group
hospital service corporation, managed care organization, local
mutual aid association, statewide mutual assessment company,
stipulated premium company, and stock or mutual insurance company,
that collects from residents of this state gross premiums or gross
considerations subject to taxation under Section 257.003. The tax
required by this chapter is in addition to other taxes imposed that
are not in conflict with this chapter.
       (b)  In this section, "managed care organization" means an
organization authorized under this code to engage in the business
of issuing health benefit plans that is not authorized as a health
maintenance organization, preferred provider organization, or
insurance company and the taxation of which is not preempted by
federal law.
       SECTION 12.  Section 271.002(a), Insurance Code, is amended
to read as follows:
       (a)  A maintenance fee is imposed on all [each insurer with
gross] premiums subject to assessment under Section 271.006.
       SECTION 13.  Section 401.151(e), Insurance Code, is amended
to read as follows:
       (e)  The amount of all examination and evaluation fees paid
to the state by an insurer in each taxable year shall be allowed as a
credit on the amount of premium taxes due [under this subchapter].
       SECTION 14.  Section 401.154, Insurance Code, is amended to
read as follows:
       Sec. 401.154.  TAX CREDIT AUTHORIZED. An insurer is
entitled to a credit on the amount of premium [or other] taxes to be
paid by the insurer for all examination fees paid under Section
401.153. The insurer may take the credit for the taxable year
during which the examination fees are paid and may take the credit
to the same extent the insurer may take a credit for examination
fees paid when a salaried department examiner conducts the
examination.
       SECTION 15.  Section 1502.053, Insurance Code, is amended to
read as follows:
       Sec. 1502.053.  EXEMPTION FROM CERTAIN TAXES. (a) The
issuer of a children's health benefit plan approved under Section
1502.051 is not subject to the premium tax or the tax on revenues
imposed under Chapter 222 with respect to money received for
coverage provided under that plan.
       (b)  The issuer of a children's health benefit plan approved
under Section 1502.051 is not subject to the retaliatory tax
imposed under Chapter 281 with respect to money received for
coverage provided under that plan.
       SECTION 16.  Section 2210.058(c), Insurance Code, is amended
to read as follows:
       (c)  An insurer may credit an amount paid in accordance with
Subsection (a)(4) in a calendar year against the insurer's premium
tax under Chapter 221. The tax credit authorized under this
subsection shall be allowed at a rate not to exceed 20 percent per
year for five or more successive years beginning [following] the
calendar year that the assessments under this section are paid [of
payment of the claims]. The balance of payments made by the insurer
and not claimed as a premium tax credit may be reflected in the
books and records of the insurer as an admitted asset of the insurer
for all purposes, including exhibition in an annual statement under
Section 862.001.
       SECTION 17.  (a) Article 4.11A, Insurance Code, is repealed.
       (b)  Section 281.006(a), Insurance Code, is repealed.
       SECTION 18.  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.