Part 7.5. Nonadmitted Insurance Tax of California Revenue And Taxation Code >> Division 2. >> Part 7.5.

This part shall be known and may be cited as the Nonadmitted Insurance Tax Law.

For purposes of this part:
  (a) "Person" means an individual, bank, corporation, partnership, limited liability company, society, association, organization, joint stock company, estate, or trust, or a receiver, trustee, assignee, referee or any other person acting in a fiduciary capacity, whether appointed by a court or otherwise, or any combination thereof.
  (b) "Taxpayer" means any person subject to the tax imposed by this part.

(a) For gross premiums paid or to be paid on insurance contracts that take effect or are renewed on or after January 1, 1994, every California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code, who effects insurance governed by Chapter 6 (commencing with Section 1760) of Part 2 of Division 1 of the Insurance Code shall pay a gross premium tax of 3 percent charged for the use of the state, less 3 percent of returned premiums that were subject to the tax received by reason of cancellation or reduction of premium.
  (1) This section shall not apply to any of the following:
  (A) Insurance coverage for which a tax on the gross premium is due or has been paid pursuant to Section 1775.5 of the Insurance Code.
  (B) Gross premiums paid and returned premiums received by that California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code, upon business governed by the provisions of Section 1760.5 of the Insurance Code.
  (C) Insurance coverage for which a tax on the gross premium is due or has been paid pursuant to Section 132 of the Insurance Code.
  (2) If during any calendar quarter 3 percent of the returned premiums received that were subject to the tax imposed by this part exceed 3 percent of the gross premiums paid or to be paid by that person on contracts that took effect or were renewed in that calendar quarter, then that person may either carry forward the excess to a succeeding calendar quarter and apply it as a credit against the 3 percent of gross premiums paid or to be paid by that person in the succeeding calendar quarter, or the person may elect to receive, and be paid a refund equal to the amount of taxes paid by the person on the excess of returned premiums received over gross premiums paid or to be paid.
  (b) For purposes of determining the tax, the total gross premium paid or to be paid for all nonadmitted insurance placed in a single transaction with one underwriter or group of underwriters, whether in one or more policies, in that calendar quarter during which the taxable insurance contract or contracts took effect or were renewed, shall be the entire gross premium charged on all nonadmitted insurance for the California home state insured as defined by subdivision (f) of Section 1760.1 of the Insurance Code.
  (c) Subdivision (b) shall not apply to interstate motor transit operations conducted between this and other states. With respect to those operations, the tax shall be payable on the entire premium charged on all nonadmitted insurance, less any of the following:
  (1) The portion of the premium that is determined to have been charged for operations in other states that have taxed the premium on operations in states of an insured maintaining its headquarters office in this state.
  (2) The premium for any operations outside of this state of an insured who maintains a headquarters operating office outside of this state and a branch office in this state.

(a) Every person subject to this part shall file with the Franchise Tax Board a return prescribed by the board on or before the first day of the third month following the close of the calendar quarter during which a taxable insurance contract took effect or was renewed.
  (b) In accordance with forms and instructions, the tax, penalties, and interest imposed by this part shall be administered and enforced by the Franchise Tax Board as though they are taxes imposed under Part 10 (commencing with Section 17001). Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or any other applicable law shall apply for this purpose in the same manner and with the same force and effect as if the language of Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or the other applicable law is incorporated in full into this part, except to the extent that the provision is either inconsistent with a provision of this part, is not relevant to this part, or is otherwise provided for under this part.
  (c) The following penalties shall apply, in lieu of those penalties provided under Part 10.2 (commencing with Section 18401):
  (1) A penalty of 10 percent of the amount of the payment due is imposed upon any person who fails to make the necessary payment within the time required.
  (2) For any part of a payment required that was not made within the time required by law, when the nonpayment or late payment was due to fraud on the part of the taxpayer, a penalty of 25 percent of the amount unpaid shall be added thereto, in addition to all other penalties otherwise imposed.
  (d) (1) Except as provided in paragraph (2), interest shall be allowed and paid on any refund provided under paragraph (2) of subdivision (a) of Section 13210 from the date the claim for refund is filed. No interest shall be allowed or paid on amounts credited to succeeding calendar quarters as provided under paragraph (2) of subdivision (a) of Section 13210.
  (2) If an amount refunded as provided under paragraph (2) of subdivision (a) of Section 13210 within 120 days after a claim or return is filed, or within 120 days after the last date for filing the tax return, whichever is later, no interest shall be allowed on the amount of the refund.
  (e) The period of limitation for allowing or making refunds or credits as provided under paragraph (2) of subdivision (a) of Section 13210 shall be the period of limitations for allowing or making refunds or credits of overpayments under Part 10.2 (commencing with Section 18401), except that the "date of cancellation or reduction of premium" shall be substituted for "date of overpayment."

In the event that a person subject to tax is delinquent in the payment of any amount due under this part, and that person also has an amount imposed and due and payable under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), any amounts collected by the Franchise Tax Board shall be applied first to the payment of those taxes, additions to tax, penalties, interest, fees, or other amounts imposed and due and payable under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001).

(a) All amounts collected shall be transmitted to the Treasurer and deposited in the State Treasury to the credit of the Insurance Tax Fund that is created by Section 13151.
  (b) Moneys in the Insurance Tax Fund shall be drawn therefrom for the purpose of paying refunds under this part.