Kentucky Statutes 91A.080 – License tax on insurance companies
Current as of: 2024 | Check for updates
|
Other versions
(1) The legislative body of each local government which elects to impose and collect license fees or taxes upon insurance companies for the privilege of engaging in the business of insurance may, except as provided in subsection (10) of this section, enact or change its license fee or rate of tax to be effective July 1 of each year on a prospective basis only and shall file with the commissioner of insurance at least one hundred (100) days prior to the effective date, a copy of all ordinances and amendments which impose a license fee or tax. No less than eighty-five (85) days prior to the effective date, the commissioner of insurance shall promptly notify each insurance company engaged in the business of insurance in the Commonwealth of those local governments which have elected to impose the license fees or taxes and the current amount of the license fee or rate of tax.
(2) Any license fee or tax imposed by a local government upon an insurance company with respect to life insurance policies may be based upon the first year’s premiums, and, if so based, shall be applied to the amount of the premiums actually collected within each calendar quarter upon the lives of persons residing within the corporate limits of the local government.
(3) Any license fee or tax imposed by a local government upon any insurance company with respect to any policy which is not a life insurance policy shall be based upon the premiums actually collected by the insurance company within each calendar quarter on risks located within the corporate limits of the local government on those classes of business which the insurance company is authorized to transact, less all premiums returned to policyholders. In determining the amount of license fee or tax to be collected and to be paid to the local government, the insurance company shall use the tax rate effective on the first day of the policy term. When an insurance company collects a premium as a result of a change in the policy during the policy term, the tax rate used shall be the rate in effect on the effective date of the policy change. With respect to premiums returned to policyholders, the license fee or tax shall be returned by the insurance company to the policyholder pro rata on the unexpired amount of the premium at the same rate at which it was collected and shall be taken as a credit by the insurance company on its next quarterly report to the local government.
(4) The Department of Insurance shall, by administrative regulation, provide for a reasonable collection fee to be retained by the insurance company or its agent as compensation for collecting the tax, except that the collection fee shall not be more than fifteen percent (15%) of the fee or tax collected and remitted to the local government or two percent (2%) of the premiums subject to the tax, whichever is less. To facilitate computation, collection, and remittance of the fee or tax and collection fee provided in this section, the fees or taxes set out in subsection (1), (2), or (3) of this section, together with the collection fee in this section, may be rounded off to the nearest dollar amount.
(5) Pursuant to KRS § 304.3-270, if any other state retaliates against any Kentucky domiciliary insurer because of the requirements of this section, the commissioner of insurance shall impose an equal tax upon the premiums written in this state by
insurers domiciled in the other state.
(6) Accounting and reporting procedures for collection and reporting of the fees or taxes and the collection fee herein provided shall be determined by administrative regulations promulgated by the Department of Insurance.
(7) (a) Upon written request of the legislative body of any local government, at the expense of the requesting local government, which shall be paid in advance by the local government to the Department of Insurance, the Department of Insurance shall audit, or cause to be audited by contract with qualified auditors, the books or records of the insurance companies or agents subject to the fee or tax to determine whether the fee or tax is being properly collected and remitted, and the findings of the audit shall be reported to the local government and the insurance company subject to the audit. An insurance company may appeal the findings of the audit conducted under this subsection and any assessment issued pursuant to the audit findings in accordance with the provisions of KRS § 91A.0804(5).
(b) Willful failure to properly collect and remit the fee or tax imposed by a local government pursuant to the authority granted by this section shall constitute grounds for the revocation of the license issued to an insurance company or agent under the provisions of KRS Chapter 304.
(c) If the Department of Insurance finds that an insurance company has willfully engaged in a pattern of business conduct that fails to properly collect and remit the fee or tax imposed by a local government pursuant to the authority granted by this section, the Department of Insurance may assess the responsible insurance company an appropriate penalty fee no greater than ten percent (10%) of the additional license fees or taxes determined to be owed to the local government. The penalty fee shall be paid to the local government owed the license fee or tax less any administrative costs of the Department of Insurance in enforcing this section. Any insurance company or agent held responsible for a penalty fee may request a hearing with the Department of Insurance to be conducted pursuant to KRS § 304.2-310 to KRS § 304.2-370 regarding the finding of a willful violation and the subsequent penalty fee.
