Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2011
 

Tax on Insurers Law

Chapter 7. Cancellations and Refunds*


Article 1 Cancellations

Article 2 Refund or Credit for Collected Taxes


Chapter 7. Cancellations and Refunds*

Article 1. Cancellations¹

* Stats. 1961, p. 1990, operative January 1, 1962, amended the title of Chapter 7 from "corrections" to "cancellations and refunds".

¹ Stats. 1961, p. 1990, operative January 1, 1962, amended the title of Article 1 from "generally" to "cancellations".

Text of section operative through June 30, 2011

12951. Cancellation of assessment. (a) If any amount has been illegally assessed, the board shall set forth that fact in its records, certify the amount determined to be assessed in excess of the amount legally assessed and the insurer, surplus line broker, or Medi-Cal managed care plan against which the assessment was made, and authorize the cancellation of the amount upon the records of the Controller and the board. The board shall mail a notice to the insurer, surplus line broker, or Medi-Cal managed care plan of any cancellation authorized. Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.

deletion(b) This section shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed.

History.—Stats. 1961, p. 1990, operative January 1, 1962, repealed former Section 12951 which defined "taxes," and amended and renumbered former Section 12952 as Section 12951. The section was completely reworded. Stats. 1963, p. 3110, in effect September 20, 1963, added the words "that fact" in the first sentence, and substituted "two hundred fifty dollars ($250)" for "one hundred dollars ($100)" in the first and third sentences. Stats. 1965, p. 2055, in effect September 17, 1965, substituted "one thousand dollars ($1,000)" for "two hundred fifty dollars ($250)" in the first and third sentences. Stats. 1977, Ch. 921, operative January 1, 1978, substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)" in the first and third sentences. Stats. 1985, Ch. 591, effective January 1, 1986, substitutes "fifteen thousand dollars ($15,000)" for "five thousand dollars ($5,000)" in the first and third sentences. Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "fifty thousand dollars ($50,000)" for "fifteen thousand dollars ($15,000)" in the third sentence. Stats. 1994, Ch. 726, in effect September 22, 1994, substituted "any amount" for "an amount in excess of fifty thousand dollars ($50,000)" after "If" at the beginning of the section; substituted a comma for "and" after "in its records"; deleted "to the State Board of Control" after "certify"; added "determined to be" before "assessed in excess"; substituted ", and" for ". If the State Board of Control approves, it shall" after "assessment was made"; deleted "If an amount not exceeding fifty thousand dollars ($50,000) has been illegally assessed, the board, without certifying this fact to the State Board of Control, shall authorize the cancellation of the amount upon the records of the Controller and the board." as the third sentence; and added "Any proposed determination . . . of that determination." to the end of the section. Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "and the insurer" in the first sentence and after "to the insurer" in the second sentence. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first paragraph as subdivision (a), substituted "which" for "whom" before "the assessment was made," in the first sentence of, deleted "or" and added a comma before "surplus line broker" twice in, and added ", or Medi-Cal managed care plan" after "surplus line broker" twice in, subdivision (a); and added subdivision (b). Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, deleted former subdivision (b) which provided that "This section shall remain in effect only until January 1, 2011, and as of that date is repealed." and added the new subdivision (b).

Text of section operative deletionJuly 1, 2011

12951. Cancellation of assessment. (a) If any amount has been illegally assessed, the board shall set forth that fact in its records, certify the amount determined to be assessed in excess of the amount legally assessed and the insurer or surplus line broker against which the assessment was made, and authorize the cancellation of the amount upon the records of the Controller and the board. The board shall mail a notice to the insurer or surplus line broker of any cancellation authorized. Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.

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

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011. Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, substituted "July 1, 2011" for "January 1, 2011" after "operative on" in subdivision (b).

12952. Commissioner to notify board. If the commissioner discovers an amount assessed by the board which he believes to have been illegally assessed, he shall notify the board in writing of such fact, together with a statement of any information he may have concerning the correctness of the assessment.

History.—Stats. 1961, p. 1990, operative January 1, 1962, amended and renumbered former Section 12952 pertaining to the cancellation of an illegal assessment as Section 12951 and added the new Section 12952.

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Article 2. Refund or Credit for Collected Taxes²

² Stats. 1961, p. 1990, operative January 1, 1962, amended the title of Article 2 from "Credit for Collected Taxes" to "Refund or Credit for Collected Taxes".

