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Insurance Premiums License Tax

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Who is Subject to the Tax?

Insurance companies, as defined under Code of Virginia § 58.1-2500, engaged in the business of making contracts of insurance, and Surplus Lines brokers defined under Code of Virginia § 38.2-4805.2, authorized to solicit, negotiate and place insurance with eligible or approved surplus lines insurers. 

General Filing Information

Where to File Your 2014 Reports

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File the following taxable year 2014 reports with the Virginia Department of Taxation:

Taxpayer Filing Requirement Taxable Year Due Date

Insurance Company

Estimated Payments

2014

April 15, 2014
June 15, 2014
September 15, 2014
December 15, 2014

Surplus Lines Broker

Quarterly Tax Reports

2014

April 30, 2014
July 30, 2014
October 30, 2014
January 30, 2015

Insurance Company Insurance Premiums License
Tax Return
2014 March 1, 2015
Surplus Lines Broker Annual Reconciliation Tax Report 2014 March 1, 2015

All subsequent tax reports, including declarations of estimated payments, are filed with the Department.

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Registration

Any insurance company or surplus lines broker commencing business in Virginia is required to register with the Department of Taxation.  In addition to registration, all insurance companies, except Risk Retention Groups, are required to pay an initial declaration of estimated insurance premiums license tax for the calendar year to the Department before the Bureau of Insurance issues the license.  The initial insurance premiums license tax liability on an insurance company shall be measured by an estimate of direct gross premium income reasonably expected to be derived from such business conducted in Virginia from commencement to December 31. 

Insurance companies and surplus lines brokers can register and pay the initial declaration of estimated insurance premiums license tax, if applicable, online.  If you are unable to complete your registration online, the Business Registration Application (Form R-1) and Declaration of Estimated Premiums License Tax (Form R-1A) are available to download and print  for paper submission.   

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Insurance Companies

Any insurance company whose annual direct gross Premiums License Tax liability is expected to exceed $3,000 (after tax credits) is required to file estimated tax payments throughout the year.  An insurance company whose annual direct gross Premiums License Tax liability is expected to be less than $3,000 is not required to file estimated tax payments with the Department.  However, all insurance companies are required to file an annual Insurance Premiums License Tax return (Form 800), due March 1 of the following year.

Insurance companies' estimated payments are due the 15th day of April, June, September and December, and should be submitted with Form 800ES, Insurance Premiums License Tax Estimated Payment Vouchers.  Payment and Form 800ES should be submitted electronically, using the Department's eForms or Business iFile applications, or by ACH Credit.  If you are unable to submit your payments electronically, forms for paper submission are available to download and print for paper submission.

Form 800, Insurance Premiums License Tax Return and Accompining Schedules are available to download for paper submission.

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Surplus Lines Brokers Reports

A surplus lines broker is required to file a quarterly tax report and make a payment if:

  • Its annual Insurance Premiums License Tax liability can reasonably be expected to exceed $1,500 and,
  • During the quarter, it derived direct gross premium income from policies for insured parties whose home state is the Commonwealth of Virginia. 

A surplus lines broker is not required to file the quarterly tax report if its annual tax liability is not expected to exceed $1,500 or if it did not have a tax liability for the current period.  No report is required for a quarter if there is a credit from a prior period or returned premiums within the same taxable year that equals or exceeds the amount of the tax liability for the current period.

Surplus Lines Brokers Quarterly Tax Reports, Form 801, are due on the 30th day of April, July, October and January.  Surplus lines brokers should submit quarterly tax reports and payments electronically via eForms. If you are unable to submit your quarterly tax report Form 801 electronically, you may file paper returns. 

Surplus Lins Broker Annaul Reconciliation Tax Report, Form 802:  In addition to their quarterly reports, surplus lines brokers must also file an annual reconciliation tax report. It is due on or before March 1 following the close of the previous calendar year.  The Surplus Lines Brokers Annual Reconciliation Tax Report, Form 802, must be filed even if no Insurance Premiums License Tax is owed.  Form 802 is available to file electronicly via eForms or as a fillable form.

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Retaliatory Tax Credit

Virginia allows a retaliatory costs tax credit (Code of Virginia § 58.1-2510) against the insurance premiums license tax for qualified domestic insurance companies in an amount equal to the retaliatory costs incurred during the corresponding taxable year as a result of the difference between the lower tax rates and costs imposed by other states and the tax rates and costs imposed by the Commonwealth of Virginia.  To qualify for the credit, taxpayers must maintain a certain number of qualified full-time employees.  Insurance companies are required to file Schedule RET CR, Virginia Application for Credit of Excess Tax Based on Retaliatory Cost, which must be signed by an independent certified public accountant.  The application is due by March 1 following the close of the previous calendar year. 