(8) The license fees or taxes provided for by subsections (2) and (3) of this section shall be due thirty (30) days after the end of each calendar quarter. Annually, by March
31, each insurance company shall furnish each local government to which the tax or fee is remitted with a breakdown of all collections in the preceding calendar year for the following categories of insurance:
(a) Casualty;
(b) Automobile; (c) Inland marine;
(d) Fire and allied perils; (e) Health; and
(f) Life.
(9) Any license fee or tax not paid on or before the due date shall bear interest at the tax
interest rate as defined in KRS § 131.010(6) from the date due until paid. Such interest payable to the local government is separate of penalties provided for in subsection (7) of this section. In addition, the local government may assess a ten percent (10%) penalty for a tax or fee not paid within thirty (30) days after the due date.
(10) No license fee or tax imposed under this section shall apply to premiums:
(a) Received on policies of group health insurance provided for state employees under KRS § 18A.225;
(b) Received on policies insuring employers against liability for personal injuries to their employees or the death of their employees caused thereby, under the provisions of KRS Chapter 342;
(c) Received on health insurance policies issued to individuals;
(d) Received on policies issued through Kentucky Access created in Subtitle 17B
of KRS Chapter 304;
(e) Received on policies for high deductible health plans as defined in 26 U.S.C. § 223(c)(2);
(f) Received on multistate surplus lines, defined as non-admitted insurance as provided in Title V, Subtitle B, the Non-Admitted and Reinsurance Reform Act of 2010, of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203;
(g) Paid to insurance companies or surplus lines brokers by nonprofit self- insurance groups or self-insurance entities whose membership consists of school districts; or
(h) Paid to insurance companies or surplus lines brokers by nonprofit self- insurance groups or self-insurance entities whose membership consists of cities, counties, charter county governments, urban-county governments, consolidated local governments, unified local governments, school districts, or any other political subdivisions of the Commonwealth.
(11) No county may impose the tax authorized by this section upon the premiums received on policies issued to public service companies which pay ad valorem taxes.
(12) Insurance companies which pay license fees or taxes pursuant to this section shall credit city license fees or taxes against the same license fees or taxes levied by the county, when the license fees or taxes are levied by the county on or after July 13,
1990. For purposes of this subsection, a consolidated local government, urban- county government, charter county government, or unified local government shall be considered a county.
(13) No license fee or tax imposed under this section shall apply to premiums paid to insurers of municipal bonds, leases, or other debt instruments issued by or on behalf of a city, county, charter county government, urban-county government, consolidated local government, special district, nonprofit corporation, or other political subdivision of the Commonwealth. However, this exemption shall not apply if the bonds, leases, or other debt instruments are issued for profit or on behalf of for-profit or private organizations.
(14) A county may impose a license fee or tax covering the entire county or may limit the application of the fee or tax to the unincorporated portions of the county.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 101, sec. 1, effective July 15, 2014; and ch. 137, sec. 3, effective July 15, 2014. — Amended 2011 Ky. Acts ch. 48, sec. 2, effective June 8, 2011. — Amended 2010 Ky. Acts ch. 24, sec. 75, effective July 15, 2010; and ch. 165, sec. 4, effective July 15, 2010. — Amended 2008 Ky. Acts ch. 94, sec. 5, effective July 15, 2008. — Amended 2005 Ky. Acts ch. 31, sec. 1, effective June 20,
2005; and ch. 144, sec. 14, effective June 20, 2005. — Amended 2004 Ky. Acts ch.
28, sec. 1, effective July 13, 2004. — Amended 2001 Ky. Acts ch. 164, sec. 5, effective June 21, 2001. — Amended 2000 Ky. Acts ch. 425, sec. 2, effective July 14,
2000; and ch. 476, sec. 30, effective July 14, 2000. — Amended 1998 Ky. Acts ch.
