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RULE §3.820Premium Tax Paid by Certain Purchasing Groups

(a) Purchasing groups must pay a 4.85% premium tax on all insurance procured from a company not licensed to do business in this state where all negotiation and procurement of the policy occurs outside of this state. The purchasing group must file a report and pay a premium tax on premiums paid by the purchasing group or a purchasing group member for coverage of all risks located in this state. The report, which must be filed on forms provided by the comptroller, and the taxes are due by March 1 of each year, based on insurance procured in the previous calendar year.

(b) Taxes on insurance obtained through negotiation and procurement occurring in whole or in part within this state with an unlicensed company must be paid by the insurer. If the state is unable to collect the tax from the insurer, the purchasing group will be secondarily liable and must pay the tax.

(c) To the extent that a purchasing group or its members pay premiums to a licensed company, registered risk retention group, or licensed surplus lines agent in this state, the purchasing group is not liable for the direct payment of tax on such premiums to the state.

(d) Membership fees collected from purchasing group members and not paid to insurance companies or surplus lines agents are not subject to premium tax when coverage is obtained from a licensed company or surplus lines agent.

(e) Membership fees collected from purchasing group members should not be included in the tax base when the purchasing group files and reports the premium tax as independently procured.

Source Note: The provisions of this §3.820 adopted to be effective March 8, 1991, 16 TexReg 1290; transferred effective September 1, 1993, as published in the Texas Register, October 19, 1993, 18 TexReg 7295; amended to be effective November 23, 1995, 20 TexReg 9446.

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