The purpose of the proposed amendments to Rule 12B-8.001, F.A.C. (Premium Tax; Rate and Computation), is to implement the changes to Section 288.99(11), F.S., as amended by Chapter 2005-91, L.O.F., regarding the transfer of certified capital company ...

 

DEPARTMENT OF REVENUE

Miscellaneous Tax

RULE NOS.: RULE TITLES:

12B-8.001 Premium Tax; Rate and Computation

12B-8.003 Tax Statement; Overpayments

12B-8.0012 Insurance Policy Surcharge; Rate and Computation

PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12B-8.001, F.A.C. (Premium Tax; Rate and Computation), is to implement the changes to Section 288.99(11), F.S., as amended by Chapter 2005-91, L.O.F., regarding the transfer of certified capital company (CAPCO) credits. The purpose of the proposed amendments to Rule 12B-8.0012, F.A.C. (Insurance Policy Surcharge; Rate and Computation), is to implement the changes to Section 252.372, F.S., as amended by Chapter 2005-280, L.O.F., regarding the collection and remission of the surcharge by surplus lines companies and surplus lines agents for policies issued on or after January 1, 2006. The purpose of the proposed amendments to Rule 12B-8.003, F.A.C. (Tax Statement; Overpayments), is to adopt, by reference, changes to forms used by the Department in the administration of the insurance premium tax.
SUMMARY: The proposed amendments to Rule 12B-8.001, F.A.C. (Premium Tax; Rate and Computation), add provisions necessary to facilitate the transfer of certified capital company (CAPCO) credits required under Section 288.99(11), F.S., as amended by Chapter 2005-91, L.O.F. The proposed amendments to Rule 12B-8.0012, F.A.C. (Insurance Policy Surcharge; Rate and Computation), implement the changes to Section 252.372, F.S., as amended by Chapter 2005-280, L.O.F., by removing language relating to the collection and remission of the surcharge by surplus lines companies and surplus lines agents. The surcharges on surplus lines policies and independently procured policies will be remitted to the Florida Surplus Lines Office for policies issued on or after January 1, 2006. The proposed amendments to Rule 12B-8.003, F.A.C. (Tax Statement; Overpayments): (1) adopt, by reference, changes to forms used by the Department in the administration of the insurance premium tax; and (2) update information on how to obtain forms from the Department.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Costs was prepared.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

SPECIFIC AUTHORITY: 213.06(1) FS., 220.183(6) FS., 288.99(11) FS., 624.5105(6) FS., Ch. 93-128, L.O.F.

LAW IMPLEMENTED: 175.101 FS., 175.121 FS., 175.141 FS., 185.08(3) FS., 185.10 FS., 185.12 FS., 213.05 FS., 213.235 FS., 213.37 FS., 220.183(3) FS., 288.99(11) FS., 624.4621 FS., 624.475 FS., 624.509 FS., 624.5092 FS., 624.510 FS., 624.5105 FS., 624.511 FS., 624.518 FS., 624.519 FS., 624.520(2) FS., 626.7451(11) FS., 627.3512 FS., 627.357(9) FS., 628.6015 FS., 629.5011 FS., 634.131 FS., 634.313(2) FS., 634.415(2) FS., Ch. 93-128, L.O.F.

A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: February 6, 2006, 10:00 a.m.

PLACE: Room 118, Carlton Building, 501 South Calhoun Street, Tallahassee, Florida

NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT: Any person requiring special accommodations to participate in any rulemaking proceeding before Technical Assistance and Dispute Resolution is asked to advise the Department at least 48 hours before such proceeding by contacting Larry Green at [phone]. Persons with hearing or speech impairments may contact the Department by using the Florida Relay Service, which can be reached at [phone] (Voice) and [phone] (TDD).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULES IS: Robert DuCasse, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

 

THE FULL TEXT OF THE PROPOSED RULES IS:

 

12B-8.001 Premium Tax; Rate and Computation.

(1) through (2) No change.

(3) Credits Against the Tax.

(a) through (d) No change.

(e) Certified Capital Company (CAPCO) Credit.

1. Who May Claim the Credit. Any certified investor who made an investment of certified capital in a CAPCO and earned a CAPCO credit under Section 288.99, F.S., is entitled to use no more than 10 percent of the CAPCO credit, including any carryover CAPCO credits, per year beginning with the insurance premium tax (IPT) return for calendar year 2000.

