Plain Text Law

Title 31 — Subtitle 06. Taxes and Fees

Chapter 01. Allocation and Taxation of Premiums

Regulation .01 Authority and Purpose.Copy Citation

A.
Pursuant to the authority contained in Insurance Article, Title 6, Subtitle 1, Annotated Code of Maryland, the State Insurance Commissioner prescribes by this chapter the methods of allocating the gross direct premium for business transacted by insurers.
B.
The purpose of this chapter is to establish a uniform method for determining how premiums are to be allocated for premium tax purposes, and to make clear what that method is.

Regulation .02 Method.Copy Citation

Beginning with the annual statement for the calendar year 1970, to be filed on or before March 1, 1971, each insurer shall allocate its premiums in accordance with the following:
A.
Property and Casualty.
B.
Life.
C.
Accident and Health.
D.
Annuity Allocations. Insofar as annuity considerations are taxable, they shall be allocated by the same method as that adopted for life insurance premiums.
E.
Title Allocations. Title insurance premiums are to be allocated to location of risk.
F.
Federal Areas Allocations. Business done at Army, Navy, or Air Force bases, and other similar federal installations, shall be allocated to the jurisdiction of the insured's residence, as listed on the application.

Regulation .03 Waiver By Commissioner.Copy Citation

The method of allocation of gross direct premiums set forth above may be altered or waived in whole or in part by the Commissioner upon application by any insurer and a finding by the Commissioner that the proposed method of allocation justly and fairly determines the portion of the premiums derived from, or reasonably attributable to, the insurer's business in this State.

Regulation .04 Taxes on Premiums Received.Copy Citation

A.
Authority. This regulation is deemed necessary as an aid to effectuation of Insurance Article, §6-101, Annotated Code of Maryland.
B.
Applicability. This regulation applies to all domestic insurers.
C.
Taxes on Premiums Received by Domestic Companies Which Are Not Taxed by Another State. In determining the amount of direct premiums taxable in this State, premiums written, procured, or received in this State shall be deemed written on property or risks located or resident in this State, except such premiums as are properly allocated or proportioned and reported as taxable premiums of any other state or states.

Chapter 02. Retaliatory Tax

Regulation .01 Premium Tax Report.Copy Citation

Beginning with the return for the calendar year 1967, to be filed on or before March 15, 1968, each foreign and alien insurer licensed to do business in Maryland shall prepare, as part of the annual premium tax report, an analysis in the aggregate of the applicable taxes, licenses, and other fees payable by a Maryland insurer transacting the same lines of business to any agency or department of the foreign or alien insurer’s state of domicile. An analysis, in the aggregate, shall also be prepared of all the applicable taxes, licenses, and other fees payable by the foreign or alien insurer to any agency or department of Maryland. On the basis of these analyses, the company shall compute the retaliatory tax and include the payment of the total due if any in its remittance for premium taxes, payable to the Maryland Insurance Administration on or before March 15th in each calendar year, the time fixed by statute for filing the premium tax report. A composite tax form will be made available to all affected insurers.

Regulation .02 Audit.Copy Citation

The Maryland Insurance Administration shall perform an audit of the retaliatory tax with its audit of the annual premium tax report and in addition shall compute and bill for any additional retaliatory tax due from companies domiciled in a state where by statute or ordinance taxes, licenses, or fees are payable to political subdivisions of that state. If the amount of retaliatory tax computed by the Maryland Insurance Administration is greater than the amount shown on the report, the excess shall be assessed by the Maryland Insurance Administration and a notice of the assessment shall be mailed to the insurance company filing the report. The assessment shall be made within 3 years from the date the report was due, except in the case of failure to file a report or of a fraudulent report, in which case the excess may be assessed at any time.

Regulation .03 Credit to Calendar Year.Copy Citation

For the purpose of computing the obligations imposed by Maryland on foreign and alien insurers, payments made to the Unsatisfied Claim and Judgment Fund, the Maryland Automobile Insurance Fund, and any other Maryland special purpose fund which comes within the provisions of the retaliatory tax statute, shall be credited to the calendar year in which the payments were actually made, regardless of the premium payment year on which assessment is based.

