The following words and terms, when used in this section, shall have
the following meanings, unless the context clearly indicates otherwise.
(1) Gross premium definition for property and casualty companies--
(A) Gross premiums are the total gross amount of premiums,
membership fees, assessments, dues, and any other considerations for the taxable
year on insurance written on each and every kind of property or risk located
in the state, with no deduction for premiums paid for reinsurance, and excluding:
(i) return premiums (i.e., unearned premiums returned to policyholders);
(ii) dividends paid to policyholders;
(iii) premiums received from other licensed companies for reinsurance;
and
(iv) premium finance charges clearly identified in a premium
note or other evidence of premium payable that are separately stated to the
policyholder (i.e., invoice, billing, contract).
(B) The following non-taxable premiums are deducted from gross
premiums in order to calculate taxable premiums:
(i) crop insurance reinsured by the Federal Crop Insurance
Corporation under Federal Crop Insurance Act (7 U.S.C. §1508), §508;
(ii) premiums for the Property Protection Program for Underserved
Areas under Insurance Code, Article 5.35-3.
(C) Gross premium defined in subparagraph (A) of this paragraph
applies to every insurance carrier, including Lloyds, reciprocal exchanges,
and any other organization or concern writing gross premiums from the business
of fire, marine, inland marine, accident, credit, livestock, fidelity, guaranty,
surety, casualty, employers' liability, or any other kind or character of
insurance. However, the definition does not apply to:
(i) title insurance companies;
(ii) premium receipts from the business of life insurance,
personal accident insurance, life and accident insurance, or health and accident
insurance for profit, or health maintenance organization coverage;
(iii) fraternal benefit associations or societies in this state,
non-profit group hospital service plans, stipulated premium companies, mutual
assessment associations, companies or corporations regulated by the Insurance
Code, Chapter 14, as amended; and
(iv) cooperative or mutual fire insurance companies administered
by the members thereof solely for the protection of their own property and
not for profit.
(2) Gross premium definition for life, health, and accident
insurance companies and health maintenance organizations--
(A) Gross premiums are the total gross amount of all premiums,
including membership fees, assessments, dues and any other consideration received
during the taxable year, with no deduction for premiums paid for reinsurance,
on each and every kind of life, accident, or health insurance policy or contract
that covers persons who are located in the State of Texas, or the gross amount
of revenues for the issuance of health maintenance organization certificates
or contracts, and excludes:
(i) return premiums (i.e., unearned premiums returned to policyholders);
(ii) dividends applied to purchase paid-up additions to life
insurance or to shorten the endowment or premium payment period for life insurance
policies;
(iii) premiums that an insurance carriers receives from another
insurance carrier for reinsurance (a stop-loss or excess-loss insurance policy
issued to a health maintenance organization is considered reinsurance);
(iv) premium finance charges that are clearly identified in
a premium note or other evidence of premium payable, and that are separately
stated to the policyholder (i.e., invoice, billing, contract);
(v) premiums received from the State Comptroller or from the
Treasury of the United States for accident and health insurance or health
maintenance organization coverage for which the state or federal government
contracts for the purpose of providing welfare benefits to designated welfare
recipients, or for insurance for which the state or federal government contracts
in accordance with, or in furtherance of the provisions of the Human Resource
Code, Title 2, or the Federal Social Security Act; and
(vi) premiums paid on group health, accident, and life insurance
policies or health maintenance organization coverage in which the group covered
has established a single non-profit trust to provide coverage primarily for
employees of:
(I) a municipality, county, or hospital district in this state;
or
(II) a county or municipal hospital, without regard to whether
the employees are employees of the county or municipality or another entity
that operates the hospital on behalf of the county or municipality.
(B) The following non-taxable premiums are deducted from gross
premiums in order to calculate taxable premiums:
(i) group benefits provided under Insurance Code, Articles
3.50-2, 3.50-3, and 3.50-4;
(ii) premiums for the Texas 65 Health Insurance Plan under
Insurance Code, Article 3.71; and
(iii) premiums for the Federal Employees Health Benefit Program
under United States Code, Title 5, §8909.
(C) The definition of gross premiums does not include annuities
or annuity considerations. Therefore, annuities and annuity consideration
are not subject to premium taxation under Article 4.11. However, annuities
and annuity considerations are included for purposes of Article 4.17, Maintenance
Tax on Gross Premiums, and are taxed accordingly. Maintenance taxes are assessed
when annuities are purchased from insurance companies (at the time of annuitization),
which is typically known as back-end reporting.
(D) The gross premium definition in subparagraph (A) of this
paragraph applies to every insurance carrier that receives 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 the State of Texas, and
to every health maintenance organization that receives revenues for the issuance
of certificates or contracts in the State of Texas.
(3) Gross premium definition for title insurance companies--Gross
premiums are the total gross amount of premiums, membership fees, dues, and
any other considerations received by the title insurer or its agent for the
taxable year on title insurance written on property located in this state
with no deduction for premiums paid for reinsurance, and excludes:
(A) premiums received from other licensed title insurance companies
for reinsurance; and
(B) return premiums paid to policyholders.
(4) Taxation on distribution of title insurance premiums--
(A) Premium and maintenance taxes are levied on all amounts
defined to be title premiums whether paid to the title insurance company or
retained by the title insurance agent.
(B) The collection of the title premium tax and maintenance
fee remitted to the comptroller on the premium retained by the title agent
is incorporated in the division of the premium between insurer and agent so
that the insurer receives the premium tax and maintenance fee due on the agent's
portion of the premium.
(C) Title insurers and title agents are both subject to the
premium and maintenance tax on their proportional share of the premiums and
are separately liable for the tax if the insurer fails to remit the tax due
on the agent's portion.
(D) The insurer is required to remit to the comptroller the
total title premium and maintenance taxes due.
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