Tax on Insurers – FAQs

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About Tax on Insurers

What is the tax on insurers?

The tax on insurers is an annual tax imposed on insurance companies doing business in California. The tax on insurers program is jointly administered by the Board of Equalization (BOE), California Department of Insurance (CDI) and the State Controller's Office (SCO).

How are the tax on insurers funds used?

The funds are deposited into the Insurance Tax Fund of the State Treasury. After refunds are drawn from the Fund, the balance is transferred to the General Fund. (RTC 13151-13153.)

Who owes tax on insurers?

Insurance companies that have received authority from the California Department of Insurance (CDI) to transact insurance business in California are called "admitted insurers." Any insurer transacting insurance business in California may be subject to as many as three taxes in California.

  • All insurers are subject to tax on gross premiums or business income as below.
  • An insurer may also be subject to a retaliatory tax if the insurance company is domiciled in another state which imposes higher taxes and fees.(RTC 12281)
  • The third tax on insurers is on ocean marine insurance. (RTC 12101)

Surplus Line Brokers are brokers who are authorized to place policies with nonadmitted insurance companies on behalf of California insurance customers. Surplus lines brokers are not insurers; however, they also pay a separate tax imposed on insurance business. (Ins Code 1760 – 1780.)

How is tax on insurers charged?

  • For insurers, other than those transacting title insurance, the basis for the tax is a percentage of gross premiums, less return premiums, received by the insurer on business done in California. (RTC 12221.) Gross premiums do not include premiums received for ocean marine insurance. For insurers transacting title insurance, the basis of the tax is upon income, for business done in this state. (RTC 12231.)
  • California's retaliatory tax is imposed on an out-of-state insurer when its state of domicile (home state) imposes more tax on a California insurer doing identical business in its home state. When the home state does this, a retaliatory tax in the amount of the difference is assessed against the out-of-state insurer. (Cal.Const., Art. XIII, 28(f)(3); Insurance Code 685).
  • For insurers transacting ocean marine insurance, the basis of the tax is measured by a portion of the underwriting profits. (RTC 12103.)

Licensed surplus line brokers pay a tax based on a percentage of gross premiums charged on business done in this state. (Ins Code 1760 – 1780.)

For detailed information, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov.

Registration

Who is required to register with CDI?

  • Insurers (including Title, Non-Title, Pension, & Ocean Marine)
    Insurers are required to register with and receive a Certificate of Authority from the CDI to transact insurance business in California. Insurers should contact the CDI for information on registration and licensing requirements. To register, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov. Tax forms and payment instructions can be found on the CDI website. The CDI will notify the BOE of any new registration.
  • Surplus Line Brokers
    Surplus line brokers are required to register with the CDI. They should contact the CDI directly for specific registration and licensing requirements.

How do I register?

To register, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov. The CDI will notify the BOE of any necessary registration or registration updates. The CDI will notify the BOE of any new registration.

Do I need to register with any other agency?

The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements. For a listing of their assistance centers, visit their website at www.business.ca.gov/.

Visit www.calgold.ca.gov for help with permit and licensing requirements for other state, federal, and local authorities (for example, you may need to be registered with the Franchise Tax Board or the Employment Development Department).

Visit California's Tax Service Center at www.taxes.ca.gov for additional tax information.

You may also want to consult with a tax professional for assistance on other agency requirements.

Who do I contact if my business changes or I need additional information?

You should notify the CDI of any registration changes.

For questions pertaining to appeals with the BOE, you may also contact the BOE Customer Service Center at 1-800-400-7115 (TTY: 711), Monday through Friday (except state holidays) 8:00 a.m. to 5:00 p.m. (Pacific time), and select the option for "Special Taxes and Fees" or send a message through our website at Email Your Tax Questions.

Collecting the Tax on Insurers

What is the current tax on insurers rate?

The rate of tax on insurance varies by the type of insurance. For detailed information regarding exact rates, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov.

Are there any exemptions for tax on insurers?

For detailed information regarding exemptions, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov.

Is the tax on insurers in lieu of any other taxes?