Regulation .04 Domicile.Copy Citation

For the purposes of this chapter, the domicile of an insurer formed under the Laws of Canada or a province of Canada shall be deemed to be that of the province in which its head office is situated. All other alien insurers shall be deemed to be domiciled in that state in which is located its principal place of business in the United States.

Chapter 03. Risk Retention Groups and Purchasing Groups—Fees

Regulation .01 Purpose.Copy Citation

This chapter is promulgated to aid in the effectuation of Insurance Article, Title 25, Subtitle 1, Annotated Code of Maryland, and establishes reasonable fees to defray the costs incurred by the Insurance Administration in carrying out these requirements.

Regulation .02 Applicability.Copy Citation

This chapter shall apply to all:
A.
Risk retention groups seeking to be chartered in this State;
B.
Risk retention groups chartered in a state other than this State and seeking to do business in this State; and
C.
Purchasing groups which intend to do business in this State.

Regulation .03 Registration Fees.Copy Citation

A.
Domestic risk retention groups shall pay the following nonrefundable fees to the Commissioner:
(1)
Submission of plan of operation or feasibility study—$50;
(2)
Certificate of authority—$200;
(3)
Filing annual statement—$25;
(4)
Annual continuation of certificate of authority—$25.
B.
Foreign risk retention groups shall pay the following nonrefundable fees to the Commissioner:
(1)
Submission of plan of operation or feasibility study—$50;
(2)
Filing annual statement—$25.
C.
Purchasing groups shall pay to the Commissioner a nonrefundable registration fee of $100 upon submission of intent to do business in Maryland.

Chapter 04. Premium Tax — Required Filings, Payments, Penalties, and Interest

Regulation .01 Scope.Copy Citation

This chapter applies to any person who is subject to the taxation of premiums in the State under Insurance Article, §§6-101 and 6-102.1, Annotated Code of Maryland.

Regulation .02 Declaration of Estimated Tax and Quarterly Payments.Copy Citation

A.
Each taxpayer subject to premium tax under Insurance Article, §6-101, Annotated Code of Maryland, shall declare an estimated annual tax if the taxpayer’s total tax for the current tax year is reasonably expected to exceed $1,000.
B.
The declaration of estimated annual tax shall be:
(1)
Filed with the Insurance Administration, on a form or in a manner approved by the Commissioner, on or before April 15 of the tax year; and
(2)
A reasonable estimate of the expected annual tax liability for that year.
C.
The taxpayer shall pay to the Insurance Administration at least 25 percent of the estimated annual tax liability at the time the declaration of annual tax is filed, on or before April 15 of the tax year.
D.
Thereafter, the taxpayer shall file a quarterly payment report with the Insurance Administration, on a form or in a manner approved by the Commissioner, and pay to the Insurance Administration at least 25 percent of the estimated annual tax each quarter, on or before June 15, September 15, and December 15 of the tax year.
E.
A reasonable estimate of the annual tax shall be either:
(1)
100 percent of premium tax liability for the prior year as shown on the prior year's Final Report on the line stating “Premium Tax Due — Entire Calendar Year”; or
(2)
90 percent of the amount of the current year tax liability.

