This part shall be known and may be cited as the Nonadmitted Insurance Tax Law.
Part 7.5NONADMITTED INSURANCE TAX
Section § 13201
This section is called the Nonadmitted Insurance Tax Law, which focuses on the taxes related to insurance policies that are not admitted, or not officially recognized, within the state.
Nonadmitted insurance insurance tax tax law unlicensed insurers surplus lines insurance insurance regulation nonadmitted insurers insurance premiums tax collection insurance reporting policy taxation insurance compliance state insurance tax unauthorized insurers insurance oversight
Section § 13203
This section defines who is considered a "Person" and a "Taxpayer" for the purposes of this part of the law. A "Person" can be an individual or any form of legal or business entity, including corporations and partnerships, as well as those acting in a fiduciary role like trustees or receivers. A "Taxpayer" is any such person that is required to pay the tax detailed in this part of the law.
For purposes of this part:
(a)CA Revenue and Taxation Code § 13203(a) “Person” means an individual, bank, corporation, partnership, limited liability company, society, association, organization, joint stock company, estate, or trust, or a receiver, trustee, assignee, referee or any other person acting in a fiduciary capacity, whether appointed by a court or otherwise, or any combination thereof.
(b)CA Revenue and Taxation Code § 13203(b) “Taxpayer” means any person subject to the tax imposed by this
part.
individual bank corporation partnership limited liability company society association organization joint stock company estate trust fiduciary capacity court-appointed tax obligation legal entity
Section § 13210
This law requires individuals or businesses in California who pay insurance premiums for contracts that start or renew after January 1, 1994, to pay a 3% gross premium tax. It applies to home state insureds, which are specifically defined by California law.
There are exceptions including coverage already taxed under different sections of the Insurance Code, like Section 1775.5 or Section 132. If the returned premiums exceed the paid ones in a quarter, taxpayers can either carry forward the excess to reduce future taxes or receive a refund.
Moreover, when calculating the tax, the total premium for all nonadmitted insurance from a single transaction in a quarter is considered. However, certain interstate transit operations are excluded, and separate rules apply about where the premium should be taxed, especially for businesses with out-of-state operations.
(a)CA Revenue and Taxation Code § 13210(a) For gross premiums paid or to be paid on insurance contracts that take effect or are renewed on or after January 1, 1994, every California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code, who effects insurance governed by Chapter 6 (commencing with Section 1760) of Part 2 of Division 1 of the Insurance Code shall pay a gross premium
tax of 3 percent charged for the use of the state, less 3 percent of returned premiums that were subject to the tax received by reason of cancellation or reduction of premium.
(1)CA Revenue and Taxation Code § 13210(a)(1) This section shall not apply to any of the following:
(A)CA Revenue and Taxation Code § 13210(a)(1)(A) Insurance coverage for which a tax on the gross premium is due or has been paid pursuant to Section 1775.5 of the Insurance Code.
(B)CA Revenue and Taxation Code § 13210(a)(1)(B) Gross premiums paid and returned premiums received by that California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code, upon business governed by the provisions of Section 1760.5 of the Insurance Code.
(C)CA Revenue and Taxation Code § 13210(a)(1)(C) Insurance coverage for which a tax on the gross premium is due or has been paid pursuant to Section 132 of the Insurance Code.
(2)CA Revenue and Taxation Code § 13210(a)(2) If during any calendar quarter 3 percent of the returned premiums received that were subject to the tax imposed by this part exceed 3 percent of the gross premiums paid or to be paid by that person on contracts that took effect or were renewed in that calendar quarter, then that person may either carry forward the excess to a succeeding calendar quarter and apply it as a credit against the 3 percent of gross premiums paid or to be paid by that person in the succeeding calendar quarter, or the person may elect to receive, and be paid a refund equal to the amount of taxes paid by the person on the excess of returned premiums received over gross premiums paid or to be paid.
(b)CA Revenue and Taxation Code § 13210(b) For purposes of determining the tax, the total gross premium paid or to be paid for all nonadmitted insurance placed in a single transaction with one underwriter or group of underwriters, whether in one or
more policies, in that calendar quarter during which the taxable insurance contract or contracts took effect or were renewed, shall be the entire gross premium charged on all nonadmitted insurance for the California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code.
(c)CA Revenue and Taxation Code § 13210(c) Subdivision (b) shall not apply to interstate motor transit operations conducted between this and other states. With respect to those operations, the tax shall be payable on the entire premium charged on all nonadmitted insurance, less any of the following:
(1)CA Revenue and Taxation Code § 13210(c)(1) The portion of the premium that is determined to have been charged for operations in other states that have taxed the premium on operations in states of an insured maintaining its headquarters office in this state.
