Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2011
 

Tax on Insurers Law

Chapter 3. All Insurance Other Than Ocean Marine.

Article 1. General*

Section 12202.1

12202.1. Adjustment of rate of tax. Notwithstanding the rate specified by Section 12202, the gross premiums tax rate paid by insurers for any premiums collected between November 8, 1988 and January 1, 1991 shall be adjusted by the Board of Equalization in January of each year so that the gross premiums tax revenues collected for each prior calendar year shall be sufficient to compensate for changes in such revenues, if any, including changes in anticipated revenues, arising from this act. In calculating the necessary adjustment, the Board of Equalization shall consider the growth in premiums in the most recent three year period, and the impact of general economic factors including, but not limited to, the inflation and interest rates.

History.—Adopted by voters, Prop 103, Sec. 6, in effect November 8, 1988.

Prepayment judicial review denied.—Article XIII, section 32 of the California Constitution prohibits the court from considering the challenge against this provision prior to the payment of tax, if any, assessed under its provisions. Calfarm Insurance Co. v. Deukmejian (1989) 48 Cal.3d 805.

Section 12202.1 constitutional.—This section is a proper delegation of legislative power to an administrative agency, and the constitutional grant of power to the Legislature in article XIII, section 28, subdivision (i), entails a similar grant of power to the electorate to legislate through the initiative process. State Compensation Insurance Fund v. State Board of Equalization (1993) 14 Cal.App.4th 1295.

Tax rates.—The rate set by the Board for 1989 was valid since the Board considered the three statutory factors, but the rate set for 1990 was invalid because the Board did not consider one of the statutory factors. The proper remedy was not to order a refund, but instead to remand to the Board to properly set the rate for 1990 by considering all the factors set forth in the statute. Pacific Mutual Life Insurance Co. v. State Board of Equalization (1996) 41 Cal.App.4th 1153.

* The title of Article 1. Tax Base, commencing with former Section 12251 was amended to its present form by Stats. 1961, p. 1981, operative January 1, 1962.