Overview

The Texas Comptroller of Public Accounts is offering a temporary amnesty program for unauthorized insurance premium tax that may provide an opportunity for non-admitted captive insurance companies, and their insureds, to voluntarily address potential Texas exposure. Companies with Texas operations, employees, property, or other insured risks should evaluate whether the program applies before the filing deadline.

At A Glance

Texas rules may impose a 4.85% unauthorized insurance premium tax on gross premiums charged for insurance covering people, property, or activities located in Texas. This applies when coverage is written by a non-admitted insurer, including a non-admitted captive insurance company. If the captive insurer does not pay the tax when due, the insured may also become jointly responsible for the tax.

What Is a Non-admitted Captive Insurance Company?

In general, a non-admitted insurer is an insurer who transacts insurance business in Texas without holding a Texas license. In the captive insurance context, this issue may arise when a captive insurer is formed outside Texas, such as in Vermont, Bermuda, the Cayman Islands, Tennessee, or another jurisdiction, and the captive’s policy covers Texas-based risks, including Texas property, employees, operations, people, or activities (a captive does not have to ‘transact‘ insurance business in Texas, merely cover Texas-based risks).

The amnesty program applies to insurance coverage written from January 1, 2022, through December 31, 2025. The program may be available to non-admitted captive insurance companies and their insureds where Texas risks are covered. Taxpayers who submit the applicable filings by December 31, 2026, may qualify for amnesty from penalties and interest.

Key Program Details

The program focuses on historical compliance for the following coverage period:

• January 1, 2022, through December 31, 2025

For qualifying taxpayers, the program may provide amnesty from the following:

• Waiver of penalties
• Waiver of interest

Texas Comptroller Guidance [1]

Required Filings

Non-admitted captive insurance companies and their insureds should evaluate whether they have Texas unauthorized insurance premium tax filing obligations for tax years 2022 through 2025. Depending on the facts, taxpayers should review whether the following filings are applicable to participate in the amnesty program:

• Form 25-108 – Texas Annual Unauthorized Insurance Tax Report
• Form 25-123 – Texas Annual Unauthorized Insurance Tax Report Supplement

The applicable filings must be submitted by December 31, 2026, to qualify for the temporary amnesty program.

Comptroller Notices

The Texas Comptroller has indicated that certain Texas franchise taxpayers who may be affiliated with a non-admitted captive insurance company may receive outreach regarding the amnesty program.

• Receiving a notice is not required to participate in the amnesty program.
• Taxpayers who receive notice but are not affiliated with a non-admitted captive insurance company do not need to take any further action.

Why This Matters

Captive insurance structures are often managed outside the state tax function within an organization, and Texas unauthorized insurance premium tax obligations may not have been fully considered where Texas risks are covered through non-admitted captive insurance arrangements. Because Texas may impose joint liability on the insured if the captive insurer does not pay the tax when due, both the captive insurer and the insured company should evaluate potential exposure. The amnesty window gives companies a practical opportunity to identify potential exposure, address prior-year compliance, and reduce the cost of correction through amnesty from penalties and interest.

Recommended next steps include:

• Identify policies covering Texas people, property, operations, or any other risks.
• Review premium allocation methodologies for multistate or global programs.
• Quantify potential Texas unauthorized insurance premium tax exposure for 2022 through 2025.
• Evaluate whether existing or future captive insurance structures should be refined to address ongoing Texas unauthorized insurance premium tax exposure.

How A&M Can Help

Alvarez & Marsal’s Insurance Strategy, Tax & Alternative Risk Solutions (ISTARS) and State & Local Tax (SALT) teams can help companies assess applicability, quantify exposure, prepare applicable filings, and evaluate future-state captive insurance planning considerations.

• Assess applicability of Texas unauthorized insurance premium tax rules.
• Evaluate eligibility for the temporary amnesty program.
• Quantify historical liabilities and prepare applicable filings.
• Develop approaches to address prior-year compliance and support communications with applicable stakeholders.
• Review potential alternative captive insurance structures, future-state compliance and planning considerations, including assisting with execution of developed reorganization plans.

References

[1] Texas Comptroller of Public Accounts, Tax Policy News: July 2026, 2026