Text of section operative through June 30, 2011

12977. Credits and refunds. (a) If the board determines that any tax, interest, or penalty has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in its records of the board, certify the amount of the taxes, interest, or penalties collected in excess of what was legally due, and from whom they were collected or by whom paid, and certify the excess to the Controller for credit or refund.

(b) The Controller upon receipt of a certification for credit or refund shall credit the excess on any amounts then due and payable from the insurer, surplus line broker, or Medi-Cal managed care plan under this part and refund the balance.

(c) Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.

deletion(d) This section shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed.

History.—Amended by Stats. 1957, p. 2470, in effect September 11, 1957; Stats. 1959, p. 1894, in effect April 1, 1959; Stats. 1959, p. 4380, in effect September 18, 1959; Stats. 1961, p. 1990, operative January 1, 1962. Stats. 1963, p. 3110, in effect September 20, 1963, substituted "two hundred fifty dollars ($250)" for "one hundred dollars ($100)" in the third sentence. Stats. 1965, p. 2055, in effect September 17, 1965, substituted "one thousand dollars ($1,000)" for "two hundred fifty dollars ($250)." Stats. 1977, Ch. 921, operative January 1, 1978, substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)" and added the word "State" preceding "Board" in the first and second sentences. Stats. 1982, Ch. 327, in effect June 30, 1982, added "(a)" before the first sentence, substituted "ten thousand dollars ($10,000)" for "five thousand dollars ($5,000)" after "exceeding" in the third sentence of new subdivision (a), added subdivision "(b)," and added "(c)" before the last sentence. Stats. 1985, Ch. 591, effective January 1, 1986, substituted "fifteen thousand dollars ($15,000)" for "ten thousand dollars ($10,000)" in subdivision (a). Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "fifty thousand dollars ($50,000)" for "fifteen thousand dollars ($15,000)" in the third sentence. Stats. 1994, Ch. 726, in effect September 22, 1994, substituted ", certify" for "and shall certify to the State Board of Control" after "records of the board"; substituted ", and certify the excess" for ". If approved by the State Board of Control, the excess shall be certified" after "by whom paid"; deleted "In the case, however, of a determination by the board that an amount not exceeding fifty thousand dollars ($50,000) was not required to be paid under this part, the board without obtaining approval of the State Board of Control may certify the amount to the Controller for credit or refund." in subdivision (a) deleted subdivision (b) which read: "Notwithstanding the provisions of subdivision (a), approval of the State Board of Control shall not be required with regard to a refund resulting from prepayment of taxes during and from the calendar year."; relettered former subdivision "(c)" as "(b)"; and added subdivision (c). Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "from the insurer" in subdivision (b). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, deleted "or" and added a comma before "surplus line broker" and added ", or Medi-Cal managed care plan" after "surplus line broker" in subdivision (b); and added subdivision (d). Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, deleted former subdivision (d) which provided that "This section shall remain in effect only until January 1, 2011, and as of that date is repealed." and added the new subdivision (d).

Text of section operative deletionJuly 1, 2011

12977. Credits and refunds. (a) If the board determines that any tax, interest, or penalty has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in its records of the board, certify the amount of the taxes, interest, or penalties collected in excess of what was legally due, and from whom they were collected or by whom paid, and certify the excess to the Controller for credit or refund.

(b) The Controller upon receipt of a certification for credit or refund shall credit the excess on any amounts then due and payable from the insurer or surplus line broker under this part and refund the balance.

(c) Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.

(d) This section shall become operative on deletionJuly 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011. Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, substituted "July 1, 2011" for "January 1, 2011" after "operative on" in subdivision (d).

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12978. Time for presentation of claim. No credit or refund shall be allowed or approved after four years after April 1st of the year following the year for which the overpayment was made, or with respect to a deficiency assessment made under Article 3 (commencing with Section 12421) of Chapter 4 after six months from the date the deficiency assessment becomes final, or after six months from the date of the overpayment, whichever period expires the later, unless a claim therefor is filed with the commissioner or the board within that period.

History.—Stats. 1961, p. 1991, operative January 1, 1962, completely revised this section. Stats. 1969, p. 1476, in effect August 14, 1969, operative January 1, 1970, substituted "April 1st" for "June 15th". Stats. 1982, Ch. 454, in effect January 1, 1983, added "(commencing with Section 12421)" after "Article 3," deleted "of this part" after "Chapter 4" and substituted "that" for "such" after "within".