2. Carryovers of CAPCO Credit. Any CAPCO credits not used by a certified investor in any single year may be carried forward and applied against the premium tax liabilities of such investor for subsequent calendar years. The IPT return for calendar year 2010 is the first return on which a certified investor or a transferee of a certified investor’s unused CAPCO credit may use carryover CAPCO credits.

3. Transfer/Sale of CAPCO Credit. Effective May 26, 2005, CAPCO credits may be sold. A transfer or sale of a CAPCO credit will not affect the time schedule for taking the CAPCO credit. The claim of a transferee of a certified investor’s unused CAPCO credit is permitted in the same manner and subject to the same provisions and limitations as the original certified investor. Transfers or sales of a current year CAPCO credit (the amount of CAPCO credit available to be claimed in the current tax year), future year CAPCO credits (the amount of CAPCO credit available to be claimed in future years – excluding carryover CAPCO credits), and CAPCO credit carryovers (the amount of CAPCO credit carried over from prior years where the current year CAPCO credit at that time was not fully used) are allowed.

a.(I) When current year CAPCO credits, future year CAPCO credits or carryover CAPCO credits are transferred in whole or in part, written notification of such action must be provided to the Department of Revenue, Return Reconciliation Process, Insurance Premium Tax, 5050 W. Tennessee St., Bldg. F-3, Tallahassee, FL 32399-0100. This notification must be made at the earlier of within 30 days of such action, or within 30 days of when such IPT return on which such CAPCO credits could initially be claimed is due. The notification is required to contain the name and federal identification number of the original CAPCO investor, the name and federal identification number of the seller (if different from the original CAPCO investor), the name and federal identification number of the purchaser, the amount and type of CAPCO credit being transferred/sold, and a schedule tracking the amount of CAPCO credit granted the original investor and the use of such CAPCO credit through the date of transfer/sale.

(II) Transfer/sale of Future Year and Carryover CAPCO Credit Example. Insurer Z made an investment of certified capital in a CAPCO of $1,000,000 in 1999 and earned a CAPCO credit of $1,000,000. Insurer Z may use up to $100,000 of its CAPCO credit, including any carryover CAPCO credit, each IPT year, beginning with the 2000 IPT return, until the CAPCO credit is used in its entirety. In 2000, 2001, 2002, 2003, and 2004, Insurer Z used CAPCO credits of $100,000, $100,000, $100,000, $75,000, and $30,000, respectively. Insurer Z did not transfer any of its 2000, 2001, 2002, 2003, or 2004 current year CAPCO credits, as it had no affiliates. Insurer Z had a carryover CAPCO credit of $95,000 ($25,000 from 2003 and $70,000 from 2004), which could be used by Insurer Z on its 2010 IPT return. On December 1, 2005, Insurer Z sells all of its remaining CAPCO credits and carryover credits, including its 2005 current year CAPCO credit, to Insurer M. By the earlier of December 31, 2005, or January 31, 2006, Insurer Z sent a letter to the Department of Revenue stating that it sold all of its CAPCO credits to Insurer M. The letter included the federal identification numbers of Insurer Z and Insurer M. The letter also included a breakdown of how insurer Z used its CAPCO credits from 2000 to 2004 ($405,000 of CAPCO credits used by Insurer Z – $100,000 used on its 2000 IPT year, $100,000 used on its 2001 IPT year, $100,000 used on its 2002 IPT year, $75,000 used on its 2003 IPT year, and $30,000 used on its 2004 IPT year) and a recap of the amount of CAPCO credits sold (CAPCO credits of $100,000 per year for IPT years 2005 through 2009 and a $95,000 CAPCO credit carryover available for the 2010 IPT year for a total of $595,000). Insurer M started claiming CAPCO credits beginning with its 2005 IPT return. Insurer M will include a statement with each of its IPT returns on which it is claiming a CAPCO credit that it purchased its CAPCO credit from Insurer Z on December 1, 2005.

b.(I) Instead of fulfilling the requirements of sub-subparagraph a., when a certified investor transfers in whole or in part current year CAPCO credits to an affiliate of the certified investor, the certified investor and the affiliate(s) to whom the current year CAPCO credit transfer was made are required to prepare a schedule reconciling how the certified investor’s current year CAPCO credit was utilized and attach a copy of that schedule to the current year IPT returns of the certified investor and affiliate(s) to whom an allocation of current year CAPCO credit was made. The schedule must include the name, federal identification number, and amount of CAPCO credit claimed by each entity. In addition, the certified investor must attach a copy of the certification letter it received from the certified capital investment company to its IPT return.

