H.B. No. 3315
 
 
 
 
AN ACT
  relating to the imposition and collection of certain insurance
  taxes, the adoption of certain reciprocal or multistate agreements
  relating to those taxes, and the adoption of rules 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 for insurance 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.  Chapter 225, Insurance Code, is amended by
  adding Section 225.014 to read as follows:
         Sec. 225.014.  LIMITATION ON RULEMAKING. In adopting rules
  under this chapter, the comptroller may not adopt a rule that
  exceeds the requirements of this chapter.
         SECTION 7.  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 8.  Subchapter A, Chapter 226, Insurance Code, is
  amended by adding Section 226.006 to read as follows:
         Sec. 226.006.  LIMITATION ON RULEMAKING. In adopting rules
  under this subchapter, the comptroller may not adopt a rule that
  exceeds the requirements of this chapter.
         SECTION 9.  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 10.  Subchapter B, Chapter 226, Insurance Code, is
  amended by adding Section 226.057 to read as follows:
         Sec. 226.057.  LIMITATION ON RULEMAKING. In adopting rules
  under this subchapter, the comptroller may not adopt a rule that
  exceeds the requirements of this chapter.
         SECTION 11.  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 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
  related tax information. 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.  In adopting rules under this chapter, the
  comptroller may not adopt a rule that does not specifically
  implement this section.
         SECTION 12.  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 13.  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 14.  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 15.  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 16.  Subchapter A, Chapter 281, Insurance Code, is
  amended by adding Section 281.008 to read as follows:
         Sec. 281.008.  RECIPROCITY AGREEMENTS. The comptroller by
  rule may enter into a reciprocity agreement with another state
  under which the parties agree to mutually set aside retaliatory
  provisions in situations in which this state and the other state
  determine that retaliation is not the preferred approach to protect
  their domestic insurers from excessive taxation or other financial
  obligations.  In adopting rules under this section, the comptroller
  may not adopt a rule that does not specifically implement this
  section.
         SECTION 17.  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 18.  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 19.  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 20.  Section 2007.002, Insurance Code, is amended to
  read as follows:
         Sec. 2007.002.  ASSESSMENT. The comptroller shall assess
  against all insurers to which this chapter applies a combined total
  of $30 [$15] million for each 12-month period.
         SECTION 21.  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 22.  (a) Article 4.11A, Insurance Code, is repealed.
         (b)  Sections 281.006(a) and 2007.009, Insurance Code, are
  repealed.
         SECTION 23.  Section 2007.002, Insurance Code, as amended by
  this Act, does not apply to an assessment under Section 2007.004,
  Insurance Code, that is made by the comptroller on or before
  September 1, 2007.
         SECTION 24.  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.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3315 was passed by the House on May 9,
  2007, by the following vote:  Yeas 141, Nays 0, 2 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 3315 on May 25, 2007, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 3315 on May 27, 2007, by the following vote:  Yeas 147,
  Nays 0, 2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 3315 was passed by the Senate, with
  amendments, on May 23, 2007, by the following vote:  Yeas 29, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  3315 on May 27, 2007, by the following vote:  Yeas 30, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor