Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2010
 

Tax on Insurers Law

Chapter 4. Assessment and Effect of Tax*



Chapter 4. Assessment and Effect of Tax*

* Stats. 1961, p. 1984, operative January 1, 1962, amended the title of Chapter 4 by substituting "Effect of Tax" for "Levy".

Article 1. Tax Returns and Initial Payments

12301. Due date. (a) The taxes imposed upon insurers by deletionSection 28 of Article XIII of the California Constitution and of this part, except with respect to taxes on ocean marine insurance and retaliatory taxes, are due and payable annually on or before April 1st of the year following the calendar year in which the insurer engaged in the business of insurance or transacted insurance in this state. The taxes imposed with respect to ocean marine insurance are due and payable on or before June 15th of deletionthat year.

(b) With respect to Medi-Cal managed care plans, the taxes imposed by Section 12201 shall be due and payable on or before April 1st of the year following the calendar year in which the plan contracted with the State Department of Health Care Services as described in Section 12009.

(c) This section shall remain in effect only until January 1, 2011, and as of that date is repealed. However, any tax imposed by Section 12201 shall continue to be due and payable until the tax is paid.

History.—Added by Stats. 1961, p. 1984, operative January 1, 1962. Stats. 1969, p. 1474, in effect August 14, 1969, operative January 1, 1970, added "except with respect to taxes on ocean marine insurance and retaliatory taxes" and substituted "April 1st" for "June 15" in the first sentence, and added the second sentence. Stats. 1974, p. 621, operative November 6, 1974, substituted "Section 28" for "Section 144/5". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), deleted "the provisions of" after "upon insurers by", added "California" before "Constitution", deleted "of" before "this part, except", and substituted "that" for "such" after "before June 15th of" in subdivision (a); and added subdivisions (b) and (c).

Text of section operative January 1, 2011

12301. Due date. (a) The taxes imposed upon insurers by Section 28 of Article XIII of the California Constitution and this part, except with respect to taxes on ocean marine insurance and retaliatory taxes, are due and payable annually on or before April 1st of the year following the calendar year in which the insurer engaged in the business of insurance or transacted insurance in this state. The taxes imposed with respect to ocean marine insurance are due and payable on or before June 15th of that year.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12302. Insurance tax return in duplicate. (a) On or before April 1st (or June 15th with respect to taxes on ocean marine insurance) every person deletionthat is subject to any tax imposed by deletionSection 28 of Article XIII of the California Constitution or deletionthis part, in respect to the preceding calendar year shall file, in duplicate, deletiona tax return with the commissioner in deletionthe form as the commissioner may prescribe. The return shall show deletionthat information pertaining to its insurance business, or in the case of a Medi-Cal managed care plan, pertaining to contracts for providing services as described in Section 12209, in this state as will reflect the basis of its tax as set forth in deletionChapter 2 (commencing with Section 12071) and Chapter 3 (commencing with Section 12201) of this part, the computation of the amount of tax for the period covered by the return, the total amount of any tax prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part, and deletionany other information as the commissioner may require to carry out the purposes of this part. Separate returns shall be filed with respect to the following kinds of insurance:

deletion(1) Life insurance (or life insurance and disability insurance).

deletion(2) Ocean marine insurance.

deletion(3) Title insurance.

deletion(4) Insurance other than life insurance (or life insurance and disability insurance), ocean marine insurance or title insurance.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1984, operative January 1, 1962. Stats. 1963, p. 5013 (Extra Session), in effect October 31, 1963, added the words "the total amount of any prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part" to the second sentence. Stats. 1969, p. 1475, in effect August 14, 1969, operative January 1, 1970, substituted "April 1st" for "June 15" and added the exception in parentheses for ocean marine insurance, in the first sentence. Stats. 1974, p. 621, operative November 6, 1974, substituted "Section 28" for "Section 144/5". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), substituted "that" for "who" after "marine insurance) every person", deleted "the provisions of" after "any tax imposed by", added "California" before "Constitution", deleted "of" after "Constitution or", deleted "an insurance" and added "a" before "tax return with the commissioner", substituted "the" for "such" after "with the commissioner in" and "The return shall show", added ", or in the case of a Medi-Cal managed care plan, pertaining to contracts for providing services as described in Section 12209," after "pertaining to its insurance business", substituted "Chapter" for "Chapters" before "2", added "Chapter" before "3", substituted "any" for "such" before "other information as the commissioner", redesignated former subdivisions (a), (b), (c), and (d) as paragraphs (1), (2), (3), and (4), respectively, in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12302. Insurance tax return in duplicate. (a) On or before April 1st (or June 15th with respect to taxes on ocean marine insurance) every person that is subject to any tax imposed by Section 28 of Article XIII of the California Constitution or this part, in respect to the preceding calendar year shall file, in duplicate, an insurance tax return with the commissioner in the form as the commissioner may prescribe. The return shall show that information pertaining to its insurance business, or in the case of a Medi-Cal managed care plan, pertaining to its total operating revenue as defined in Section 12241, in this state as will reflect the basis of its tax as set forth in Chapter 2 (commencing with Section 12071) and Chapter 3 (commencing with Section 12201) of this part, the computation of the amount of tax for the period covered by the return, the total amount of any tax prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part, and any other information as the commissioner may require to carry out the purposes of this part. Separate returns shall be filed with respect to the following kinds of insurance:

(1) Life insurance (or life insurance and disability insurance).

(2) Ocean marine insurance.

(3) Title insurance.

(4) Insurance other than life insurance (or life insurance and disability insurance), ocean marine insurance or title insurance.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12303. Return to be signed; oath or declaration. (a) Every return required by this article to be filed with the commissioner shall be signed by the insurer or Medi-Cal managed care plan or an executive officer of the insurer or plan and shall be made under oath or contain a written declaration that it is made under the deletionpenalty of perjury. A return of a foreign insurer may be signed and verified by its manager residing within this deletionstate. A return of an alien insurer may be signed and verified by the United States manager of deletionthe insurer.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1984, operative January 1, 1962. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), added "Medi-Cal managed care plan or" after "signed by the insurer or", added "or plan" before "and shall be made under oath", substituted "penalty" for "the penalties" before "of perjury.", substituted "state" for "State" after "residing within this", and substituted "the" for "such" after "United States manager of" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12303. Return to be signed; oath or declaration. (a) Every return required by this article to be filed with the commissioner shall be signed by the insurer or an executive officer of the insurer and shall be made under oath or contain a written declaration that it is made under penalty of perjury. A return of a foreign insurer may be signed and verified by its manager residing within this state. A return of an alien insurer may be signed and verified by the United States manager of the insurer.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12304. Blank forms furnished. (a) Blank forms of returns shall be furnished by the commissioner on application, but failure to secure deletionthe form shall not relieve any insurer or Medi-Cal managed care plan from making or filing a timely return.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), substituted "the" for "such a" after "but failure to secure", and added "or Medi-Cal managed care plan" after "not relieve any insurer" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12304. Blank forms furnished. (a) Blank forms of returns shall be furnished by the commissioner on application, but failure to secure the form shall not relieve any insurer from making or filing a timely return.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12305. Remittance of tax. (a) The insurer or Medi-Cal managed care plan required to file a return shall deliver the return in duplicate, together with a remittance payable to the Controller, for the amount of tax computed and shown thereon, less any prepayments made pursuant to Article 5, (commencing with Section 12251) of Chapter 3 of this part, to the office of the commissioner.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 1963, p. 5014 (Extra Session), in effect October 31, 1963, added the words "less any prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a) and added "or Medi-Cal managed care plan" after "The insurer" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12305. Remittance of tax. (a) The insurer required to file a return shall deliver the return in duplicate, together with a remittance payable to the Controller, for the amount of tax computed and shown thereon, less any prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part, to the office of the commissioner.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12306. Extension of time. The commissioner, for good cause shown, may extend for not to exceed 30 days the time for filing a tax return or paying any amount required to be paid with the return. The extension may be granted at any time, provided that a request therefor is filed with the commissioner within or prior to the period for which the extension may be granted.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 1965, p. 1831, in effect September 17, 1965, substituted "30" days for "10" days.

12307. Interest on extension. (a) Any insurer or Medi-Cal managed care plan to deletionwhich an extension is granted shall pay, in addition to the tax, interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5 from April 1st until the date of payment.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 1969, p. 1475, in effect August 14, 1969, operative January 1, 1970, substituted "April 1st" for "June 15th". Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "1 percent" for "one-half of 1 percent." Stats. 1982, Ch. 5. First Extra Session, in effect May 27, 1982, substituted "adjusted . . . 19269" for "rate . . . thereof" before "from". Stats. 1984, Ch. 1020, operative July 1, 1985, added "modified" before "adjusted," deleted "annual" before "rate," added "per month, or fraction thereof," before "established" and substituted "Section 6591.5" for "Section 19269". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), added "or Medi-Cal managed care plan" after "Any insurer", substituted "which" for "whom" before "an extension is granted", and added a comma after "6591.5" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12307. Interest on extension. (a) Any insurer that is granted an extension shall pay, in addition to the tax, interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from April 1st until the date of payment.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


Article 2. Initial Assessments

12411. Duplicate copy of return forwarded to board. A duplicate copy of each tax return received by the commissioner shall be promptly forwarded to the board.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962.

12412. Initial assessment of tax. (a) Upon receipt of the duplicate copy of the return of an insurer or Medi-Cal managed care plan the board shall initially assess the tax in accordance with the data as reported by the insurer or Medi-Cal managed care plan on the return.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a) and added "or Medi-Cal managed care plan" twice in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12412. Initial assessment of tax. (a) Upon receipt of the duplicate copy of the return of an insurer the board shall initially assess the tax in accordance with the data as reported by the insurer on the return.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12413. Notice of initial assessment. (a) The board shall promptly transmit notice of its initial assessment to the commissioner and the Controller, and if the initial assessment differs from the amount computed by the insurer or Medi-Cal managed care plan, notice shall also be given to the insurer or Medi-Cal managed care plan.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a) and added "or Medi-Cal managed care plan twice in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12413. Notice of initial assessment. (a) The board shall promptly transmit notice of its initial assessment to the commissioner and the Controller, and if the initial assessment differs from the amount computed by the insurer, notice shall also be given to the insurer.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12414. Overpayments may be offset. In making an initial assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against penalties, and against any interest on an underpayment.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962.

Back to top


Article 3. Deficiency Assessments

12421. Determination of correct amount of tax. (a) As soon as practicable after an insurer's,deletion surplus line broker's, or Medi-Cal managed care plan's return is filed, the commissioner shall examine it, together with any information within his or her possession or that may come into his or her possession, and he or she shall determine the correct amount of tax of the insurer,deletion surplus line broker, or Medi-Cal managed care plan.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, substituted "an insurer's or surplus line broker's" for "the" after "as practicable after", added "or her" after "information within his" and after "come into his", added "or she" after "possession, and he", and added "or surplus line broker" after "of the insurer". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), added a comma and deleted "or" before "surplus line broker" twice, and added ", or Medi-Cal managed care plan after "surplus line broker" twice in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12421. Determination of correct amount of tax. (a) As soon as practicable after an insurer's or surplus line broker's return is filed, the commissioner shall examine it, together with any information within his or her possession or that may come into his or her possession, and he or she shall determine the correct amount of tax of the insurer or surplus line broker.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12422. Proposed deficiency assessment. (a) If the commissioner determines that the amount of tax disclosed by the insurer's tax return and assessed by the board is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(b) If the commissioner determines that the amount of tax disclosed by the surplus line broker's tax return is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(c) If the commissioner determines that the amount of tax disclosed by the Medi-Cal managed care plan's tax return is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(d) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added subdivision designation "(a)", added "insurer's tax" after "disclosed by the", added "or her" after "disclosed by his", and added "or she" after "examination, he", in the first sentence of subdivision (a); and added subdivision (b). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, added commas before and after "in writing" in subdivisions (a) and (b) and added subdivisions (c) and (d).

Text of section operative January 1, 2011

12422. Proposed deficiency assessment. (a) If the commissioner determines that the amount of tax disclosed by the insurer's tax return and assessed by the board is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(b) If the commissioner determines that the amount of tax disclosed by the surplus line broker's tax return is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(c) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12423. Estimate where no return filed. (a) If an insurer,deletion surplus line broker, or Medi-Cal managed care plan fails to file a return, the commissioner may require a return by mailing notice to the insurer,deletion surplus line broker, or Medi-Cal managed care plan to file a return by a specified date or he or she may without requiring a return, or upon no return having been filed pursuant to the demand therefor, make an estimate of the amount of tax due for the calendar year or years in respect to which the insurer, deletionsurplus line broker, or Medi-Cal managed care plan failed to file the return. The estimate shall be made from any available information which is in the commissioner's possession or may come into his or her possession, and the commissioner shall propose, in writing, to the board a deficiency assessment for the amount of the estimated tax. The proposal shall set forth the basis of the estimate and the details of the computation of the tax.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "If an insurer", after "to the insurer" and after "which the insurer", added "or she" after "date or he", in the first sentence; and added "or her" after "come into his" in the second sentence. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), deleted "or" and added a comma before "surplus line broker" and added ", or Medi-Cal managed care plan" after "surplus line broker" three times, and added commas before and after "in writing" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12423. Estimate where no return filed. (a) If an insurer or surplus line broker fails to file a return, the commissioner may require a return by mailing notice to the insurer or surplus line broker to file a return by a specified date or he or she may without requiring a return, or upon no return having been filed pursuant to the demand therefor, make an estimate of the amount of tax due for the calendar year or years in respect to which the insurer or surplus line broker failed to file the return. The estimate shall be made from any available information which is in the commissioner's possession or may come into his or her possession, and the commissioner shall propose, in writing, to the board a deficiency assessment for the amount of the estimated tax. The proposal shall set forth the basis of the estimate and the details of the computation of the tax.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12424. Board to assess deficiency. The board shall make a deficiency assessment on the basis of a proposal submitted to it by the commissioner pursuant to Section 12422 or 12423.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962.

12425. More than one deficiency assessment. One or more deficiency assessments may be proposed or made for the amount of tax due for one or for more than one calendar year.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962.

Back to top


12426. Overpayments may be offset. In making a deficiency assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against penalties and against any interest on an underpayment.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962.

12427. Notice of deficiency assessment. (a) The board shall promptly notify the insurer, deletionsurplus line broker, or Medi-Cal managed care plan of a deficiency assessment made against the insurer, deletionsurplus line broker, or Medi-Cal managed care plan.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "notify the insurer" and after "against the insurer". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), and deleted "or" and added a comma before "surplus line broker", and added ", or Medi-Cal managed care plan" twice in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12427. Notice of deficiency assessment. (a) The board shall promptly notify the insurer or surplus line broker of a deficiency assessment made against the insurer or surplus line broker.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12428. Petition for redetermination. (a) An insurer, deletionsurplus line broker, or Medi-Cal managed care plan against deletionwhich a deficiency assessment is made under Section 12424 or 12425 may petition for redetermination of the deficiency assessment within 30 days after service upon the insurer, deletionsurplus line broker, or Medi-Cal managed care plan of the notice thereof, by filing with the board a written petition setting forth the grounds of objection to the deficiency assessment and the correction sought. At the time the petition is filed with the board a copy of the petition shall be filed with the commissioner.

If a petition for redetermination is not filed within the period prescribed by this section, the deficiency assessment becomes final and due and payable at the expiration of that period.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.— Added by Stats. 1961, p. 1986, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "An insurer" and after "upon the insurer" in the first sentence of the first paragraph. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first two sentences as subdivision (a), deleted "or" and added a comma before "surplus line broker" twice, substituted "which" for "whom" before "a deficiency assessment", added ", or Medi-Cal managed care plan" after "surplus line broker" twice, and added a comma before "a copy" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12428. Petition for redetermination. (a) An insurer or surplus line broker against which a deficiency assessment is made under Section 12424 or 12425 may petition for redetermination of the deficiency assessment within 30 days after service upon the insurer or surplus line broker of the notice thereof, by filing with the board a written petition setting forth the grounds of objection to the deficiency assessment and the correction sought. At the time the petition is filed with the board, a copy of the petition shall be filed with the commissioner.

If a petition for redetermination is not filed within the period prescribed by this section, the deficiency assessment becomes final and due and payable at the expiration of that period.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12429. Oral hearing. (a) If a petition for redetermination of a deficiency assessment is filed within the time allowed under Section 12428, the board shall reconsider the deficiency assessment and, if the insurer, deletionsurplus line broker, or Medi-Cal managed care plan has so requested in the petition, shall grant an oral hearing for the presentation of evidence and argument before the board or its authorized representative. The board shall give the petitioner and the commissioner at least 20 days' notice of the time and place of hearing. The hearing may be continued from time to time as may be necessary.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1986, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "if the insurer" in the first sentence. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), deleted "or" and added a comma before surplus line broker, and added ", or Medi-Cal managed care plan" after "surplus line broker" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12429. Oral hearing. (a) If a petition for redetermination of a deficiency assessment is filed within the time allowed under Section 12428, the board shall reconsider the deficiency assessment and, if the insurer or surplus line broker has so requested in the petition, shall grant an oral hearing for the presentation of evidence and argument before the board or its authorized representative. The board shall give the petitioner and the commissioner at least 20 days' notice of the time and place of hearing. The hearing may be continued from time to time as may be necessary.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12430. Decrease or increase before finality date. The board may decrease or increase the amount of the deficiency assessment before the deficiency assessment becomes final, but the amount may be increased only if a claim for the increase is asserted by the commissioner or the board at or before the hearing.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962.

Back to top


12431. Finality date. (a) The order or decision of the board upon a petition for redetermination of a deficiency assessment becomes final 30 days after service on the insurer, deletionsurplus line broker, or Medi-Cal managed care plan of a notice thereof, and any resulting deficiency assessment is due and payable at the time the order or decision becomes final.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962. Former Section 12431, repealed by Stats. 1961, p. 1985, provided for an annual assessment of taxes upon insurers. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "on the insurer". Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), deleted "or" and added a comma before "surplus line broker", and added ", or Medi-Cal managed care plan" after "surplus line broker" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12431. Finality date. (a) The order or decision of the board upon a petition for redetermination of a deficiency assessment becomes final 30 days after service on the insurer or surplus line broker of a notice thereof, and any resulting deficiency assessment is due and payable at the time the order or decision becomes final.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12432. Statute of limitations. Except for a notice given pursuant to Section 12430 or 12431, or in the case of fraud or the failure to file a return, every notice of a deficiency assessment shall be given within four years after April 1st of the year following the year for which the amount of tax is assessed or within four years after the return is filed, whichever period expires the later. In the case of failure to file a return the notice shall be given within eight years after April 1st of the year following the year for which the amount of tax is assessed.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962. Stats. 1969, p. 1475, in effect August 14, 1969, operative January 1, 1970, substituted "April 1st" for "June 15th" in the first and second sentences.