82, sec. 14, effective July 15, 1998. — Amended 1992 Ky. Acts ch. 244, sec. 1, effective July 14, 1992. — Amended 1990 Ky. Acts ch. 481, sec. 1, effective July 13,
1990. — Repealed, reenacted, and amended 1988 Ky. Acts ch. 334, sec. 1, effective July 15, 1988. — Amended 1984 Ky. Acts ch. 52, sec. 1, effective July 13, 1984; and ch. 170, sec. 1, effective January 1, 1985. — Created 1982 Ky. Acts ch. 434, sec. 13, effective July 15, 1982.
Legislative Research Commission Note (7/15/2014). This statute was amended by 2014
Ky. Acts chs. 101 and 137, which do not appear to be in conflict and have been codified together.
Legislative Research Commission Note (6/8/2011). 2011 Ky. Acts ch. 48, sec. 5, provided that the provisions contained in Sections 2, 3, and 4 of that Act “shall take effect as provided in Article XIII of Section 1 of this Act, upon legislative enactment of the compact into law by two compacting states, provided the commission shall become effective for purposes of adopting rules, and creating the clearinghouse when there are a total of ten compacting states and contracting states or, alternatively, when there are compacting states and contracting states representing greater than 40 percent of the surplus lines insurance premium volume based on records of the percentage of surplus lines insurance.” The Reviser of Statutes has determined that, as of April 8, 2011, two states had enacted the compact, thereby triggering the initial effective date of the compact. Since 2011 Ky. Acts ch. 48, did not contain an emergency clause, this section became effective June 8, 2011, the normal effective date for 2011 legislation.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 165, sec. 7, provides, “Notwithstanding any other statutory provision to the contrary, no license fee or tax imposed under KRS § 91A.080 shall apply to premiums paid to insurance companies or surplus lines brokers by non-profit self-insurance groups whose membership consists of cities, counties, charter county governments, urban-county governments, consolidated local governments, school districts, or any other political subdivisions of the Commonwealth.” 2010 Ky. Acts ch. 165, sec. 8, states, “Section 7 of this Act is effective for and applies to the fiscal year beginning July 1, 2010, and ending June 30, 2011, and fiscal year beginning July 1, 2011, and ending June 30,
2012, and shall expire at the end of June 30, 2012.”
(2) Any license fee or tax imposed by a local government upon an insurance company with respect to life insurance policies may be based upon the first year’s premiums, and, if so based, shall be applied to the amount of the premiums actually collected within each calendar quarter upon the lives of persons residing within the corporate limits of the local government.
Terms Used In Kentucky Statutes 91A.080
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- City: includes town. See Kentucky Statutes 446.010
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Contract: A legal written agreement that becomes binding when signed.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Year: means calendar year. See Kentucky Statutes 446.010
(3) Any license fee or tax imposed by a local government upon any insurance company with respect to any policy which is not a life insurance policy shall be based upon the premiums actually collected by the insurance company within each calendar quarter on risks located within the corporate limits of the local government on those classes of business which the insurance company is authorized to transact, less all premiums returned to policyholders. In determining the amount of license fee or tax to be collected and to be paid to the local government, the insurance company shall use the tax rate effective on the first day of the policy term. When an insurance company collects a premium as a result of a change in the policy during the policy term, the tax rate used shall be the rate in effect on the effective date of the policy change. With respect to premiums returned to policyholders, the license fee or tax shall be returned by the insurance company to the policyholder pro rata on the unexpired amount of the premium at the same rate at which it was collected and shall be taken as a credit by the insurance company on its next quarterly report to the local government.
(4) The Department of Insurance shall, by administrative regulation, provide for a reasonable collection fee to be retained by the insurance company or its agent as compensation for collecting the tax, except that the collection fee shall not be more than fifteen percent (15%) of the fee or tax collected and remitted to the local government or two percent (2%) of the premiums subject to the tax, whichever is less. To facilitate computation, collection, and remittance of the fee or tax and collection fee provided in this section, the fees or taxes set out in subsection (1), (2), or (3) of this section, together with the collection fee in this section, may be rounded off to the nearest dollar amount.
(5) Pursuant to KRS § 304.3-270, if any other state retaliates against any Kentucky domiciliary insurer because of the requirements of this section, the commissioner of insurance shall impose an equal tax upon the premiums written in this state by
insurers domiciled in the other state.
(6) Accounting and reporting procedures for collection and reporting of the fees or taxes and the collection fee herein provided shall be determined by administrative regulations promulgated by the Department of Insurance.
(7) (a) Upon written request of the legislative body of any local government, at the expense of the requesting local government, which shall be paid in advance by the local government to the Department of Insurance, the Department of Insurance shall audit, or cause to be audited by contract with qualified auditors, the books or records of the insurance companies or agents subject to the fee or tax to determine whether the fee or tax is being properly collected and remitted, and the findings of the audit shall be reported to the local government and the insurance company subject to the audit. An insurance company may appeal the findings of the audit conducted under this subsection and any assessment issued pursuant to the audit findings in accordance with the provisions of KRS § 91A.0804(5).
(b) Willful failure to properly collect and remit the fee or tax imposed by a local government pursuant to the authority granted by this section shall constitute grounds for the revocation of the license issued to an insurance company or agent under the provisions of KRS Chapter 304.
(c) If the Department of Insurance finds that an insurance company has willfully engaged in a pattern of business conduct that fails to properly collect and remit the fee or tax imposed by a local government pursuant to the authority granted by this section, the Department of Insurance may assess the responsible insurance company an appropriate penalty fee no greater than ten percent (10%) of the additional license fees or taxes determined to be owed to the local government. The penalty fee shall be paid to the local government owed the license fee or tax less any administrative costs of the Department of Insurance in enforcing this section. Any insurance company or agent held responsible for a penalty fee may request a hearing with the Department of Insurance to be conducted pursuant to KRS § 304.2-310 to KRS § 304.2-370 regarding the finding of a willful violation and the subsequent penalty fee.
(8) The license fees or taxes provided for by subsections (2) and (3) of this section shall be due thirty (30) days after the end of each calendar quarter. Annually, by March
31, each insurance company shall furnish each local government to which the tax or fee is remitted with a breakdown of all collections in the preceding calendar year for the following categories of insurance:
(a) Casualty;
(b) Automobile; (c) Inland marine;
(d) Fire and allied perils; (e) Health; and
(f) Life.
(9) Any license fee or tax not paid on or before the due date shall bear interest at the tax
interest rate as defined in KRS § 131.010(6) from the date due until paid. Such interest payable to the local government is separate of penalties provided for in subsection (7) of this section. In addition, the local government may assess a ten percent (10%) penalty for a tax or fee not paid within thirty (30) days after the due date.
(10) No license fee or tax imposed under this section shall apply to premiums:
(a) Received on policies of group health insurance provided for state employees under KRS § 18A.225;
(b) Received on policies insuring employers against liability for personal injuries to their employees or the death of their employees caused thereby, under the provisions of KRS Chapter 342;
(c) Received on health insurance policies issued to individuals;
(d) Received on policies issued through Kentucky Access created in Subtitle 17B
of KRS Chapter 304;
(e) Received on policies for high deductible health plans as defined in 26 U.S.C. § 223(c)(2);
(f) Received on multistate surplus lines, defined as non-admitted insurance as provided in Title V, Subtitle B, the Non-Admitted and Reinsurance Reform Act of 2010, of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203;
(g) Paid to insurance companies or surplus lines brokers by nonprofit self- insurance groups or self-insurance entities whose membership consists of school districts; or
(h) Paid to insurance companies or surplus lines brokers by nonprofit self- insurance groups or self-insurance entities whose membership consists of cities, counties, charter county governments, urban-county governments, consolidated local governments, unified local governments, school districts, or any other political subdivisions of the Commonwealth.
(11) No county may impose the tax authorized by this section upon the premiums received on policies issued to public service companies which pay ad valorem taxes.
