BILL NUMBER: AB 1424	CHAPTERED  09/06/05

	CHAPTER  231
	FILED WITH SECRETARY OF STATE  SEPTEMBER 6, 2005
	APPROVED BY GOVERNOR  SEPTEMBER 6, 2005
	PASSED THE SENATE  AUGUST 22, 2005
	PASSED THE ASSEMBLY  MAY 19, 2005
	AMENDED IN ASSEMBLY  APRIL 7, 2005

INTRODUCED BY   Assembly Member Saldana

                        FEBRUARY 22, 2005

   An act to amend Section 1775.9 of the Insurance Code, and to amend
Sections 12491, 12493, 12494, 12495, and 12636.5 of the Revenue and
Taxation Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1424, Saldana  Taxation: delinquent tax liabilities: surplus
line brokers.
    Existing law imposes a gross premiums tax on, among others,
surplus line brokers, which is measured by gross premiums less return
premiums with certain exceptions, and provides for the processing
and auditing of tax returns by the Department of Insurance, for the
issuing of deficiency assessments, and the processing of petitions
and refunds by the State Board of Equalization. Existing law provides
that the tax levied upon an insurer, as specified, is a lien upon
all property owned by the insurer, imposes a penalty on any insurer
who fails to pay any tax, as specified, and disallows a corporate
dissolution or bankruptcy discharge unless all tax obligations are
paid.
   This bill would clarify that surplus line brokers are subject to
these same lien provisions that apply to other insurers.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1775.9 of the Insurance Code is amended to
read:
   1775.9.  (a) If the commissioner determines that the amount of tax
reported by the surplus line broker is less than the tax disclosed
by the commissioner's examination, the commissioner shall permit the
surplus line broker to provide additional information demonstrating
that the surplus line broker owes a lesser amount. If within 60 days,
or such additional time as the commissioner deems appropriate, the
commissioner and the surplus line broker cannot agree on the amount
owed, the commissioner shall propose in writing to the State Board of
Equalization a deficiency assessment for the difference pursuant to
subdivision (b) of Section 12422 of the Revenue and Taxation Code.
   (b) Section 12636.5, Article 3 (commencing with Section 12421) and
Article 4 (commencing with Section 12491) of Chapter 4 of, and
Article 1 (commencing with Section 12951) and Article 2 (commencing
with Section 12977) of Chapter 7 of, Part 7 of Division 2 of the
Revenue and Taxation Code shall apply to surplus line brokers, except
where inconsistent with the provisions of this chapter, in which
case this chapter shall govern.
  SEC. 2.  Section 12491 of the Revenue and Taxation Code is amended
to read:
   12491.  (a) Every tax levied upon an insurer under the provisions
of Article XIII of the 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.
  SEC. 3.  Section 12493 of the Revenue and Taxation Code is amended
to read:
   12493.  Every lien has the effect of an execution duly levied
against all property of a delinquent insurer or surplus line broker.

  SEC. 4.  Section 12494 of the Revenue and Taxation Code is amended
to read:
   12494.  No judgment is satisfied nor lien removed until either:
   (a) The taxes, interest, penalties, and costs are paid.
   (b) The insurer's or surplus line broker's property is sold for
the payment thereof.
  SEC. 5.  Section 12495 of the Revenue and Taxation Code is amended
to read:
   12495.  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.
  SEC. 6.  Section 12636.5 of the Revenue and Taxation Code is
amended to read:
   12636.5.  Every payment on an insurer's or surplus line broker's
delinquent annual tax shall be applied as follows:
   (a) First, to any interest due on the tax.
   (b) Second, to any penalty imposed by this part.
   (c) The balance, if any, to the tax itself.