12433. Waiver of limitation. (a) If before the expiration of the time prescribed in Section 12432 for giving of a notice of deficiency assessment the insurer, deletionsurplus line broker, or Medi-Cal managed care plan has consented in writing to the giving of the notice after deletionthat time, the notice may be given at any time prior to the expiration of the time agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "assessment the insurer" in the first sentence. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designatd the first paragraph as subdivision (a), deleted "or" and added a comma before "surplus line broker", added ", or Medi-Cal managed care plan" after "surplus line broker", and substituted "that" for "such" after "giving of the notice after" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12433. Waiver of limitation. (a) If before the expiration of the time prescribed in Section 12432 for giving of a notice of deficiency assessment the insurer or surplus line broker has consented in writing to the giving of the notice after that time, the notice may be given at any time prior to the expiration of the time agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

Back to top


12434. Service of notice. (a) Any notice required by this article shall be placed in a sealed envelope, with postage paid, addressed to the insurer, deletionsurplus line broker, or Medi-Cal managed care plan at deletionits address as it appears in the records of the commissioner or the board. The giving of notice shall be deemed complete at the time of deposit of the notice in the United States Post Office, or a mailbox, deletionsubpost office, substation or mail chute or other facility regularly maintained or provided by the United States Postal ervice, without extension of time for any reason. In lieu of mailing, a notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of deletionthe delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962. Stats. 1974, Ch. 610, effective January 1, 1975, revised and expanded the section and deleted the reference to section 1013 of the C. C. P. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "to the insurer" and added "or her" after "at his" in the first sentence. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), deleted "or" and added a comma before "surplus line broker", added ", or Medi-Cal managed care plan" after "surplus line broker", substituted "its" for "his or her" before "address as it appears", substituted "subpost" for "sub-post" after ", or a mailbox,", and substituted "the" for "such" after "deemed complete at the time of" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12434. Service of notice. (a) Any notice required by this article shall be placed in a sealed envelope, with postage paid, addressed to the insurer or surplus line broker at its address as it appears in the records of the commissioner or the board. The giving of notice shall be deemed complete at the time of deposit of the notice in the United States Post Office, or a mailbox, subpost office, substation or mail chute or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason. In lieu of mailing, a notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of the delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12435. Copies of notice. A copy of each notice of a deficiency assessment made by the board shall be transmitted to the commissioner and the Controller. The Controller shall keep an appropriate record of all such assessments and any payments thereon.

History.—Added by Stats. 1961, p. 1987, operative January 1, 1962. Former Section 12434, repealed by stats. 1961, p. 1985, provided for notice to insurers whose tax had been assessed in an amount differing from the amount of tax liability as computed by the insurer.

Back to top


Article 4. Effect of Tax

12491. Lien of tax. (a) Every tax levied upon an insurer underdeletion Article XIII of the California Constitution anddeletion this part is a lien upon all property and franchises of every kind and nature belonging to the insurer, and has the effect of a judgment against the insurer.

(b) (1) Every tax levied upon a surplus line broker under deletionPart 7.5 (commencing with Section 13201) of Division 2 is a lien upon all property and franchises of every kind and nature belonging to the surplus line broker, and has the effect of a judgment against the surplus line broker.

(2) A lien levied pursuant to this subdivision shall not exceed the amount of unpaid tax collected by the surplus line broker.

(c) (1) Every tax levied upon a Medi-Cal managed care plan under Chapter 1 (commencing with Section 12001) is a lien upon all property and franchises of every kind and nature belonging to the Medi-Cal managed care plan, and has the effect of a judgment against the Medi-Cal managed care plan.

(2) A lien levied pursuant to this subdivision shall not exceed the amount of unpaid tax collected by the Medi-Cal managed care plan.