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Estimated Payments

Any insurance company whose annual direct gross premiums license tax liability is expected to exceed $3,000 (after tax credits), is required to make estimated tax payments.  Estimated payments are due on or before the 15th day of April, June, September and December. The Department's eForms and Business iFile applications are secure options for submitting estimated payments electronically.  If you are unable to submit your estimated payment electronically, Form 800ES, Insurance Premiums License Tax Estimated Payment Vouchers, is available to download and print for paper submission.

The date the declaration is to be filed, number of payment installments and amount of estimated tax to be paid is determined in accordance with the following table:

If the requirements are first met – The declaration shall be on or before – The number of installments to be paid is – The following percentage of the estimated tax shall be paid on or before the 15th day of –
April June September December
before the 1st day of the 4th month of the taxable year April 1 of the taxable year 4 25% 25% 25% 25%
after the last day of the 3rd month and before the 1st day of the 6th month of the taxable year after March 31 but before June 1 of the taxable year 3 - 33% 33% 33%
after the last day of the 5th month and before the 1st day of the 9th month of the taxable year after May 31 but before September 1 of the taxable year 2 - - 50% 50%
after the last day of the 8th month and before the 1st day of the 12th month of the taxable year after August 31 but before December 1 of the taxable year 1 - - - 100%

In case of any underpayment of estimated Insurance Premiums License Tax by an insurance company, an addition to the tax shall be imposed in the form of interest that will begin accruing on the amount of the underpayment.  The interest rate is equal to the federal interest rate plus 2%.  This interest rate is applied to the underpayment.  If the insurance company's underpayment of estimated tax is the result of a qualified exception and the addition to the tax should not be imposed, Form 800C, Underpayment of Virginia Estimated Insurance Premiums License Tax, is required and must be attached to the company's Insurance Premiums License Tax annual return. 

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Fines, Penalties and Interest

Late Filing Fine

Any insurance company that fails to file their annual tax report, Form 800, Virginia Insurance Premiums License Tax Report (due March 1 following the close of the previous calendar year), with the Department will be subject to a late filing fine of $50 per day for each day's failure to submit the report.

Any surplus lines broker that fails to file with the Department their annual report, Form 802, Surplus Lines Brokers Annual Reconciliation Tax Report, (due March 1 following the close of the previous calendar year), will be subject to a late filing fine of $50 per day for each day's failure to submit the report.

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Late Payment Penalty

Any insurance company or surplus lines broker that fails to pay the Insurance Premiums License Tax by the March 1 due date is subject to a ten percent penalty that shall be added to the amount of the unpaid tax liability.

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Other Penalties

In the event that an insurance company or surplus lines broker fails to pay its insurance premiums license tax, the Commission may suspend or revoke the license to conduct business in the Commonwealth of Virginia pursuant to Code of Virginia § 38.2-1857.7 upon notification from the Department.

In addition to other penalties provided by law, any licensed surplus lines broker or any person required to be licensed as a surplus lines broker who willfully fails or refuses to pay the full amount of the tax required by Chapter 48 of Title 38.2, either by himself or through his agents or employees, or who makes a false or fraudulent return with intent to evade the tax hereby levied, or who makes a false or fraudulent claim for refund, shall be guilty of a Class 1 misdemeanor.

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Interest

Insurance Companies

Virginia law requires the Department to assess interest on any balance of unpaid tax, from the payment due date through the date the tax is paid.  Interest charges apply to late payments and payments made with returns filed on extension, as well as to additional balances due or assessed as the result of audit adjustments.

Code of Virginia § 58.1-15 sets the interest rate for late payments at the federal underpayment rate established under Internal Revenue Code Section § 6621, plus 2 percent. For the current daily interest rate, contact us at (804) 367-8037, or at tax-geninfo@tax.virginia.gov.

Surplus Lines Brokers

All surplus lines brokers are required to file an annual report by March 1 reporting the direct gross premium income derived from policies for insured parties whose home state is Virginia during the preceding year ending December 31.  Upon the failure of any surplus lines broker to pay the annual insurance premiums license tax due with the annual report, interest is assessed at the rate of interest established pursuant to Code of Virginia § 58.1-15 for the period between the due date of the annual report and the date of full payment.

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Responsible Parties

Any corporate, partnership or limited liability officer may be held personally liable for unpaid taxes assessed against a corporation or partnership.

The term "corporate, partnership or limited liability officer" includes an officer or employee of a corporation, or a member, manager or employee of a partnership or limited liability company, who is under a duty to collect, account for or pay the assessed tax, who had knowledge of the failure to pay the tax, and who had authority to prevent the failure.  See Code of Virginia § 58.1-1813.

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For Additional Information

If you need additional information or assistance, please contact the Department by email at insurance@tax.virginia.gov, or by phone at (804) 404-4163.

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Last Updated 3/17/2014 12:16

 

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