PART 7. INSURANCE TAXATION [12001. - 13170.]
Part 7 added by Stats. 1941, Ch. 113.
§§ 12001–13170 · 135 sections
CHAPTER 1. General Provisions §§ 12001–12009 · 9 sections
ARTICLE 1. Definitions §§ 12001–12009 · 9 sections
- § 12001 Unless the context otherwise requires, the definitions set forth in this article govern the construction of this part.
- § 12002 “Ocean marine insurance” means insurance written within this state upon hulls, freights, or disbursements, or upon goods, wares, merchandise, and all other…
- § 12003 “Insurer” as used in this part includes each of the following: (a) Insurance companies or associations. (b) Reciprocal or interinsurance exchanges, together…
- § 12004 “Marine insurer” means an insurer transacting ocean marine insurance.
- § 12005 “Taxes” means the taxes assessed and levied, or which may be assessed and levied, under the provisions of Section 28 of Article XIII of the State Constitution…
- § 12006 “Board” means the State Board of Equalization.
- § 12007 “Commissioner” means the State Insurance Commissioner.
- § 12008 “Controller” means the State Controller.
- § 12009 (a) “Medi-Cal managed care plan” or “plan” means any individual, organization, or entity, other than an insurer as described in Section 12003 or a dental…
CHAPTER 2. Ocean Marine Insurance §§ 12071–12107 · 15 sections
ARTICLE 1. Definitions §§ 12071–12078 · 8 sections
- § 12071 The definitions contained in this article apply with respect to ocean marine insurance.
- § 12072 “Current calendar year” means the calendar year for which underwriting profit is computed pursuant to Section 12073.
- § 12073 “Underwriting profit,” as respects any one calendar year, means the amount arrived at by deducting from the net earned premiums of that calendar year on ocean…
- § 12074 “Net earned premiums” means the amount arrived at by: (a) Deducting all return premiums, premiums on policies not taken, and premiums paid for reinsurance,…
- § 12075 “Losses incurred” means gross losses incurred during the current calendar year under ocean marine contracts written within the United States, less reinsurance…
- § 12076 “Expenses incurred” includes specific and general expenses incurred in the current calendar year on ocean marine contracts written within the United States.
- § 12077 “Specific expenses” means expenses incurred directly and specifically in connection with earned ocean marine premiums, including all commissions, agency…
- § 12078 “General expenses” means the portion of expenses not chargeable specifically to a particular class of insurance which is allocated to earned ocean marine…
ARTICLE 2. Basis of Tax for Ocean Marine Insurance §§ 12101–12107 · 7 sections
- § 12101 Every insurer transacting the business of ocean marine insurance in this State shall annually pay to the State a tax measured by that portion of the…
- § 12102 The tax is in lieu of all other state, county and municipal taxes and licenses upon the marine insurer, except taxes upon real estate, any retaliatory…
- § 12103 Except as otherwise provided in Section 12105, the tax shall be computed each year upon the average annual underwriting profit of the insurer from ocean marine…
- § 12104 If the insurer has transacted ocean marine insurance in this State in each of the three calendar years immediately preceding the year in which a tax return is…
- § 12105 If the insurer has not transacted ocean marine insurance in this State in each of the three calendar years immediately preceding the year in which a tax return…
- § 12106 In computing the tax of a marine insurer issuing participating policies, there shall not be included in underwriting profit the amounts refunded by the insurer…
- § 12107 Whenever in this part the date, April 1st, is used as the beginning date for the computation of interest, attachment of penalties, or the fixing of periods of…
CHAPTER 3. All Insurance Other Than Ocean Marine §§ 12201–12260 · 27 sections
ARTICLE 1. General §§ 12201–12210 · 11 sections
- § 12201 (a) Every insurer doing business in this state shall annually pay to the state a tax on the bases, at the rates, and subject to the deductions from the tax…
- § 12202 The rate of tax to be applied to the basis of the annual tax in respect to each year is 2.35 percent except the rate to be applied to the basis in respect to…
- § 12202.1 Notwithstanding the rate specified by Section 12202, the gross premiums tax rate paid by insurers for any premiums collected between November 8, 1988 and…
- § 12203 The State Compensation Insurance Fund shall annually pay a tax computed on the same bases, at the same rates, and subject to the same deductions specified in…
