Texas Insurance Code - Not Codified - Article 4.11A. Administrative Services Tax
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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.
Article: 3.51-2 3.51-4 3.51-5 3.51-7 3.56 3.70-3D 4.01 4.11A 4.51 4.52 4.53 4.54 4.55 4.56 4.57
Last modified: August 11, 2007
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