(2)CA Revenue and Taxation Code § 13210(c)(2) The premium for any operations
outside of this state of an insured who maintains a headquarters operating office outside of this state and a branch office in this state.
gross premium tax insurance contracts nonadmitted insurance home state insured returned premiums tax exemptions tax credit insurance coverage exceptions california insureds premium refund single transaction interstate motor transit nonadmitted insurance premium tax calculation rules interstate operations
Section § 13220
This law requires individuals dealing with certain taxable insurance contracts to file a return with the Franchise Tax Board by the end of the second month after each calendar quarter. Taxes, penalties, and interest are managed similarly to other tax laws unless stated otherwise. If you miss the payment deadline, you face a 10% penalty, or 25% if fraud is involved. Refunds can earn interest if they aren't issued quickly, but such interest isn't applicable if refunded promptly. Lastly, the time limit for refunds relates to changes in premiums rather than overpayments.
(a)CA Revenue and Taxation Code § 13220(a) Every person subject to this part shall file with the Franchise Tax Board a return prescribed by the board on or before the first day of the third month following the close of the calendar quarter during which a taxable insurance contract took effect or was renewed.
(b)CA Revenue and Taxation Code § 13220(b) In accordance with forms and instructions, the tax, penalties, and interest imposed by this part shall be administered and enforced by the Franchise Tax Board as though they are taxes imposed under Part 10
(commencing with Section 17001). Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or any other applicable law shall apply for this purpose in the same manner and with the same force and effect as if the language of Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or the other applicable law is incorporated in full into this part, except to the extent that the provision is either inconsistent with a provision of this part, is not relevant to this part, or is otherwise provided for under this part.
(c)CA Revenue and Taxation Code § 13220(c) The following penalties shall apply, in lieu of those penalties provided under Part 10.2 (commencing with Section 18401):
(1)CA Revenue and Taxation Code § 13220(c)(1) A penalty of 10 percent of the amount of the payment due is imposed upon any person who fails to make the necessary payment within the time required.
(2)CA Revenue and Taxation Code § 13220(c)(2) For any part of a payment required that was not made within the time required by law, when the nonpayment or late payment was due to fraud on the part of the taxpayer, a penalty of 25 percent of the amount unpaid shall be added thereto, in addition to all other penalties otherwise imposed.
(d)Copy CA Revenue and Taxation Code § 13220(d)
(1)Copy CA Revenue and Taxation Code § 13220(d)(1) Except as provided in paragraph (2), interest shall be allowed and paid on any refund provided under paragraph (2) of subdivision (a) of Section 13210 from the date the claim for refund is filed. No interest shall be allowed or paid on amounts credited to succeeding calendar quarters as provided under paragraph (2) of subdivision (a) of Section 13210.
(2)CA Revenue and Taxation Code § 13220(d)(2) If an amount refunded as provided under paragraph (2) of subdivision (a) of Section 13210 within 120 days after a claim or return is filed, or
within 120 days after the last date for filing the tax return, whichever is later, no interest shall be allowed on the amount of the refund.
(e)CA Revenue and Taxation Code § 13220(e) The period of limitation for allowing or making refunds or credits as provided under paragraph (2) of subdivision (a) of Section 13210 shall be the period of limitations for allowing or making refunds or credits of overpayments under Part 10.2 (commencing with Section 18401), except that the “date of cancellation or reduction of premium” shall be substituted for “date of overpayment.”
taxable insurance contract Franchise Tax Board calendar quarter tax filing deadline penalty for late payment fraud penalty refund interest refund period refund limitations premium reduction payment deadlines interest on refunds tax penalties refund claim date
Section § 13221
If a person owes overdue taxes under this section and also owes amounts under other specified parts of the tax code, the Franchise Tax Board will use any money collected to first pay off the amounts owed under those other parts. This includes taxes, penalties, interest, and fees that are due under those parts.
In the event that a person subject to tax is delinquent in the payment of any amount due under this part, and that person also has an amount imposed and due and payable under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), any amounts collected by the Franchise Tax Board shall be applied first to the payment of those taxes, additions to tax, penalties, interest, fees, or other amounts imposed and due and payable under Part 10 (commencing with Section 17001), Part 10.2 (commencing
with Section 18401), or Part 11 (commencing with Section 23001).
delinquent tax payment Franchise Tax Board tax collection priority overdue taxes tax penalties interest on tax fees on tax tax code parts Part 10 taxes Part 10.2 taxes Part 11 taxes additions to tax tax payment application multi-part tax debt payment allocation
Section § 13222
This law section states that any collected amounts must be sent to the Treasurer and placed into the State's Insurance Tax Fund. This fund is specifically used to issue refunds under the related laws.
(a)CA Revenue and Taxation Code § 13222(a) All amounts collected shall be transmitted to the Treasurer and deposited in the State Treasury to the credit of the Insurance Tax Fund that is created by Section 13151.
(b)CA Revenue and Taxation Code § 13222(b) Moneys in the Insurance Tax Fund shall be drawn therefrom for the purpose of paying refunds under this part.
Insurance Tax Fund State Treasury Treasurer collected amounts refunds fund allocation tax refunds fund deposits tax collection government fund management insurance taxation public finance state fund usage fiscal policy revenue handling