Yes. The tax imposed on insurers (including ocean marine insurers) is in lieu of all other taxes and licenses, state, county, and municipal, upon those insurers and their property, except those as stated in RTC 12204 (or RTC 12102).

Filing and Making a Payment

When are the tax on insurers return and payment due?

All insurance tax returns are filed and paid to the CDI. However, payments for deficiency assessments (billings) issued by the BOE, should be made directly to the SCO.

  • For all insurers, except ocean marine insurers, the annual return and payment are due April 1 of the following calendar year. If applicable, the schedule for retaliatory tax should be filed with the annual return.
  • The return and payment for taxes on ocean marine insurance are due June 15 of the following calendar year.
  • The return and payment for surplus line brokers are due March 1 of the following calendar year.

For more information on return or payment due dates, please contact the CDI at 1-800-927-4357 or visit their website at www.insurance.ca.gov.

How do I pay the insurance tax?

All tax returns are filed and paid to the CDI. However, payments for deficiency assessments (billings) issued by the BOE, should go directly to the SCO.

Payment instructions are provided on the Notice of Deficiency Assessment (billing). If you are making payment by check, please make your check payable to:

State Controller's Office
Division of Accounting and Reporting
State Tax Accounting and Reporting Bureau
P. O. Box 942850
Sacramento, CA 94250-5880

The CDI's Electronic Fund Transfer Program Information Guide provides EFT registration information. For more information, you may also call (916) 492-3288, send an email to eft@insurance.ca.gov, or write to the following address:

California Department of Insurance
Accounting Services Bureau
Attn: Tax Accounting/EFT
300 Capitol Mall, Suite 14000
Sacramento, CA 95814

How do I file an appeal of a billing issued by the BOE?

You may file an appeal of an insurance tax deficiency assessment (billing) by using BOE- 416, Petition for Redetermination, stating the specific grounds upon which the appeal is founded. Petitions for Redetermination must be filed within 30 days from the date on the assessment, should be in writing and specify the period for which you are making the appeal. Additional information about appeals can be found in our Publication 17, Appeals Procedures.

Mail your petition to:

Board of Equalization
Appeals and Data Analysis Branch (MIC: 33)
P.O. Box 942879
Sacramento, CA 94279-0033

Or email to:
adab@boe.ca.gov

A copy of the appeal must also be sent to:

California Department of Insurance
Premium Tax Audit Bureau
300 South Spring Street, 13th Fl
Los Angeles, CA 90013-1230

Attn: David Okumura, Supervisor

How do I claim a refund of the tax on insurers?

If you have overpaid the tax on insurers, you may file a claim for refund by using BOE-101, Claim for Refund or Credit, or by filing an amended return(s), stating the specific reason(s) for the overpayment. Claims for refund must be in writing, be signed by you and should specify the period and amount for which you are making the claim. Additional information about claiming a refund can be found at www.boe.ca.gov/sptaxprog/refund/.

Mail claims for refund and/or amended returns to:

Board of Equalization
Appeals and Data Analysis Branch (MIC: 33)
P.O. Box 942879
Sacramento, CA 94279-0033

Or email to:
adab@boe.ca.gov

A copy of the claim for refund and amended return must also be sent to:

California Department of Insurance
Premium Tax Audit Bureau
300 South Spring Street, 13th Fl
Los Angeles, CA 90013-1230

Attn: David Okumura, Supervisor

How long do I have to file a refund claim for the tax?

Claims for refund must be filed by whichever of the following dates that occurs last:

  • For returns-Four years after April 1st of the year following the year for which the overpayment was made. (This date is also valid for ocean marine insurers and surplus line brokers, even though they have different annual return due dates of June 15 and March 1 respectively).
  • Six months from the date you overpaid the tax.
  • Six months from the date a determination (billing) became final.

Be sure to file your claim for refund by the applicable deadline. If you do not file on time, the BOE cannot consider your claim, even if you overpaid the tax. If you have questions about your deadline to file a refund claim, contact our Customer Service Center at 1-800-400-7115, Monday through Friday, 8:00 a.m. to 5:00 p.m. (Pacific time), excluding state holidays.