Regulation .03 Final Report.Copy Citation

A.
On or before March 15 following the end of the tax year, a person subject to premium tax shall file a Final Report with the Insurance Administration on a form or in a manner approved by the Commissioner.
B.
The Final Report of premium taxes required under Insurance Article, §6-107, Annotated Code of Maryland, shall contain:
(1)
Either:
(a)
A report of the new and renewal gross direct premiums less returned premiums written by the taxpayer during the preceding calendar year, including, for Maryland domiciled taxpayers, premiums written in a state where the taxpayer is not licensed; or
(b)
If the taxpayer issues perpetual policies of fire insurance, a report of the average amount of deposits held by the taxpayer during the preceding calendar year in connection with perpetual policies of fire insurance issued on property in the State and in force during any part of that year;
(2)
A calculation of retaliatory tax owed to Maryland under COMAR 31.06.02;
(3)
A calculation of any applicable credits against premium tax allowed by Insurance Article, Title 6, Annotated Code of Maryland; and
(4)
Credit, if any, for overpayment of premium tax paid in prior tax years.
C.
On or before March 15 following the end of the tax year, the Assessment Form shall be filed to report the assessment amount pursuant to Insurance Article, §6-102.1, Annotated Code of Maryland, and shall contain:
(1)
A report of the gross amount of all health and accident & health insurance premiums written during the preceding calendar year;
(2)
An itemization of allowed excluded premiums during the preceding calendar year;
(3)
A calculation of the assessment; and
(4)
Any other information or documentation required by the Commissioner.
D.
Remittance.
(1)
The taxpayer shall remit the following with the Final Report required by §B of this regulation:
(a)
The total amount of premium tax due, after crediting the amount of taxes paid under Regulation .02 of this chapter; and
(b)
Any retaliatory tax due under COMAR 31.06.02.
(2)
The amount remitted under §C(1) of this regulation shall be the net amount due after any applicable credits are applied against the premium tax that are allowed by Insurance Article, Title 6, Annotated Code of Maryland.
(3)
Taxpayers shall maintain in their files, and shall make available to the Commissioner on request, supporting documentation for:
(a)
The retaliatory tax due on the Final Report, consisting of the applicable taxes, licenses, and other fees that are part of the computation of the retaliatory tax due; and
(b)
Any credits against premium tax taken by the taxpayer that are allowed under Insurance Article, Title 6, Annotated Code of Maryland.
(4)
An entity subject to assessment pursuant to Insurance Article, §6-102.1, Annotated Code of Maryland, shall remit the assessment amount due with the Assessment Form as required by §C of this regulation.
(5)
The payment of premium taxes as required by §D(1) of this regulation and the payment of the assessment as required by §D(4) of this regulation shall be remitted separately and not combined in one remittance.
(6)
A managed care organization may remit quarterly payments of the assessment required by Insurance Article, §6-102.1, Annotated Code of Maryland, equal to at least 25 percent of the assessment due on or before March 15, June 15, September 15, and December 15.

Regulation .04 Interest and Penalties.Copy Citation

A.
Each taxpayer is subject to the assessment of a penalty of 5 percent of the amount not paid when due and interest at the rate specified in Tax-General Article, §13-604(b)(1), Annotated Code of Maryland, from the date the tax was due until payment is made to the Commissioner when the taxpayer fails to remit or remits less than:
(1)
The amount due with:
(a)
The declaration of estimated annual tax in accordance with Regulation .02C of this chapter; or
(b)
Each quarterly payment report in accordance with Regulation .02D of this chapter; or
(2)
The total premium tax due to be paid with the Final Report in accordance with Regulation .03 of this chapter.
B.
Notwithstanding §A(1) of this regulation, the Commissioner may not assess a penalty or interest under §A(1) if:
(1)
The taxpayer's declaration of estimated annual tax is at least 90 percent of the premium liability for the current year or 100 percent of the premium tax liability due for the prior tax year as shown on the Final Report on the line stating “Premium Tax Due—Entire Calendar Year”; and
(2)
The taxpayer pays at least 25 percent of the estimated annual tax on or before April 15, June 15, September 15, and December 15 of the tax year.
C.
Interest will be assessed at the rate of 6 percent per year from the due date of the Final Report until payment is made to the Commissioner if, following an audit by the Commissioner, an additional amount of premium tax is found to be due.
D.
Penalties for Failure to Pay Retaliatory Tax.
(1)
The Commissioner shall assess a penalty of 5 percent of the amount not paid when due and interest at the rate specified in Tax-General Article, §13-604(b)(1), Annotated Code of Maryland, if the taxpayer fails to pay the retaliatory tax under COMAR 31.06.02 within 30 days after the Commissioner issues a notice to the taxpayer specifying the amount due.
(2)
The penalty and interest imposed under §D(1) of this regulation shall be from the 31st day after the Commissioner issues the notice until the tax is paid to the Commissioner.
E.
Notwithstanding §A, B, C, or D of this regulation, the Commissioner may not impose a penalty or interest if the total amount of the interest and penalty is less than $20.