Form 63-22 - Premium Excise Return For Domestic Insurance Companies

How Is the Excise Determined?

contribution or 0.4% for the third year it makes the required contribu-

tion. A Certificate of Contribution issued by the Property and Casualty

Domestic insurance companies are taxed both on premiums written

Insurance Company Initiative must accompany the return if claiming

and finance charges imposed on those premiums in Massachusetts.

the lower rate. A company that does not make the required contribu-

These companies are also taxed on premiums in other jurisdictions

tion in any year will continue to be taxed at the rate for the last year in

where no tax is paid. A tax is also imposed on gross investment

which it did make the required contribution.

income.

Line 3. If applicable, and not previously reported on Schedule T, in-

Are Combined Returns Allowed?

clude the disbursement received from the Massachusetts Property In-

No. Domestic insurance companies are not allowed to participate in

filing combined returns.

surance Underwriting Association and/or Crime Insurance Program.

Line 4 — Credit Recapture. If the corporation is required to recap-

Line Instructions

ture any amount of previously claimed EOA Credit, complete Sched-

Federal Audit

ule H-2 and enter the result in line 4 of the return. Current year credits

If your corporation has undergone a federal audit for some prior year,

can then be used to offset the total excise due which will include the

you must report any changes on Massachusetts Form CA-6, Applica-

recapture amount.

tion for Abatement/Amended Return, within three months after the

final determination of the correct taxable income by the IRS. Other-

Line 6 — Retalitory Surtax Credit. A company that contributes its full

wise, you will be subject to a penalty. Answering “yes” to this question

and proportionate share to the Property and Casualty Initiative may

does not relieve the company of this filing obligation.

receive a credit against the premium tax equal to increasing percent-

ages of the retaliatory taxes paid during the preceding taxable year

Should the Whole Dollar Method be Used?

attributable to the surtax. If the aggregate cumulative investment by

Yes. All amounts must be rounded off to the nearest dollar.

domestic property and casualty companies in the Property and Casu-

Computation of Excise

alty Initiative reaches $100,000,000, the credit shall equal 100% of the

Line 1. Multiply the amount from Part I, line 5 on the back of this re-

retaliatory taxes attributable to the surcharge. The amount of the credit

turn, by .0228 (2.28%) and enter in line 1.

is 20% for the tax year beginning on or after January 1, 1999 or the

first year in which a participating property and casualty company con-

Note: Ocean marine premiums reported on your 2001 Ocean Marine

tributes its full proportionate share. The amount of the credit is 40% for

Profits Tax Return, line 34, column 7, are deductible from net direct

the tax year beginning on or after January 1, 2000 or the second year

premiums.

in which a participating property and casualty company contributes its

Taxable premiums are derived from net direct premiums subject to

full proportionate share. The amount of credit is 60% for the tax year

tax in Massachusetts from Schedule T of the NAIC Annual Statement,

beginning on or after January 1, 2001 or the third year in which the

and net direct premiums from other states or countries where no tax

participating property and casualty company contributes its full propor-

has been paid. Include in this amount any finance and service charges

tionate share.

from Schedule T.

The total amount of the credit shall not exceed $8,000,000 for all do-

Form 63-22 filers are allowed a dividend deduction for premiums re-

mestic property and casualty companies. The amount of each prop-

turned or credited to policyholders in Massachusetts as dividends on

erty and casualty company’s credit shall be limited to that company’s

direct business from Schedule T of the NAIC Annual Statement.

credit share. A company seeking the credit must provide the Commis-

sioner of Revenue with the amount of its retaliatory taxes attributable

Net Direct Premiums are gross premiums, exclusive of reinsurance

to the surtax and payable for the preceding taxable year, before appli-

assumed as written in:

cation for the credit, by December 31 of the current taxable year. The

• all policies issued or renewed (including dividends applied to pay-

commissioner of revenue shall be responsible for reporting to each

ment of renewals, and policy and membership fees whether or not

company its credit share amount by February fifteenth of the current

actually received by the company);

taxable year. A certificate of contribution issued by the Property and

• all additional premiums charged on policies issued in this or in pre-

Casualty Initiative must accompany the return.

vious years; and

• all assessments made upon policyholders, for insurance of property

Line 7 — Initiative Credit. A company shall be allowed a credit against

or interests in Massachusetts or which are subjects of insurance is-

the premium tax equal to 1.5% of such company’s total capital contri-

sued through companies or agents in this state;

bution in excess of their full proportionate share which shall mean an

investment in Massachusetts Property and Casualty insurance com-

Less

pany community and economic development initiative.

• premiums on direct policies written but not taken or canceled through

default of payment; and

This credit is effective for tax years which the aggregate cumulative

• premiums returned to policyholders on canceled policies of direct

investment in Property and Casualty Initiative is $100,000,000 or the

insurance, but without deduction or exclusion in any manner of rein-

tax year 2004, whichever is later.

surance ceded, dividends, commissions, expenses or losses.

Line 9 — Credit for Member Insurers of the Massachusetts Life

Line 2 — Income. Enter in the subtotal section of line 2 the amount

and Health Insurance Guaranty Association. Enter 10% of the as-

from Part II, line 10. Multiply this amount by the applicable tax rate

sessment for each of five years following the year in which the as-

checked in the registration section. Property and casualty insurers

sessment was paid. If the sum of offsets exceeds $3,000,000, the

may reduce their tax rate on gross investment income from the 1%

excess may be carried forward and may be used in a year in which

tax rate if they contribute the required amount to the initiative over a

the $3,000,000 is not exceeded. If the total offsets exceed $3,000,000

five-year period. The reduced rate schedule is as follows: 0.8% for

in a year, the Department of Revenue will assess each member with

the first year on or after January 1, 1999, in which it makes the re-

an additional tax equal to the amount of the offset which exceeds

quired contribution and 0.6% for the second year it makes the required

$3,000,000 of such members pro rata share. If the total offsets do not

Form 63-22 - Premium Excise Return For Domestic Insurance Companies - 2001 Page 4

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