Texas Offers Temporary Tax Amnesty for Nonadmitted Captive Insurers

The Texas Comptroller of Public Accounts has launched a temporary amnesty program for nonadmitted captive insurance companies and their insureds to encourage voluntary compliance with the state's unauthorized insurance premium tax requirements.

A captive insurer provides insurance coverage exclusively to its affiliated companies. Under Texas Insurance Code, Chapter 226, Subchapter A, captive insurance companies that are not licensed under Chapter 964 are subject to the unauthorized insurance premium tax. The tax is 4.85 percent of gross premiums charged for insurance covering people, property, or activities located in Texas. If a nonadmitted captive insurer does not pay the tax when it is due, the insured also becomes jointly responsible for the liability.

The Texas Comptroller's office said it will notify certain franchise taxpayers that may be affiliated with a nonadmitted captive insurance company. However, receiving a notice is not required to participate in the amnesty program. Taxpayers that receive a notice but are not affiliated with a nonadmitted captive insurance company do not need to take any further action.

Under the program, the lookback period is limited to 4 years, and eligible participants will have penalties and interest waived.

To qualify, unlicensed captive insurance companies and their insureds must file Forms 25-108 and 25-123, the Texas Annual Unauthorized Insurance Tax Report, and its supplement, for insurance tax years 2022, 2023, 2024, and 2025. These filings cover insurance written between January 1, 2022, and December 31, 2025.

The required forms must be submitted by December 31, 2026, to receive amnesty. The forms are available through the Texas Comptroller's website at comptroller.texas.gov/taxes/insurance/forms.

The Texas Comptroller's office said taxpayers with questions about the program can contact the agency toll- free at (800) 688–6829 or in Austin at (512) 305–9899.