- § 12204 (a) The tax imposed on insurers by this chapter is in lieu of all other taxes and licenses, state, county, and municipal, upon those insurers and their…
- § 12205 It is the intent of the Legislature that the amount of the state low-income housing tax credit allocated to a project pursuant to Section 12206 shall not…
- § 12206 (a) (1) There shall be allowed as a credit against the “tax,” described by Section 12201, a state low-income housing tax credit in an amount equal to the…
- § 12207 (a) For the taxable years beginning on or after January 1, 2017, and before January 1, 2028, there shall be allowed as a credit against the “tax,” as described…
- § 12208 (a) There shall be allowed as a credit against the amount of tax, as defined in Section 28 of Article XIII of the California Constitution, an amount equal to…
- § 12209 (a) Notwithstanding Sections 12207 and 12208 to the contrary, for the years 2020 and 2021, the total amount of all credits otherwise allowable under Sections…
- § 12210 (a) A life insurer or life insurance agent shall inform his or her client of the tax imposed under this part. (b) A life insurer or life insurance agent who…
ARTICLE 2. Basis of Tax for Other Than Title Insurers §§ 12221–12222 · 2 sections
- § 12221 In the case of an insurer not transacting title insurance in this State, the basis of the tax is, in respect to each year, the amount of gross premiums, less…
- § 12222 Funds accepted by a life insurer under an agreement which provides for an accumulation of funds to purchase annuities at future dates may be considered as…
ARTICLE 3. Basis of Tax for Title Insurers §§ 12231–12232 · 2 sections
- § 12231 In the case of an insurer transacting title insurance in this State, the basis of the tax is, in respect to each year, all income upon business done in this…
- § 12232 “Investments,” as used in Section 12231, includes property acquired by an insurer in the settlement or adjustment of claims against it but excludes investments…
ARTICLE 4. Basis of Tax for Medi-Cal Managed Care Plans §§ 12240–12242 · 3 sections
- § 12240 In the case of a Medi-Cal managed care plan, the basis of the tax is, in respect to each year, total operating revenue.
- § 12241 For purposes of this article, “total operating revenue” means all amounts received by a Medi-Cal managed care plan in premium or capitation payments for the…
- § 12242 This article shall be operative on July 1, 2012.
ARTICLE 5. Prepayments §§ 12251–12260 · 9 sections
- § 12251 (a) Each calendar year, insurers transacting insurance in this state and whose annual tax for the preceding calendar year was twenty thousand dollars ($20,000)…
- § 12253 (a) Each insurer required to make prepayments shall remit them on or before each of the dates of April 1, June 1, September 1, and December 1 of the current…
- § 12254 (a) The amount of each prepayment shall be 25 percent of the amount of the annual insurance tax liability reported on the return of the insurer for the…
- § 12255 The commissioner, for good cause shown, may extend for not to exceed 10 days the time for making a prepayment. The extension may be granted at any time,…
- § 12256 All amounts paid under this article, other than penalties and interest, shall be allowed as a credit on the annual tax imposed by Section 28 of Article XIII of…
- § 12257 (a) If the total amount of prepayments for any calendar year exceeds the amount of annual tax for that year, the excess shall be treated as an overpayment of…
- § 12258 (a) Any insurer that fails to pay any prepayment within the time required shall pay a penalty of 10 percent of the amount of the required prepayment, plus…
- § 12259 The provisions of this article apply to the State Compensation Insurance Fund as well as to private insurers.
- § 12260 (a) Notwithstanding any other provision of this article, the commissioner may relieve an insurer of its obligation to make prepayments if the insurer…
CHAPTER 3.5. Retaliatory Taxes, Licenses and Fees §§ 12281–12289 · 4 sections
- § 12281 Annually, on or before April 1, each insurer subject to the imposition of retaliatory exactions shall file, in duplicate, with the Insurance Commissioner, in…
- § 12287 Except for the retaliatory tax due on ocean marine insurance, the retaliatory tax shall be due and payable on or before April 1 and shall be paid by remittance…
- § 12288 Deficiency assessments for retaliatory taxes may be made in the same manner as is provided by this part for other deficiency assessments.