(d) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History—Added by Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 2005, Ch. 231 (AB 1424), in effect January 1, 2006, established the former first sentence as subdivision (a); and added subdivision (b), paragraphs (1) and (2). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, deleted "the provisions of" before "Article XIII of", added "California" before "Constitution", deleted "of" before "this part is a lien upon", deleted "the provisions of" before "Part 7.5" of subdivision (a); and added subdivisions (c) and (d).

Notes.—This statutory lien attaches to operative property of a corporation irrespective of ownership and until such lien is liquidated a tax clearance certificate cannot be issued. McKenney v. Riley (1936) 14 Cal.App.2d 174, 57 P2d 1362.

Text of section operative January 1, 2011

12491. Lien of tax. (a) Every tax levied upon an insurer under the provisions of Article XIII of the California Constitution and of this part is a lien upon all property and franchises of every kind and nature belonging to the insurer, and has the effect of a judgment against the insurer.

(b) (1) Every tax levied upon a surplus line broker under the provisions of Part 7.5 (commencing with Section 13201) of Division 2 is a lien upon all property and franchises of every kind and nature belonging to the surplus line broker, and has the effect of a judgment against the surplus line broker.

(2) A lien levied pursuant to this subdivision shall not exceed the amount of unpaid tax collected by the surplus line broker.

(c) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12492. When lien attaches. Every lien attaches as of 12:01 a.m. on the first day of March of the calendar year in which the tax is levied.

History.—Added by Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 1967, p. 2244, operative January 1, 1968, substituted "as of 12:01 a.m. on the first day of" for "on the first Monday in" March.

Back to top


12493. Lien has effect of execution. (a) Every lien has the effect of an execution duly levied against all property of a delinquent insurer, deletionsurplus line broker, or Medi-Cal managed care plan.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 2005, Ch. 231 (AB 1424), in effect January 1, 2006, added "or surplus line broker" after "all property of a delinquent insurer." Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first sentence as subdivision (a), deleted "or" and added a comma before "surplus line broker" and added ", or Medi-Cal managed care plan" after "surplus line broker" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12493. Lien has effect of execution. (a) Every lien has the effect of an execution duly levied against all property of a delinquent insurer or surplus line broker.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12494. Removal of lien. (a) No judgment is satisfied nor lien removed until either:

deletion(1) The taxes, interest, penalties, and costs are paid.

deletion(2) The insurer's, deletionsurplus line broker's, or Medi-Cal managed care plan's property is sold for the payment thereof.

(b) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 1959, p. 1892, in effect April 1, 1959, added "interest" in subdivision (a). Stats. 2005, Ch. 231 (AB 1424), in effect January 1, 2006, added "or surplus line broker's" after "The insurer's" in subdivision (b). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated first sentence as subdivision (a), redesignated former subdivisions (a) and (b) as paragraphs (1) and (2), respectively, deleted "or" and added a comma before "surplus line broker's", and added ", or Medi-Cal managed care plan's" before "property is sold" in subdivision (a); and added subdivision (b).

Text of section operative January 1, 2011

12494. Removal of lien. (a) No judgment is satisfied nor lien removed until either:

(1) The taxes, interest, penalties, and costs are paid.

(2) The insurer's or surplus line broker's property is sold for the payment thereof.

(b) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.

12495. No dissolution or bankruptcy discharge until taxes paid. No court shall make and enter a final discharge in bankruptcy or decree of dissolution, nor shall any county clerk or the Secretary of State file a discharge, decree, or any other document by which the term of existence of a corporation or surplus line broker's business is reduced, or a surplus line broker's assets are transferred to a new owner until all taxes, interest, penalties, and costs are paid and discharged.

History.—Added Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 1959, p. 1892, in effect April 1, 1959, inserted "interest," between "taxes," and "penalties." Stats. 2005, Ch. 231 (AB 1424), in effect January 1, 2006, added "or surplus line broker's business" after "existence of a corporation", added "a surplus line broker's assets are transferred to a new owner" and deleted "terminated" after "existence of a corporation is reduced, or."

Back to top