Art. 4.11A. ADMINISTRATIVE SERVICES TAX. Tax payment requirement Sec. 1. Each insurance carrier receiving any form of administrative or service fee, consideration, payment, premium, fund, reimbursement, or compensation for performing or providing any service, function, or duty, or acting in any administrative, clerical, management, advisory, or technical capacity, or providing any claims or expense review, service, administration, management, payment, indemnification, or reimbursement, under an administrative service contract to be performed in this state, or on behalf of persons in this state, or for risks located in this state, and relating to any employer-employee, multiple employer-employee, self-insurance group, member, or other medical, accident, sickness, injury, indemnity, death, or health benefit plan, including but not limited to any medical, surgical, orthopedic, chiropractic, physical therapy, speech pathology, audiology, mental health, dental, hospital, workers' compensation, optometric, or health maintenance organization plan or program, but excluding any portion of such plan for which premiums for insurance are received by the carrier and are otherwise subject to taxation by this state under Article 1.14-1, 1.14-2, 4.10, or 4.11, Insurance Code, or Section 33, Texas Health Maintenance Organization Act (Article 20A.33, Vernon's Texas Insurance Code), shall pay to the State Board of Insurance as provided by this article for transmittal to the comptroller an annual tax on the gross amount of administrative or service fees received by the carrier. This section does not apply to a person to the extent he receives an administrative or service fee, consideration, payment, premium, fund, reimbursement, or compensation, as provided by this section, from a unit or units of local government, or from units of local government that have organized under Chapter 791, Government Code, or Chapter 119, Local Government Code, to provide group workers' compensation, health, accident, dental, disability, and life insurance solely to local government employees. This section does not apply to local mutual aid associations or fraternal benefit societies or associations. Other tax payment requirement Sec. 2. Each person, except an insurance carrier subject to Section 1 of this article, receiving any form of administrative or service fee, consideration, payment, premium, fund, reimbursement, or compensation for performing or providing any service, function, or duty, or acting in any administrative, clerical, management, advisory, or technical capacity, or providing any claims or expense review, service, administration, management, payment, indemnification, or reimbursement, under an administrative service contract to be performed in this state, or on behalf of persons in this state, or for risks located in this state, and relating to any employer-employee, multiple employer-employee, self-insurance group, member, or other medical, accident, sickness, injury, indemnity, death, or health benefit plan, including but not limited to any medical, surgical, orthopedic, chiropractic, physical therapy, speech pathology, audiology, mental health, dental, hospital, workers' compensation, optometric, or health maintenance organization plan or program, but excluding any portion of such plan for which premiums for insurance are received by an insurance carrier and are otherwise subject to taxation by this state under Article 1.14-1, 1.14-2, 4.10, or 4.11, Insurance Code, or Section 33, Texas Health Maintenance Organization Act (Article 20A.33, Vernon's Texas Insurance Code), shall pay to the State Board of Insurance as provided by this article for transmittal to the comptroller an annual tax on the gross amount of administrative or service fees received by the person. This section does not apply to a person to the extent he receives an administrative or service fee, consideration, payment, premium, fund, reimbursement, or compensation, as provided by this section, from a unit or units of local government, or from units of local government that have organized under Chapter 791, Government Code, or Chapter 119, Local Government Code, to provide group workers' compensation, health, accident, dental, disability, and life insurance solely to local government employees. This section does not apply to local mutual aid associations or to fraternal benefit societies or associations. Definitions Sec. 3. In this article: (1) "Insurance carrier" or "carrier" means: (A) every type of foreign and domestic insurer engaged in the business of insurance; (B) every insurer that is licensed or operates under, or is required to be licensed or to operate under, Chapter 2, 3, 8, 11, 13, 14, 15, 16, 17, 18, 19, 20, or 22, Insurance Code, or Article 1.14-2, Insurance Code. (C) a health maintenance organization that is licensed or operates under the Texas Health Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance Code); and (D) an unauthorized insurer within the meaning of Article 1.14-1, Insurance Code. (2) "Gross amount of administrative or service fee" includes: (A) the total gross amount of all consideration, fees, payments, reimbursements, and all compensation received by the carrier or other person during the taxable year for each and every kind of such service, activity, or function described either in Section 1 or Section 2 of this article; and (B) the total amount of all claims and benefits paid to or on behalf of employers, multiple employers, employees, unions, beneficiaries, trusts, members, spouses, dependents, or other persons under a plan described in either Section 1 or Section 2 of this article. (3) "Taxable year" is the calendar year, January 1 through December 31. (4) "Person" includes an individual, corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, plan, or any other legal entity. (5) "Administrative service contract" means a management contract, agency contract, or other written or oral contract or agreement under which the management, administration, or servicing of a plan or any portion of a plan, is provided by an insurance carrier or other person. (6) "Plan" means any plan, fund, trust, or other program to the extent that the plan, fund, trust, or program is established or maintained for the purpose of providing persons, including spouses and beneficiaries, through insurance or otherwise, the benefits or coverage specified in Section 1 or Section 2 of this article. Tax rate Sec. 4. (a) There is imposed on each insurance carrier subject to Section 1 of this article and on each person subject to Section 2 of this article an annual tax equal to 2.5 percent of the gross amount of administrative or service fees respecting that carrier or person, but that insurance carrier or person is not liable for the payment of the gross amount of administrative or service fees as defined in Section 3(2)(B) of this article to the extent that funds from which the insurance carrier or person is able to collect or retain that tax as provided by Subsection (c) of this section do not come into the possession