OLR Bill Analysis
AN ACT CONCERNING INSURANCE TAX PROVISIONS.
This bill gives domestic insurance companies the choice of applying an insurance premium tax overpayment to their estimated tax payments for the following year or, as current law provides, receiving a refund for the overpaid amount. It eliminates the revenue services commissioner's authority to adopt regulations governing how excess estimated tax payments must be credited from one year to the next.
The bill also requires captive insurance companies to pay premium taxes on assumed reinsurance premiums by March 1 annually, rather than in March. Captive insurers are typically wholly-owned subsidiaries that insure some or all of their parent company's risks. They can also insure another insurer's risks if they are authorized to insure those types of risks (i.e., reinsurance). Under existing law, unchanged by the bill, captive insurers must pay premium taxes on direct-written premiums by March 1 annually.
EFFECTIVE DATE: July 1, 2013, and the change affecting premium tax overpayments is applicable to estimated tax payments for the calendar years beginning on or after January 1, 2014.
ESTIMATED INSURANCE PREMIUM TAX OVERPAYMENTS
The bill allows domestic insurers who have timely filed their tax returns to apply tax overpayments to the following year's estimated tax or receive a refund, as current law provides. By law, these insurers must pay their estimated insurance premium taxes in four installments during the calendar year according to the schedule the law specifies. If a company overpays an installment, the law requires the excess to be credited against the next installment. But, if the amount paid for the year exceeds the amount of tax due for that year, current law requires the state to refund the company.
Under the bill, the insurer can elect to apply the excess taxes to its estimated taxes for the following year. If the insurer elects to do this, the state must apply the excess to the first installment due in the next income year and to any subsequent installments in the order they are due.
Finance, Revenue and Bonding Committee