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Introducing the

Learning
Center

SLA's new
online center for broker
education and broker license
renewal assistance.

SLA's new online center
for broker education and
broker license renewal assistance.

SLA's new online center for broker
education and broker license
renewal assistance.

Learn More

Introducing the

Emerging Risks
Discussion Forum

A new way to
have dialogue about
emerging risks in the
surplus line industry.

A new way to have dialogue
about emerging risks in the
surplus line industry.

A new way to have dialogue
about emerging risks in the
surplus line industry.

Learn More

State Tax

A:
The current state surplus line tax rate is 3%.
A:

Gross premium as used in the calculation of premium taxes due, is the gross policy premiums plus any fees/charges pertaining to the policy such as policy fee, inspection fee, etc. For more information on which fees are subject to tax, please refer to California Department of Insurance Bulletin 80-6: Brokers’ Fees and other Similar Fees.

A:

The link to the CDI tax forms is located on the Broker page of this website or you can visit the CDI's website: http://www.insurance.ca.gov/0250-insurers/0300-insurers/0100-applications/tax-forms-instruct-and-info/index.cfm.

A:
California does not send invoices for payment of the state tax.  The broker is responsible for paying taxes on time.
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The invoice date, not the policy or endorsement effective date, is the date to use when determining when the state tax is due.  Refer to SLA Bulletin 1061 for more information.

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Effective January 1, 2015, every surplus line broker whose annual tax for the preceding calendar year was $20,000 or more shall make monthly installment payments. Refer to CIC Section 1775.5 through 1776.

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Yes. The amount paid each month must be reported on line 6 of the Annual Statement and Tax Return.
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Brokers whose annual tax is over $20,000 are required to participate in the electronic funds transfer program. To register as an EFT taxpayer, contact the CDI's EFT Unit at: (916) 492-3288.
A:
Every surplus line broker must make an annual state tax filing. The amount of state tax is 3% of the California taxable surplus line premium transacted by the broker, for California home state insureds, from January 1st to December 31st of the previous year. This form must be completed by all brokers, regardless of whether business was transacted. For additional information regarding the filing of state tax returns, contact the California Department of Insurance Premium Tax Audit Bureau at premiumtaxaudit@insurance.ca.gov.
A:
All surplus line organizations are required to include a list of endorsed surplus line brokers who transacted business on their behalf, including each broker’s name and license number, with the organization’s Annual Statement and Tax Return.

Brokers who delegated the responsibility for filing the Confidential Report of Placement (SL-1 form) to another surplus line broker(s) pursuant to Section 1774(b) of the California Insurance Code are not required to file a Zero Premium Tax Return. All delegated surplus line brokers are required to list those surplus line brokers who delegated this reporting function on their behalf, including each broker’s name and license number, on their Annual Statement and Tax Return.

All surplus line brokers with active licenses not named on another surplus line broker's Annual Statement and Tax Return, and all special line brokers with active licenses who did not transact surplus line or special lines surplus line business, are required to file a Zero Premium Tax Return.

Individuals who are endorsed to a business entity license and hold an individual surplus lines bond must also file a Zero Premium Tax Return if they did not transact surplus line business under their individual license.

 
A:
No. The original, signed forms must be mailed to the address specified on the applicable tax form’s instruction page.
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Line 15 is for the calendar year  - even if the premium reported is non-taxable - and is for informational purposes only. The amounts reported may not necessarily reconcile with the other lines. However, the reasons for the differences should be noted on the return.

  • Line A: Total amount of taxable and non-taxable Gross Premium (i.e., not including returned premiums) for California Home State Insureds
  • Line B: Single State risks in California. For the most part, reconciles with Line 10 (single state gross premiums). Note any differences.
  • Line C: Multi-State risks. The percentages should equal 100% of the total premium risk allocated to California and to each other state for the entire year. If percentages do not equal 100% due to non-U.S. risks or other reasons, please note in your tax return filing.
A:

A report of the premium amount by insurer for the transactions that have been processed by the SLA is available in SLIP. In order to produce the report, log-in, click on the REPORTS tab and then click on Premium Amount by Insurer.

slip_report

Choose the option to include transactions based on Broker Invoice Date.

Enter the date criteria and generate the report in the desired format (PDF, Excel, Word, or CSV).

*If you have a SLIP profile, but cannot see the Reports tab, you might not have the required permissions to view reports in SLIP. The Master User for the account is able to edit permissions.

A:

No. The California Department of Insurance requires a wet signature in either black or blue ink.

A:
The Annual Statement and Tax Return, with payment, must be sent to the California Department of Insurance, postmarked on or before March 1st following the end of the calendar year. When the due date falls on a Saturday, Sunday, or State or Federal legal holiday, the statement, tax return, and payment are considered timely if postmarked on the next business day. Please refer to the CIC Section 1775-1775.9.
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The state tax is payable to the California Department of Insurance and the address is included in their tax return instructions. The stamping fee is paid to the Association after the broker receives an invoice from the Association.
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If a broker fails to pay state tax by the due date, it will result in a penalty of 10% of the amount of payment due, plus an interest rate of 1% per calendar month (or fraction thereof) until the payment is received by the Commissioner. More severe penalties may be imposed for "willful" violations.
A:
California does require a direct placement tax from the consumer for coverage placed on their own, for their own property, with a surplus line insurer. Refer to Bulletin #621