or under the control of the carrier or person, or to the extent collection or retention is preempted by federal law. An insurance carrier subject to Section 1 of this article and a person subject to Section 2 of this article may not, on or after the effective date of this article, enter into any administrative service contract with any plan that does not provide for the retention or collection by the insurance carrier or person of the tax imposed on and required to be paid to the State Board of Insurance under this article. (b) An insurance carrier subject to Section 1 of this article or a person subject to Section 2 of this article shall remit any tax owed under this section as specified in Subsection (a) of this section on behalf of itself and the plan or person for whom the service, administration, activity, management, or similar function is performed, and for that purpose is authorized and directed to collect or retain the amount of tax imposed by this article from funds, assessments, dues, premiums, or other money coming into its hands or under its control. (c) Except to the extent preempted by federal law, there is imposed on each plan of the type described in Section 1 or 2 of this article an annual tax equal to 2.5 percent of the gross amount of administrative or service fees and that plan shall pay the tax to the State Board of Insurance for transmittal to the comptroller. The tax provided by this subsection is imposed and is owed only to the extent a tax is not paid under Subsection (a) of this section. (d) Notwithstanding any other provision of this article, the tax imposed under this article creates no duty and shall not be collected to the extent preempted or prohibited under the constitution of this state or the United States. It is the intent of the legislature that this article not apply to any person, risk, or transaction to which it may not lawfully apply under the constitution of this state or the United States. Date for filing tax return and paying tax Sec. 5. (a) Except as provided by Subsection (b) of this section, a tax return for each tax year ending the 31st day of December preceding shall be filed and the total amount of the tax due under this article shall be paid on or before March 1 of each year to the State Board of Insurance. (b) If an insurance carrier is required to file its annual statement later than March 1 of each year, the total amount of tax due under this article must be paid on or before the date the annual statement is due. Annual sworn returns; forms; additional information Sec. 6. Each insurance carrier or other person that is liable under this article for a tax on the gross amount of administrative or service fees shall file a sworn tax return annually on forms prescribed by the State Board of Insurance. The commissioner of insurance may require that carrier or other person to file any relevant additional information reasonably necessary to verify the amount of tax due. Certification of taxes paid Sec. 7. After receipt by the commissioner of insurance of each tax return and tax payments, the commissioner shall certify to the comptroller the amount of taxes paid by each insurance carrier or other person. The commissioner's certification shall be authorization for the comptroller to transfer those certified amounts from the insurance suspense account to the general revenue fund unless there is a lawful reason for maintaining the payment in the insurance suspense account. Supplemental certification of taxes due; suspension of time period; suit by commissioner Sec. 8. (a) Except as otherwise provided by this article, the amount of any tax imposed by this article if determined on examination of any carrier or other person liable for that tax, or if determined by any other manner, shall be filed by the commissioner of insurance with the comptroller by supplemental certificate showing the amount of any taxes due by that carrier or other person within four years after the return was filed, whether or not the return was filed on or after the date due. (b) When an administrative review or a judicial proceeding is pending in a court of competent jurisdiction prior to the expiration of the time presented in Subsection (a) of this section, the time period prescribed by Subsection (a) of this section shall be suspended with respect to the amount of tax in issue in that proceeding until such matters are finally determined, whereupon the running of that period of time shall resume until finally expired. (c) In the case of failure to file a return or pay the taxes due, the commissioner of insurance may notify the comptroller of the failure and the amount of taxes due, and the commissioner of insurance may proceed in a court of competent jurisdiction for collection of the tax at any time. Sec. 9. Repealed by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(4), eff. Sept. 1, 1989. Quarterly prepayment of taxes Sec. 10. A quarterly prepayment of the tax must be made on March 1, May 15, August 15, and November 15 by all carriers or other persons with net tax liability for the previous calendar year in excess of $1,000. The tax paid on each date must equal one-fourth of the total tax paid for the previous calendar year. Should no tax have been paid during the previous calendar year, the quarterly payment shall equal the tax which would be owed on the gross amount of administrative or service fees received during the previous calendar quarter ending March 31, June 30, September 30, or December 31 at the tax rate specified by law. The State Board of Insurance is authorized to certify for refund to the comptroller any overpayment of taxes that results from the quarterly prepayment system herein established. Rules, regulations, standards, limitations Sec. 11. The State Board of Insurance may establish any rules, regulations, minimum standards, or limitations that are fair and reasonable as may be appropriate for the augmentation and implementation of this article. Application of other laws Sec. 12. The taxes imposed by this article, the insurance carrier, and each person subject to this article, are also subject to Articles 4.12, 4.13, 4.14, 4.15, and 4.16 of this code in the same manner and to the same extent as they apply to taxes and taxpayers subject to other provisions of this code to which those articles apply. Tax additional Sec. 13. The tax imposed by this article is in addition to, and not in lieu of, any other taxes imposed by law, and shall not be deemed to be in conflict with any other such tax unless specifically repealed by the legislature. Added by Acts 1987, 70th Leg., 2nd C.S., ch. 5, art. 8, Sec. 1. Sec. 9 amended by Acts 1989, 71st Leg., ch. 232, Sec. 25(b)(4), eff. Sept. 1, 1989; Secs. 1 and 2 amended by Acts 1997, 75th Leg., ch. 1423, Sec. 11.21, eff. Sept. 1, 1997; Sec. 4(c) amended by Acts 1997, 75th Leg., ch. 1423, Sec. 11.22, eff. Sept. 1, 1997; Secs. 7, 8 and 10 amended by Acts 1997, 75th Leg., ch. 1423, Sec. 11.23, eff. Sept. 1, 1997.

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Last modified: August 10, 2007