State Tax

Every surplus line broker and special surplus line broker must make an annual state tax filing. This is due on or before March 1 of each year to the Insurance Commissioner. The amount of tax due is 3% of the California taxable non-admitted premiums transacted by the broker from January 1 to December 31 in the previous year. This form must be completed by all brokers whether or not business was transacted. For additional information regarding the filing of state tax returns, contact DOI’s Tax Unit (916) 492-3288.

Every surplus line broker whose annual tax for the preceding calendar year was $5,000 or more shall make monthly installment payments on account, of the annual tax on business done during the current calendar year. The commissioner may relieve a surplus line broker of obligation to make monthly payments where the broker establishes to the satisfaction of the commissioner that either the broker has ceased to transact business in this state, or the annual tax for the current year will be less than $5,000. The monthly payments shall be remitted on or before the first day of the third calendar month following the end of the accounting month in which the business is done.

Brokers whose annual tax is $20,000 or more are required to participate in the electronic funds transfer program. To register as an EFT taxpayer, contact the Department of Insurance’s EFT Unit at (916) 492-3288.

Failure to pay state tax will be subject to a penalty of 10% of the amount of payment due, plus an interest rate of 1% per calendar month or fraction thereof until the date the payment is received by the commissioner.

(See section 1775.5 through 1776. of the Insurance Code)