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 Insurance Code, Chapter 221, or it will be subject to the tax imposed under Insurance Code, Chapter 224.

2. (b) Election. Under Insurance Code, Chapter 224, a reciprocal or interinsurance exchange may elect to be taxed under Chapter 221.

   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 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to be taxed under that article for each tax year until written notice is given to the comptroller that the election is withdrawn.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 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 (c) If a reciprocal or interinsurance exchange does not file an election as provided by this section or has withdrawn the election, the reciprocal or interinsurance exchange is subject to the tax imposed under Insurance Code, Chapter 224.
4. (d) Insurance Code, Chapter 221, imposes a tax equal to 1.6% of the gross premium receipts of insurance carriers transacting business under the authority of this article.
5. (e) Insurance Code, Chapter 224, 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 Insurance Code, Chapter 221, Chapter 224, §224.002, or Chapter 224, §224.003, 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.