SECTION 3.811. Election by Reciprocal or Interinsurance Exchange Pursuant to Insurance Code, Chapter 224

(a) Reciprocal or interinsurance exchanges authorized under Insurance Code, Chapter 942, are subject to premium and maintenance taxes as are all other insurance carriers. A reciprocal or interinsurance exchange is subject to the tax imposed under Insurance Code, Chapter 224 unless it elects to be subject to the tax imposed under Insurance Code, Chapter 221.

(1) To make the election, a reciprocal or interinsurance exchange must submit a statement in writing on a form prescribed by the comptroller making such an election. The comptroller has developed form 25-208 for this purpose. This form must be filed no later than the 31st day before the beginning of the tax year for which the election is to be effective. For example, to be taxed under Insurance Code, Chapter 221 for the 2012 tax year, the reciprocal or interinsurance exchange must have filed this form by December 1, 2011.

(2) A reciprocal or interinsurance exchange that elects to be taxed under Insurance Code, Chapter 221, will continue to be taxed under that article for each tax year until written notice is given to the comptroller that the election is withdrawn. The comptroller has developed form 25-208 for this purpose. The notice of withdrawal must be filed with the comptroller not later than the 31st day before the beginning of the tax year for which the withdrawal is to be effective.

(3) Form 25-208 is available on the comptroller's website at: http://www.window.state.tx.us/taxinfo/taxforms/25-forms.html.

(b) If a reciprocal or interinsurance exchange does not file an election as provided by this section or has withdrawn the election, the reciprocal or interinsurance exchange is subject to tax using the rate imposed under Insurance Code, Chapter 224.

(c) Insurance Code, Chapter 221, imposes an annual tax equal to 1.6% of the gross premium receipts of licensed insurance carriers and reciprocal or interinsurance exchanges that have filed an election to be taxed under this chapter.

(d) Insurance Code, Chapter 224, imposes an annual tax equal to 1.7% of the gross premium receipts of each reciprocal or interinsurance exchange that has not filed an election or that has withdrawn a prior election to be taxed under Insurance Code, Chapter 221.

(e) Except as provided by subsection (d) of this section, Insurance Code, Chapter 221 applies to the imposition, computation, and administration of the tax imposed by Insurance Code, Chapter 224 in the same manner that Insurance Code, Chapter 221 applies to the tax imposed by that Chapter.

(f) Failure to file and pay taxes as provided under Insurance Code, Chapter 221 or Chapter 224 will subject the taxpayer to penalty and interest under Tax Code, Title 2, Subtitles A and B.

Source Note: The provisions of this §3.811 adopted to be effective June 6, 1990, 15 TexReg 2912; 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; amended to be effective June 26, 2000, 25 TexReg 6151; amended to be effective November 25, 2007, 32 TexReg 8318; amended to be effective July 1, 2013, 38 TexReg 4186