12979. Form and content of claim. Every claim for refund or credit shall be in writing and shall state the specific grounds upon which it is founded.

History.—Added by Stats. 1957, p. 2471, in effect September 11, 1957. Stats. 1961, p. 1991, operative January 1, 1962, added "refund or" before "credit".

Content of claim.—Statements on the back of payment checks that the payments were under protest subject to claims for refund did not constitute valid claims for refund because the statements failed to state the required specific grounds upon which the refunds were claimed. The insurer therefore had failed to exhaust its administrative remedies. Mercury Casualty Co. v. State Board of Equalization (1986) 179 Cal.App.3d 34.

12980. Failure to file claim. Failure to file a claim for refund or credit within the time prescribed in this article constitutes a waiver of any demand against the State on account of overpayment.

History.—Added by Stats. 1957, p. 2471, in effect September 11, 1957. Stats. 1961, p. 1991, operative January 1, 1962, added "refund or" before "credit".

12981. Notice of action on claim. Within 30 days after disallowing any claim for refund or credit in whole or in part the board shall mail notice of its action to the claimant at its address as it appears in the records of the board.

History.—Added by Stats. 1957, p. 2471, in effect September 11, 1957. Stats. 1961, p. 1991, operative January 1, 1962, added "refund or" before "credit".

12982. Transmittal of claim to board. If the claim for refund or credit is presented to the commissioner he shall forthwith transmit it to the board, together with a statement of any information he may have concerning the subject of the claim.

History.—Added by Stats. 1957, p. 2471, in effect September 11, 1957. Stats. 1961, p. 1991, operative January 1, 1962, added "refund or" before "credit" and deleted "Insurance" before "commissioner".

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Text of section operative through June 30, 2011

12983. Interest; insurers. (a) Interest shall be allowed upon the amount of any overpayment of tax by an insurer or Medi-Cal managed care plan pursuant to this part at the modified adjusted rate per month established pursuant to Section 6591.5, from the first day of the monthly period following the period during which the overpayment was made. For purposes of this section, "monthly period" means the month commencing on the day after the due date of the payment through the same date as the due date in each successive month. In addition, a refund or credit shall be made of any interest imposed upon the claimant with respect to the amount being refunded or credited.

The interest shall be paid as follows:

(1) In the case of a refund, to the last day of the calendar month following the date upon which the claimant is notified in writing that a claim may be filed or the date upon which the claim is approved by the board, whichever date is the earlier.

(2) In the case of a credit, to the same date as that to which interest is computed on the tax or amount against which the credit is applied.

deletion(b) This section shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed.

History.—Added by Stats. 1959, p. 1894, in effect April 1, 1959. Stats. 1961, p. 1991, operative January 1, 1962, substituted the language beginning with "due date" for "date of the overpayment to the date on which the credit is used but not later than April 1st following the date of approval." Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "12 percent" for "6 percent." Stats. 1982, Ch. 5, First Extra Session in effect May 27, 1982, substituted "adjusted . . . 19269" for "rate . . . annum" before "from" in the first sentence. Stats. 1984, Ch. 1020, operative July 1, 1985, adds "modified" before "adjusted", deletes "annual" before "rate", adds "per annum" before "established" and substitutes "Section 6591.5" for "Section 19269" in the first line. Stats. 1992, Ch. 1336, in effect January 1, 1993, substituted "monthly" for "annum" after "adjusted rate per", substituted "first day of. . . . In addition, a" for "due date of the tax for the year for which the overpayment was made, but no" after "from the", and added "as follows" after "shall be paid" in the first sentence. Stats. 1995, Ch. 721, in effect January 1, 1996, added "by an insurer" after "overpayment of tax" in the first sentence of the first paragraph and made "The interest shall be paid as follows:" the second paragraph. Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, designated the first two paragraphs as subdivision (a), added "or Medi-Cal managed care plan" after "overpayment of tax by an insurer" in the first sentence and redesignated former subdivisions (a) and (b) as paragraphs (1) and (2), respectively, in subdivision (a); and added subdivision (b). Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, deleted former subdivision (d) which provided that "This section shall remain in effect only until January 1, 2011, and as of that date is repealed." and added the new subdivision (b).

