Section 21.09.210. Tax on insurers.

   (a) Each authorized insurer, and each formerly authorized insurer with respect to premiums written while an authorized insurer in this state, shall file with the director, on or before March 1 in each year, a report of all insurance business written or contracted in the state, with proper proportionate allocation of premium for the property, subjects, or risks in the state insured under policies or contracts covering property, subjects, or risks located or resident in more than one state, during the preceding year ending December 31. The report must show
        (1) the amounts paid policyholders on losses;
        (2) the total direct premium income including policy membership and other fees, premiums paid by application of dividends, refunds, savings coupon, and similar returns or credits to payment of premiums for new or additional or extended or renewed insurance, charges for payment of premium in installments, and all other consideration for insurance from all kinds and classes of insurance whether designated a premium or otherwise;
        (3) the amounts paid policyholders as returned premiums;
        (4) the amounts paid policyholders as dividends.
   (b) Each insurer, and each formerly authorized insurer with respect to premiums written while an authorized insurer in this state, shall pay a tax on the total direct premium written during the year ending on the preceding December 31 and paid for the insurance of property or risks resident or located in the state, other than wet marine and transportation insurance, after deducting from the total direct premium income the applicable cancellations, returned premiums, the unabsorbed portion of any deposit premium, all policy dividends, unabsorbed premiums refunded to policyholders, refunds, savings, savings coupons, and other similar returns paid or credited to policyholders with respect to their policies. Deductions may not be made of cash surrender value of policies. Considerations received on annuity contracts are not included in the direct premium income and are not subject to tax. The tax shall be paid to the director at least annually but not more often than once each quarter on the dates specified by the director. The method of payment must be by the electronic or other payment method specified by the director. Except as provided under (m) of this section, the tax is computed at the rate of
        (1) for domestic and foreign insurers, except hospital and medical service corporations, 2.7 percent;
        (2) for hospital and medical service corporations, six percent of their gross premiums less claims paid.
   (c)   [Repealed, Sec. 48 ch 29 SLA 1987]. 
   (d) An authorized insurer shall, with respect to all wet marine and transportation contracts written in this state during the preceding calendar year, pay to the director a tax of three-quarters of one percent on its gross underwriting profit. The director shall specify the dates that payment is due and the electronic or other method by which payment is to be made. The gross underwriting profit is computed by deducting, from the net premiums on wet marine and transportation insurance contracts, the net losses paid during the calendar year under the contracts. In the case of an insurer issuing participating contracts, the gross underwriting profit may not include, for computation of the tax prescribed by this section, the amounts refunded or paid as participation dividends by the insurers to the holders of the contracts. In this subsection,
        (1) "net losses" means gross losses less salvage and recoveries on reinsurance ceded;
        (2) "net premiums" means gross premiums less all return premiums and premiums for reinsurance.
   (e) Payment to the director by an insurer of the tax upon its premiums required by this section shall be in lieu of all other taxes imposed by the state upon premiums, franchise, privilege, or other taxes measured by income of the insurer.
   (f) The state hereby pre-empts the field of imposing excise, privilege, franchise, income, license, permit, registration, and similar taxes, licenses, and fees upon insurers and their general agents, agents, and representatives as such; and on the intangible property of insurers or agents; and all political subdivisions of agencies in the state, including home rule boroughs or cities, are prohibited from imposing or levying upon insurers, or upon their general agents, agents, and representatives as such, any tax, license, or fee. However, this subsection shall not be construed as prohibiting the imposition by political subdivisions of taxes upon real and tangible personal property of insurers and their general agents, agents, and representatives.
   (g) An insurer shall pay to the division a late payment fee of $50 a month plus five percent of the tax due each calendar month or part of a month during which the insurer fails to pay the full amount of the tax, or a portion of the tax, and interest at the rate of one percent of the tax due each calendar month or part of a month for the period the insurer fails to pay the premium tax in this section or in AS 21.09.270. The late payment fee, not including interest, may not exceed $250 plus 25 percent of the tax due. The tax payment shall be made in the form required by the director, or a penalty shall be added to the tax of 25 percent of the tax due, not to exceed $2,000, with a minimum penalty of $100. In addition to any other penalty provided by law, a civil penalty may be assessed of not more than $10,000 if an insurer wilfully violates this section. The director may suspend or revoke the certificate of authority of an insurer that fails to pay taxes, a penalty, or a late payment fee as required under this section.
   (h) The provisions of this section do not apply to title insurance companies.  A premium tax on title insurance companies shall be levied in accordance with the provisions of AS 21.66.110.
   (i) Premiums paid by the state for insurance policies and contracts purchased under the provisions of AS 39.30 are exempt from taxation under this section. An insurer may not include the tax imposed under this section in a premium charged on an insurance policy or contract purchased by the state under the provisions of AS 39.30. An insurer may claim the exemption on forms provided by the division of insurance.
   (j) The provisions of AS 21.96.070 and 21.96.075 apply to a taxpayer who is required to pay a tax due under this section.
   (k) If, within three years after the date the tax under this section was due, an insurer discovers a mistake or misinterpretation that resulted in an overpayment of the tax in an amount exceeding $250 in any one calendar year, the insurer may make a written request to the director for a refund. If the director determines a valid mistake or misinterpretation has occurred, the director shall refund to the insurer the amount of the excess tax by granting, at the director's discretion, a monetary refund or premium tax credit. A premium tax credit shall be used in the next calendar year to the extent possible and any unused credit shall be paid as a monetary refund. A premium tax credit may not reduce the payable tax, calculated without use of the credit, to less than zero.
   (l) A premium tax credit granted under (k) of this section may not carry over as an attribute in a transaction under AS 21.69.610, 21.69.620, AS 21.78, or a similar transaction entered into by a foreign insurer.
   (m) The tax imposed under this section for an individual life insurance policy shall be computed at the rate of
        (1) 2.7 percent of policy year premium up to $100,000; and
        (2) 0.08 percent of policy year premium exceeding $100,000.
   (n) Premiums on which taxes are paid under (m)(2) of this section are not subject to AS 21.09.270.
   (o) A qualified insurer is entitled to a premium tax credit under AS 21.55.220.
   (p) In this section, "premium tax credit" means an amount that an insurer may use as an offset against a premium tax payment.

