Premium Tax, Stamping Office Reporting, and Recordkeeping
Two charges, one filing
Texas imposes a surplus lines premium tax of 4.85% of gross premium, which stands in lieu of other state premium taxes on that business. Separately, the Surplus Lines Stamping Office of Texas charges a stamping fee of 0.04% of gross premium. The agent computes both, records them on the policy filing transmitted to SLSOT, and remits through that channel; SLSOT forwards premium tax to the state. The agent remains personally accountable for the tax, so a commission or clerical error is the agent's problem, not the insurer's.
The tax base. "Gross premium" means everything charged for the coverage, including policy fees and other charges - but excluding the stamping fee itself. Return premiums from cancellations reduce the base and generate a credit; they are reported on the filing covering the cancellation, not held until year end. On multi-state risks, only the Texas-allocated portion is taxed in Texas.
Filing duties. Policy data is due to SLSOT within 30 days of issuance or effective date, and the agent must file on the stamping office's periodic reporting cycle thereafter. Late filings and late remittances draw penalties and interest, and repeated failures are an enforcement matter for TDI as well as a licensing risk.
Records. Retain the diligent effort documentation, the eligibility verification, the disclosure, the policy and endorsements, premium and tax computations, and proof of filing for the retention period set by TDI rule (commonly five years). Records must be produced on demand for TDI or SLSOT examination.
Traps: taxing net rather than gross premium; including the stamping fee in the tax base; ignoring credits on cancelled policies; assuming the insurer pays the tax (the agent does).
Worked example: premium $25,000. Tax = 0.0485 × $25,000 = $1,212.50. Stamping fee = 0.0004 × $25,000 = $10.00. Total remitted with the filing = $1,222.50.