1. (a) Reciprocal or interinsurance exchanges are subject to premium taxes as are all other licensed insurance carriers. A reciprocal or interinsurance exchange must either affirmatively elect to be subject to the tax imposed under the Insurance Code, Article 4.10, or it will be subject to the tax imposed under the Insurance Code, Article 4.11B.

2. (b) Election. Under the Insurance Code, Article 4.11C, a reciprocal or interinsurance exchange may elect to be taxed under Article 4.10.

   1. (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 the election is to be effective.
   2. (2) A reciprocal or interinsurance exchange that elects to be taxed under the Insurance Code, Article 4.10, 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to be taxed under that article for each tax year until written notice is given to the comptroller that the election is withdrawn.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 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. (c) If a reciprocal or interinsurance exchange does not file an election as provided by this section or has withdrawn the election, the reciprocal or interinsurance exchange is subject to the tax imposed under the Insurance Code, Article 4.11B.
4. (d) The Insurance Code, Article 4.10, §10, imposes a tax equal to 3.5% of the gross premium receipts of insurance carriers transacting business under the authority of this article. An insurance carrier may qualify for a lower tax rate of 2.4% or 1.6% under the Insurance Code, Article 4.10, based on a comparison of the percentage of Texas investments owned by the carrier to investments in a similar or comparison state.
5. (e) The Insurance Code, Article 4.11B, imposes on each reciprocal or interinsurance exchange transacting business in this state an annual tax equal to 1.7% of its gross premium receipts.
6. (f) Failure to file and pay taxes as provided under the Insurance Code, Article 4.10, §10, Article 4.11B, or Article 4.11C, will subject the taxpayer to penalty and interest under the Tax Code, Title 2, Subtitles A and B.
7. (g) The Comptroller of Public Accounts adopts by reference form 25-208, Reciprocal or Interinsurance Exchange Election. Copies of the form are available for public inspection at the Office of the Secretary of State, Texas Register Division, or may be obtained from the Comptroller of Public Accounts, Account Maintenance-Insurance, 111 East 17th Street, Austin, Texas 78774-0100. Copies may also be requested by calling toll free at 1-800-252-1387. In Austin, call 463-4600.

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.