- § 12289 All provisions of this part not in conflict with the provisions of this chapter shall apply to the assessment, levy, payment, collection and correction of…
CHAPTER 4. Assessment and Effect of Tax §§ 12301–12495 · 31 sections
ARTICLE 1. Tax Returns and Initial Payments §§ 12301–12307 · 7 sections
- § 12301 (a) The taxes imposed upon insurers by Section 28 of Article XIII of the California Constitution and this part, except with respect to taxes on ocean marine…
- § 12302 (a) On or before April 1 (or June 15 with respect to taxes on ocean marine insurance) every person that is subject to any tax imposed by Section 28 of Article…
- § 12303 (a) Every return required by this article to be filed with the commissioner shall be signed by the insurer or an executive officer of the insurer and shall be…
- § 12304 (a) Blank forms of returns shall be furnished by the commissioner on application, but failure to secure the form shall not relieve any insurer from making or…
- § 12305 (a) The insurer required to file a return shall deliver the return in duplicate, together with a remittance payable to the Controller, for the amount of tax…
- § 12306 The commissioner, for good cause shown, may extend for not to exceed 30 days the time for filing a tax return or paying any amount required to be paid with the…
- § 12307 (a) Any insurer that is granted an extension shall pay, in addition to the tax, interest at the modified adjusted rate per month, or fraction thereof,…
ARTICLE 2. Initial Assessments §§ 12411–12414 · 4 sections
- § 12411 A duplicate copy of each tax return received by the commissioner shall be promptly forwarded to the board.
- § 12412 (a) Upon receipt of the duplicate copy of the return of an insurer the board shall initially assess the tax in accordance with the data as reported by the…
- § 12413 (a) The board shall promptly transmit notice of its initial assessment to the commissioner and the Controller, and if the initial assessment differs from the…
- § 12414 In making an initial assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against penalties,…
ARTICLE 3. Deficiency Assessments §§ 12421–12435 · 15 sections
- § 12421 (a) As soon as practicable after an insurer’s or surplus line broker’s return is filed, the commissioner shall examine it, together with any information within…
- § 12422 (a) If the commissioner determines that the amount of tax disclosed by the insurer’s tax return and assessed by the board is less than the amount of tax…
- § 12423 (a) If an insurer or surplus line broker fails to file a return, the commissioner may require a return by mailing notice to the insurer or surplus line broker…
- § 12424 The board shall make a deficiency assessment on the basis of a proposal submitted to it by the commissioner pursuant to Section 12422 or 12423.
- § 12425 One or more deficiency assessments may be proposed or made for the amount of tax due for one or for more than one calendar year.
- § 12426 In making a deficiency assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against…
- § 12427 (a) The board shall promptly notify the insurer or surplus line broker of a deficiency assessment made against the insurer or surplus line broker. (b) This…
- § 12428 (a) An insurer or surplus line broker against which a deficiency assessment is made under Section 12424 or 12425 may petition for redetermination of the…
- § 12429 (a) If a petition for redetermination of a deficiency assessment is filed within the time allowed under Section 12428, the board shall reconsider the…
- § 12430 The board may decrease or increase the amount of the deficiency assessment before the deficiency assessment becomes final, but the amount may be increased only…
- § 12431 (a) The order or decision of the board upon a petition for redetermination of a deficiency assessment becomes final 30 days after service on the insurer or…
- § 12432 Except for a notice given pursuant to Section 12430 or 12431, or in the case of fraud or the failure to file a return, every notice of a deficiency assessment…
- § 12433 (a) If before the expiration of the time prescribed in Section 12432 for giving of a notice of deficiency assessment the insurer or surplus line broker has…
- § 12434 (a) Any notice required by this article shall be placed in a sealed envelope, with postage paid, addressed to the insurer or surplus line broker at its address…
- § 12435 A copy of each notice of a deficiency assessment made by the board shall be transmitted to the commissioner and the Controller. The Controller shall keep an…
ARTICLE 4. Effect of Tax §§ 12491–12495 · 5 sections
- § 12491 (a) Every tax levied upon an insurer under the provisions of Article XIII of the California Constitution and of this part is a lien upon all property and…
- § 12492 Every lien attaches as of 12:01 a.m. on the first day of March of the calendar year in which the tax is levied.
