PUBLIC PROTECTION CABINET

Department of Insurance

Consumer Protection Division

(AS Amended at ARRS, April 11, 2012)

 

      806 KAR 2:095. Accounting and reporting requirements for collecting local government premium tax.

 

      RELATES TO: KRS 91A.080, 304.4-010

      STATUTORY AUTHORITY: KRS [Chapter 13A,] 91A.080, 304.2-110

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 authorizes[provides that] the Commissioner[Executive Director] of Insurance to[may] make reasonable rules and administrative regulations necessary for and as an aid to the effectuation of any provision of the Kentucky Insurance Code, as defined in KRS 304.1-010. KRS 91A.080 requires[authorizes] the Commissioner[Executive Director] of Insurance to adopt administrative regulations for the collection and reporting of local government premium taxes. This administrative regulation establishes requirements[provides] for the accounting and reporting procedures to be used [by every insurance company or its agent, to which this administrative regulation applies,] for the collection and reporting of a local government premium tax.[the fees or taxes and the collection fee herein provided by ordinance of a city, county, or urban county government for engaging in the business of insurance therein.]

 

      Section 1. Definitions. (1) "Agent" is defined by[in] KRS 304.9-020(1).

      (2) "Commissioner" is defined by[in] KRS 304.1-050(1)["Executive Director" means the Commissioner of the Kentucky Office of Insurance].

      (3) "Insurance company" means:

      (a) An entity holding a certificate of authority in accordance with KRS Chapter 304, Subtitle 3; and

      (b) A surplus lines broker licensed in accordance with KRS 304.10-120.

      (4) "Local government" is defined by[in] KRS 91A.0802(1).

      (5)[(2)] "Local government premium tax[Local government premium taxes]" means a tax or license fee[taxes] levied pursuant to KRS 91A.080.[(3) "Premiums actually collected within a calendar quarter" means premiums which have been received at an insurer's home, administrative, or regional offices within a calendar quarter. Agency contracts which allow agents a period of time in which to forward premium payments to insurers shall not allow an unreasonably long period of time. An agency contract which allows an agent more than ninety (90) days to forward premium payments to an insurer is presumed to allow an unreasonably long period of time. This presumption may be rebutted by appropriate evidence.]

 

      Section 2. Quarterly Payment and Reporting of Local Government Premium Taxes. (1)Each insurance company[insurer] with local government premium tax liability shall make payment of its tax liability based on premiums actually collected within a calendar quarter. Payment shall be made to each local government within thirty (30) days of the end of each calendar quarter, and shall be accompanied by a report in the following format:[Insurers shall make their returns on forms]

      (a) 1. Form LGT-141, "City, County or Urban County Government Quarterly Insurance Premium Tax Return"; and

      2. Form LGT 142, "City Credit Against County Taxes"; or
[prescribed by the executive director(or forms]

      (b) A form substantially similar to Form LGT-141[;][those prescribed by the executive director) or on forms prescribed by cities, counties, or urban-county governments].

      (2) A copy of the report required in subsection (1) of this section [Copies of these forms] shall not be filed with the commissioner[executive director unless the executive director directs that returns be filed with the executive director].

 

      Section 3. Annual Reports. (1) By March 31 of each year, an insurance company[Insurers] shall:

      (a) Furnish[furnish] each local government[city, county, and urban-county government] to which local government premium taxes have been paid during the preceding calendar year a report on the local government premium taxes paid during the preceding calendar year in the following format:[. A copy of this report shall be filed with the executive director accompanied by a fee of five (5) dollars per insurer.]

      1. a. Form LGT-140, "City, County or Urban County Government Insurance Premium Tax Annual Reconciliation"; and

      b. Form LGT 142, "City Credit Against County Taxes"; or

      2. A form substantially similar to Form LGT-140; and[those prescribed by the executive director) or on forms prescribed by cities, counties, or urban-county governments.]

      (b) Submit to the department a report on the local government premium taxes paid during the preceding calendar year, accompanied by a fee of five (5) dollars per insurance company, through:

      1. The Department of Insurance Web site, https://insurance.ky.gov/kentucky/secured/Eservices/default.aspx; or

      2. File Transfer Protocol through prior arrangement with the Department of Insurance.

      (2)(a) If an insurance company does not have any local government premium tax liability for the preceding calendar year, the insurance company shall submit a report to the department in accordance with subsection (1)(b) of this section.

      (b) The reports required by paragraph (a) of this subsection [subsection (2)(a) of this section] shall be required if the insurance company held an active license or certificate of authority at any time during the preceding calendar year.[The reports required by this section shall be filed with cities, counties, and urban-county governments and with the executive director by March 31st of each year following the calendar year to which the reports apply.

      (3) The reports required by this section shall be on a form prescribed by the executive director (or on a form substantially similar to that prescribed by the executive director).

      (4) The form prescribed by the executive director shall contain the following information:

      (a) An itemization of all premiums collected for which a local government premium tax is payable together with the amount of such tax collected and paid to each city, county, or urban-county government for the following kinds of insurance:

      1. Casualty;

      2. Fire and allied perils;

      3. Health;

      4. Inland marine;

      5. Life;

      6. Motor vehicle; and

      7. Such other kinds of insurance as the executive director may designate.

      (b) Such other information as the executive director may designate.]

 

      Section 4. Each insurance company[insurer] shall maintain records adequate to support the reports required by this administrative regulation. [This section applies to insurance agents and surplus lines brokers to the extent they are responsible for collecting and paying local government premium taxes imposed pursuant to KRS 91A.080.]

 

      Section 5. Each insurance company shall[insurer must] file the reports required by this administrative regulation. Reports required by this administrative regulation and[Data] filed on a group basis shall not be acceptable[is unacceptable].

 

      Section 6. Incorporation by Reference. (1) The following material is incorporated by reference:

      (a) Form LGT-140, "City, County, or Urban County Government Insurance Premium Tax Annual Reconciliation" (1/2012);

      (b) Form LGT-141, "City, County, or Urban County Government Quarterly Insurance Premium Tax Return" (1/2012); and

      (c) Form LGT-142 "City Credit Against County Taxes" (1/2012).

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Insurance, 215 West Main Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is also available on the department's website at: http://insurance.ky.gov/.

 

SHARON P. CLARK, Commissioner

ROBERT D. VANCE, Secretary

      APPROVED BY AGENCY: January 9, 2012

      FILED WITH LRC: January 10, 2012 at 3 p.m.

      CONTACT PERSON: DJ Wasson, Staff Assistant, Kentucky Department of Insurance, P. O. Box 517, Frankfort, Kentucky 40602, phone (502) 564-0888, fax (502) 564-1453.