Authorities

21.34.180;21.55.220;21.55.430;21.80.140;21.86.240;21.87.260;21.96.070;21.96.075;23.05.067

Notes

Recent Bills that will modify this

SB 15 LIFE INSURANCE POLICY PREMIUM TAX

Implemented As

3 AAC 21.550
3 AAC 21.560
3 AAC 21.570

References

3 AAC 21.460
3 AAC 21.550
3 AAC 21.560
3 AAC 21.570
AS 21.34.180 Surplus lines tax.
AS 21.55.220 Operation of the plan.
AS 21.55.430 Alaska comprehensive health insurance fund.
AS 21.80.140 Recognition of assessments in surcharge rates.
AS 21.86.240 Taxation.
AS 21.87.260 Taxation.
AS 21.96.070 Insurance tax education credit.
AS 21.96.075 Insurance tax credit for gifts to the Alaska Fire Standards Council.
AS 23.05.067 Service fees for administration of workers' safety and compensation programs.

History

(Sec. 1 ch 120 SLA 1966; am Sec. 29 ch 137 SLA 1982; am Sec. 1 ch 118 SLA 1986; am Sec. 41 ch 14 SLA 1987; am Sec. 1, 48 ch 29 SLA 1987; am Sec. 1 ch 23 SLA 1989; am Sec. 16 - 18 ch 67 SLA 1992; am Sec. 1 ch 21 SLA 1994; am Sec. 14 ch 62 SLA 1995; am Sec. 6, 7 ch 81 SLA 1997; am Sec. 1, 2 ch 131 SLA 1998; am Sec. 13 - 15 ch 38 SLA 2002; am Sec. 7 - 11 ch 96 SLA 2004; am Sec. 1 ch 108 SLA 2006; am Sec. 15 ch 8 SLA 2011; am Sec. 1 ch 13 SLA 2015)