AB 1395, as introduced, Committee on Insurance. Insurance: surplus line brokers.
Existing law requires every surplus line broker to pay annually to the Insurance Commissioner a tax of 3% of the gross premiums charged less return premiums upon business done by the surplus line broker under the authority of his or her license. If the annual tax for the preceding calendar year was $5,000 or more, existing law requires the surplus line broker to make monthly installment payments on account of the annual tax on business done during the current calendar year. Existing law requires the amount of the payment to be 3% of the gross premiums charged less return premiums upon business done by the surplus line broker during the calendar month ending 2 calendar months immediately preceding the due date of the payment, as specified. Existing law requires a surplus line broker to file a return showing that his or her return premiums exceeded his or her gross premiums even when no payment is payable by the broker.
This bill would delete the provision requiring a surplus line broker to file a return showing that his or her return premiums exceeded his or her gross premiums even when no payment is payable by the broker.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 1775.4 of the Insurance Code is amended
2to read:
(a) The amount of the payment shall be 3 percent of
4the gross premiums charged less return premiums upon business
5done by the surplus line broker during the calendar month ending
6two calendar months immediately preceding the due date of the
7payment, as specified in Section 1775.3, excluding gross premiums
8and return premiums paid by him or her upon business governed
9by the provisions of Section 1760.5. If during any calendar month
10those return premiums upon business done by a surplus line broker
11exceed the gross premiums upon the business done by him or her
12in that calendar month, then no payment shall be payable by him
13or her in respect to that calendar month, and he or she may carry
14forward that excess to the next succeeding calendar month or
15months and apply it in reduction of the taxable premiums on
16business done by him or
her in that succeeding calendar month or
17months.begin delete Even though no payment shall be payable by the broker,
18he or she shall file a return showing that his or her return premiums
19exceeded his or her gross premiums.end delete
20(b) In determining the applicability of subdivision (a) of Section
211775.1 to a surplus line broker who has acquired the business of
22another surplus line broker, the amount of tax liability of the
23acquired broker for the immediately preceding calendar year shall
24be added to the amount of the tax liability of the acquiring broker
25for the immediately preceding calendar year.
26(c) All amounts paid, other than penalties and interest, shall be
27allowed as a credit on the annual tax imposed by Section 1775.5.
28(d) If the total amount of
monthly installment payments for any
29calendar year exceeds the amount of annual tax for that year, the
30excess shall be treated as an overpayment of annual tax and be
31allowed as a credit or refund.
32(e) A penalty of 10 percent of the amount of the monthly
33payment due shall be levied upon and paid by any surplus line
34broker who fails to make the necessary payment within the time
35required, plus interest at the rate of 1 percent per calendar month
P3 1or fraction thereof from the due date of the payment until the date
2payment is received by the commissioner, but not for any period
3after the due date of the annual tax. The penalty and interest shall
4be applied as prescribed in Section 12636.5 of the Revenue and
5Taxation Code. The commissioner may remit the penalty in a case
6where he or she finds, as a result of examination or otherwise, that
7the failure of, or delay in, payment arose out of excusable mistake
8or excusable inadvertence.
9(f) For any part of a payment required that was not made within
10the time required by law, when the nonpayment or late payment
11was due to fraud on the part of the taxpayer, a penalty of 25 percent
12of the amount unpaid shall be added thereto, in addition to all other
13penalties otherwise imposed.
14(g) The commissioner, upon a showing of good cause, may
15extend for not to exceed 10 days the time for making a monthly
16payment. The extension may be granted at any time, provided that
17a request therefor is filed with the commissioner within or prior
18to the period for which the extension may be granted. Any surplus
19line broker to whom an extension is granted shall, in addition to
20the monthly payment, pay interest at the rate of 1 percent per
21month, or fraction thereof, from the due date until the annual tax
22due date.
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