Text of section operative deletionJuly 1, 2011

12983. Interest; insurers. (a) Interest shall be allowed upon the amount of any overpayment of tax by an insurer pursuant to this part at the modified adjusted rate per month established pursuant to Section 6591.5, from the first day of the monthly period following the period during which the overpayment was made. For purposes of this section, "monthly period" means the month commencing on the day after the due date of the payment through the same date as the due date in each successive month. In addition, a refund or credit shall be made of any interest imposed upon the claimant with respect to the amount being refunded or credited.

The interest shall be paid as follows:

(1) In the case of a refund, to the last day of the calendar month following the date upon which the claimant is notified in writing that a claim may be filed or the date upon which the claim is approved by the board, whichever date is the earlier.

(2) In the case of a credit, to the same date as that to which interest is computed on the tax or amount against which the credit is applied.

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

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011. Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, substituted "July 1, 2011" for "January 1, 2011" after "operative on" in subdivision (b).

12983.1. Interest; surplus line brokers. Interest shall be allowed upon the amount of any overpayment of tax by a surplus line broker pursuant to this part at the rate of 1 percent per calendar month or fraction thereof, from the first day of the monthly period following the period during which the overpayment was made. For purposes of this section, "monthly period" means the month commencing on the day after the due date of the payment through the same date as the due date in each successive month. In addition, a refund or credit shall be made of any interest imposed upon the claimant with respect to the amount being refunded or credited.

The interest shall be paid as follows:

(a) In the case of a refund, to the last day of the calendar month following the date upon which the claimant is notified in writing that a claim may be filed or the date upon which the claim is approved by the board, whichever date is the earlier.

(b) In the case of a credit, to the same date as that to which interest is computed on the tax or amount against which the credit is applied.

History.—Added by Stats. 1995, Ch. 721, in effect January 1, 1996.

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12983.5. Timely refund—disallowance of interest. If any overpayment of taxes imposed by this part is refunded or credited within 90 days after the due date of the tax for the year for which the overpayment was made, no interest shall be allowed on that overpayment.

History.—Added by Stats. 1982, Ch. 327, in effect June 30, 1982.

Text of section operative through June 30, 2011

12984. Disallowance of interest. (a) If the board determines that any overpayment has been made intentionally or made not incident to a bona fide and orderly discharge of a liability reasonably assumed by the insurer, surplus line broker, or Medi-Cal managed care plan to be imposed by law, no interest shall be allowed on the overpayment.

(b) If any insurer, surplus line broker, or Medi-Cal managed care plan which has filed a claim for refund requests the board to defer action on its claim, the board, as a condition to deferring action, may require the claimant to waive interest for the period during which the insurer, surplus line broker, or Medi-Cal managed care plan requests the board to defer action on the claim.

deletion(c) This section shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed.

History.—Added by Stats. 1961, p. 1992, operative January 1, 1962. Stats. 1978, Ch. 827, effective January 1, 1979, lettered existing first paragraph as (a), and added new paragraph (b). Stats. 1995, Ch. 721, in effect January 1, 1996, added "or surplus line broker" after "by the insurer" in subdivision (a) and added "or surplus line broker" after "If any insurer" and after "which the insurer" in subdivision (b). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, deleted "or" and added a comma before "surplus line broker" once in subdivision (a) and twice in subdivision (b), and added ", or Medi-Cal managed care plan" after "surplus line broker" once in subdivision (a) and twice in subdivision (b); and added subdivision (c). Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, deleted former subdivision (c) which provided that "This section shall remain in effect only until January 1, 2011, and as of that date is repealed." and added the new subdivision (c).

Text of section operative deletionJuly 1, 2011

12984. Disallowance of interest. (a) If the board determines that any overpayment has been made intentionally or made not incident to a bona fide and orderly discharge of a liability reasonably assumed by the insurer or surplus line broker to be imposed by law, no interest shall be allowed on the overpayment.

(b) If any insurer or surplus line broker which has filed a claim for refund requests the board to defer action on its claim, the board, as a condition to deferring action, may require the claimant to waive interest for the period during which the insurer or surplus line broker requests the board to defer action on the claim.

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

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011. Stats. 2010, Ch. 717 (SB 853), in effect October 19, 2010, substituted "July 1, 2011" for "January 1, 2011" after "operative on" in subdivision (c).

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