1. (a) A tax is imposed on gross premiums for surplus lines insurance. The rate of the tax is 4.85 percent of the gross premiums.
2. (b) Taxable gross premiums under this section are based on gross premiums written or received for surplus lines insurance placed through an eligible surplus lines insurer during a calendar year.
3. (c) If a surplus lines insurance policy covers risks or exposures only partially located in this state, the tax is computed on the portion of the premium that is properly allocated to a risk or exposure located in this state.

4. (d) In determining the amount of taxable premiums under Subsection (c), a premium, other than a premium properly allocated or apportioned and reported as a premium that may be subject to taxation by another state, is considered to be written on property or risks located or resident in this state if the premium:

   1. (1) is written, procured, or received in this state; or
   2. (2) is for a policy negotiated in this state.
5. (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:

6. (e) The following premiums are not taxable in this state:

   1. (1) if the insured's home office or state of domicile or residence is located in this state; or
   2. (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.
   3. (1) premiums properly allocated to another state that are specifically exempt from taxation in that state; and
   4. (2) premiums on risks or exposures that are properly allocated to federal or international waters or are under the jurisdiction of a foreign government.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 1, eff. April 1, 2005.

Acts 2007, 80th Leg., R.S., Ch. 932 (H.B. 3315), Sec. 4, eff. June 15, 2007.