- § 12493 (a) Every lien has the effect of an execution duly levied against all property of a delinquent insurer or surplus line broker. (b) This section shall become…
- § 12494 (a) No judgment is satisfied nor lien removed until either: (1) The taxes, interest, penalties, and costs are paid. (2) The insurer’s or surplus line broker’s…
- § 12495 No court shall make and enter a final discharge in bankruptcy or decree of dissolution, nor shall any county clerk or the Secretary of State file a discharge,…
CHAPTER 5. Payment and Collection §§ 12601–12691 · 19 sections
ARTICLE 1. Generally §§ 12601–12602 · 2 sections
- § 12601 (a) Amounts of taxes, interest, and penalties not remitted to the commissioner with the original return of the insurer shall be payable to the Controller. (b)…
- § 12602 (a) On and after January 1, 1994, and before January 1, 1995, each insurer whose annual taxes exceed fifty thousand dollars ($50,000) shall make payment by…
ARTICLE 2. Interest and Penalties §§ 12631–12637 · 9 sections
- § 12631 (a) Any insurer that fails to pay any tax, except a tax determined as a deficiency assessment by the board under Article 3 (commencing with Section 12421) of…
- § 12631.5 (a) If the department finds, taking into account all facts and circumstances, that it is inequitable to compute interest at the modified adjusted rate per…
- § 12632 (a) An insurer that fails to pay any deficiency assessment when it becomes due and payable shall, in addition to the deficiency assessment, pay a penalty of 10…
- § 12633 When a deficiency assessment is made on the basis of a proposal submitted by the commissioner pursuant to Section 12423 a penalty of 10 percent of the amount…
- § 12634 When a deficiency assessment is made on the basis of a proposal submitted by the commissioner pursuant to Section 12422 and any part of the deficiency is due…
- § 12635 If any part of a deficiency for which a deficiency assessment is made is due to fraud, a penalty of 25 percent of the amount of the deficiency assessment in…
- § 12636 (a) If the board finds that an insurer’s failure to make a timely return or payment is due to reasonable cause and to circumstances beyond the insurer’s…
- § 12636.5 (a) Every payment on an insurer’s or surplus line broker’s delinquent annual tax shall be applied as follows: (1) First, to any interest due on the tax. (2)…
- § 12637 If the board finds that a person’s failure to make a timely return or payment was due to disaster, and occurred notwithstanding the exercise of ordinary care…
ARTICLE 3. Suits for Taxes §§ 12676–12682 · 7 sections
- § 12676 At any time within four years after any amount of tax becomes due and payable, and at any time within two years after any deficiency assessment of tax becomes…
- § 12677 The provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to an action brought…
- § 12678 The Attorney General shall prosecute the action.
- § 12679 (a) If an insurer’s right to do business has been forfeited or its corporate powers suspended, service of summons may be made upon the persons designated by…
- § 12680 A writ of attachment may be issued in the action in the manner provided by Chapter 5 (commencing with Section 485.010) of Title 6.5 of Part 2 of the Code of…
- § 12681 (a) In the action, a certificate of the Controller or of the secretary of the board, showing unpaid taxes against an insurer is prima facie evidence of: (1)…
- § 12682 Payment of the amount of the judgment recovered in the action shall be made to the Controller.
ARTICLE 4. Recovery of Erroneous Refunds § 12691 · 1 section
- § 12691 The Controller may recover any refund or part thereof which is erroneously made and any credit or part thereof which is erroneously allowed in an action…
CHAPTER 6. Suspension of Rights of Delinquent Insurers §§ 12801–12834 · 6 sections
ARTICLE 1. Revocation of Certificate of Authority §§ 12801–12803 · 3 sections
- § 12801 (a) Annually, between December 10th and 15th, the Controller shall transmit to the commissioner a statement showing the names of all insurers that failed to…
- § 12802 The commissioner shall give at least 10 days’ notice in writing to each insurer of the time and place of a hearing to show cause why its certificate of…
- § 12803 An insurer whose certificate of authority has been revoked pursuant to this article may have the certificate restored by the commissioner during the period for…
ARTICLE 2. Suspended Corporate Insurers §§ 12832–12834 · 3 sections
- § 12832 Every person who attempts or purports to exercise any of the rights, privileges or powers of a suspended domestic insurer or attempts to transact any…
- § 12833 The county in which occurs any part of the attempted exercise of the powers or any part of the transaction of business has jurisdiction of the offense.