(12) Insurance companies which pay license fees or taxes pursuant to this section shall credit city license fees or taxes against the same license fees or taxes levied by the county, when the license fees or taxes are levied by the county on or after July 13,
1990. For purposes of this subsection, a consolidated local government, urban- county government, charter county government, or unified local government shall be considered a county.
(13) No license fee or tax imposed under this section shall apply to premiums paid to insurers of municipal bonds, leases, or other debt instruments issued by or on behalf of a city, county, charter county government, urban-county government, consolidated local government, special district, nonprofit corporation, or other political subdivision of the Commonwealth. However, this exemption shall not apply if the bonds, leases, or other debt instruments are issued for profit or on behalf of for-profit or private organizations.
(14) A county may impose a license fee or tax covering the entire county or may limit the application of the fee or tax to the unincorporated portions of the county.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 101, sec. 1, effective July 15, 2014; and ch. 137, sec. 3, effective July 15, 2014. — Amended 2011 Ky. Acts ch. 48, sec. 2, effective June 8, 2011. — Amended 2010 Ky. Acts ch. 24, sec. 75, effective July 15, 2010; and ch. 165, sec. 4, effective July 15, 2010. — Amended 2008 Ky. Acts ch. 94, sec. 5, effective July 15, 2008. — Amended 2005 Ky. Acts ch. 31, sec. 1, effective June 20,
2005; and ch. 144, sec. 14, effective June 20, 2005. — Amended 2004 Ky. Acts ch.
28, sec. 1, effective July 13, 2004. — Amended 2001 Ky. Acts ch. 164, sec. 5, effective June 21, 2001. — Amended 2000 Ky. Acts ch. 425, sec. 2, effective July 14,
2000; and ch. 476, sec. 30, effective July 14, 2000. — Amended 1998 Ky. Acts ch.
82, sec. 14, effective July 15, 1998. — Amended 1992 Ky. Acts ch. 244, sec. 1, effective July 14, 1992. — Amended 1990 Ky. Acts ch. 481, sec. 1, effective July 13,
1990. — Repealed, reenacted, and amended 1988 Ky. Acts ch. 334, sec. 1, effective July 15, 1988. — Amended 1984 Ky. Acts ch. 52, sec. 1, effective July 13, 1984; and ch. 170, sec. 1, effective January 1, 1985. — Created 1982 Ky. Acts ch. 434, sec. 13, effective July 15, 1982.
Legislative Research Commission Note (7/15/2014). This statute was amended by 2014
Ky. Acts chs. 101 and 137, which do not appear to be in conflict and have been codified together.
Legislative Research Commission Note (6/8/2011). 2011 Ky. Acts ch. 48, sec. 5, provided that the provisions contained in Sections 2, 3, and 4 of that Act “shall take effect as provided in Article XIII of Section 1 of this Act, upon legislative enactment of the compact into law by two compacting states, provided the commission shall become effective for purposes of adopting rules, and creating the clearinghouse when there are a total of ten compacting states and contracting states or, alternatively, when there are compacting states and contracting states representing greater than 40 percent of the surplus lines insurance premium volume based on records of the percentage of surplus lines insurance.” The Reviser of Statutes has determined that, as of April 8, 2011, two states had enacted the compact, thereby triggering the initial effective date of the compact. Since 2011 Ky. Acts ch. 48, did not contain an emergency clause, this section became effective June 8, 2011, the normal effective date for 2011 legislation.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 165, sec. 7, provides, “Notwithstanding any other statutory provision to the contrary, no license fee or tax imposed under KRS § 91A.080 shall apply to premiums paid to insurance companies or surplus lines brokers by non-profit self-insurance groups whose membership consists of cities, counties, charter county governments, urban-county governments, consolidated local governments, school districts, or any other political subdivisions of the Commonwealth.” 2010 Ky. Acts ch. 165, sec. 8, states, “Section 7 of this Act is effective for and applies to the fiscal year beginning July 1, 2010, and ending June 30, 2011, and fiscal year beginning July 1, 2011, and ending June 30,
2012, and shall expire at the end of June 30, 2012.”