- § 12834 The certified copies of lists of corporations which have failed to pay the taxes, interest, and penalties imposed upon insurers transmitted by the Controller…
CHAPTER 7. Cancellations and Refunds §§ 12951–12984 · 12 sections
ARTICLE 1. Cancellations §§ 12951–12952 · 2 sections
- § 12951 (a) If any amount has been illegally assessed, the board shall set forth that fact in its records, certify the amount determined to be assessed in excess of…
- § 12952 If the commissioner discovers an amount assessed by the board which he believes to have been illegally assessed, he shall notify the board in writing of such…
ARTICLE 2. Refund or Credit for Collected Taxes §§ 12977–12984 · 10 sections
- § 12977 (a) If the board determines that any tax, interest, or penalty has been paid more than once or has been erroneously or illegally collected or computed, the…
- § 12978 No credit or refund shall be allowed or approved after four years after April 1st of the year following the year for which the overpayment was made, or with…
- § 12979 Every claim for refund or credit shall be in writing and shall state the specific grounds upon which it is founded.
- § 12980 Failure to file a claim for refund or credit within the time prescribed in this article constitutes a waiver of any demand against the State on account of…
- § 12981 Within 30 days after disallowing any claim for refund or credit in whole or in part the board shall mail notice of its action to the claimant at its address as…
- § 12982 If the claim for refund or credit is presented to the commissioner he shall forthwith transmit it to the board, together with a statement of any information he…
- § 12983 (a) Interest shall be allowed upon the amount of any overpayment of tax by an insurer pursuant to this part at the modified adjusted rate per month established…
- § 12983.1 Interest shall be allowed upon the amount of any overpayment of tax by a surplus line broker pursuant to this part at the rate of 1 percent per calendar month…
- § 12983.5 If any overpayment of taxes imposed by this part is refunded or credited within 90 days after the due date of the tax for the year for which the overpayment…
- § 12984 (a) If the board determines that any overpayment has been made intentionally or made not incident to a bona fide and orderly discharge of a liability…
CHAPTER 8. Taxpayers’ Suits §§ 13101–13108 · 8 sections
- § 13101 No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against this State or against…
- § 13102 No suit or proceeding shall be maintained in any court for the recovery of any amount alleged to have been erroneously or illegally assessed or collected…
- § 13103 Within 90 days after the mailing of the notice of the board’s action upon a claim for refund or credit, the claimant may bring an action against the board on…
- § 13104 If the board fails to mail notice of its action on a claim for refund or credit within six months after the claim is filed with the board, the claimant may,…
- § 13105 Failure to bring a suit or an action within the time specified constitutes a waiver of all demands against the State on account of an alleged overpayment.
- § 13106 If judgment is rendered for the plaintiff, the amount of the judgment shall first be credited on any taxes due and payable from the plaintiff. The balance of…
- § 13107 In any judgment, interest shall be allowed, subject to the same limitations as are prescribed by Section 12984, at the modified adjusted rate per annum…
- § 13108 (a) A judgment shall not be rendered in favor of the plaintiff when the action is brought by or in the name of an assignee of the insurer paying the tax,…
CHAPTER 9. Disposition of Proceeds §§ 13151–13153 · 3 sections
- § 13151 All taxes, interest, and penalties collected under this part shall be transmitted to the State Treasurer to be deposited in the State Treasury to the credit of…
- § 13152 The money in the Insurance Tax Fund shall, upon order of the Controller, be drawn therefrom for refunds under this part or be transferred to the General Fund…
- § 13153 On or before April 1, the State Compensation Insurance Fund shall pay into the State Treasury to the credit of the Insurance Tax Fund the sum required under…
CHAPTER 10. Administration § 13170 · 1 section
- § 13170 The board, the Insurance Commissioner, and the Controller may each prescribe, adopt, and enforce rules and regulations relating to the administration and…