(II) Transfer of Current Year CAPCO Credit Example. Insurer A made an investment of certified capital in a CAPCO of $1,000,000 in 1999 and earned a CAPCO credit of $1,000,000. Insurer A may use up to $100,000 of its CAPCO credit, including any carryover CAPCO credit, each IPT year, beginning with the 2000 IPT return, until the CAPCO credit is used in its entirety. In the 2005 IPT year, Insurer A transferred $20,000 of its $100,000 current year CAPCO credit to its subsidiary, Insurer B. On their 2005 IPT returns, Insurer A claimed a CAPCO credit of $80,000 and Insurer B claimed a CAPCO credit of $20,000. Both insurers attached a schedule reconciling the use of Insurer A’s $100,000 current year CAPCO credit. The reconciliation schedule included Insurer A’s and Insurer B’s names, federal identification numbers, and the amount of CAPCO credit claimed by each insurer. In addition, Insurer A attached a copy of its CAPCO credit certification letter to its 2005 IPT return.

4. Recordkeeping Requirements. Every certified investor and transferee claiming a CAPCO credit must retain a copy of the certification letter received from the certified capital investment company and a schedule reconciling all credit carryovers, transfers, and sales for as long as the contents are material for administrative purposes. The retention of records is generally controlled by Section 213.35, F.S., which requires records to be kept until the expiration of time for the Department of Revenue to make an assessment under Section 95.091(3), F.S.

(4) through (9) No change.

Specific Authority 213.06(1), 220.183(6), 288.99(11), 624.5105(6) FS. Law Implemented 175.101, 175.121, 175.141, 185.08(3), 185.10, 185.12, 213.05, 213.235, 220.183(3), 288.99(11), 624.4621, 624.475, 624.509, 624.5092, 624.510, 624.5105, 624.519, 624.520(2), 626.7451(11), 627.3512, 627.357(9), 628.6015, 629.5011, 634.131, 634.313(2), 634.415(2) FS. History–New 2-3-80, Formerly 12B-8.01, Amended 3-25-90, 4-10-91, 2-18-93, 6-16-94, 10-19-94, 1-2-96, 12-9-97, 6-2-98, 4-2-00, 10-15-01, 8-1-02,_______.

 

12B-8.0012 Insurance Policy Surcharge; Rate and Computation.

(1) Every insurer, including surplus lines and surplus lines agents, must collect a surcharge of $2 and $4 from the policyholders of certain types of property insurance issued or renewed on or after May 1, 1993. The proceeds will be deposited into the Emergency Management, Preparedness, and Assistance Trust Fund.

(2) through (7) No change.

(8) The surcharge on surplus lines policies must be remitted by the surplus lines agents, unless the surplus lines insurer collects and remits the surcharge, and must be remitted on Form DR-907 and Form DR-908. The surcharge is required to be remitted by the surplus lines agent for only the surplus lines policies. The authorized insurer is required to collect and remit the surcharge for all other policies. The $250 quarterly and annual filing fees do not apply to either the surplus lines agent or the surplus lines insurer.

(9) The insurance premium tax on surplus lines will continue to be remitted to the Department of Insurance as required.

(10) through (11) renumbered (8) through (9) No change.

(10)(12) The first installment on the surcharge was due June 15, 1993, for May and June with the subsequent installment due on October 15 for the calendar quarter ending September 30. A separate line denoting the surcharge is provided on the revised Form DR-907 and the revised Form DR-908, annual return, which is due by March 1.

(13) through (16) renumbered (11) through (14) No change.

Specific Authority 213.06(1) FS., Ch. 93-128, L.O.F. Law Implemented 624.5092 FS., Ch. 93-128, L.O.F. History–New 6-16-94, Amended________.

 

12B‑8.003 Tax Statement; Overpayments.

(1) Tax returns and reports shall be made by insurers on forms prescribed by the Department. These forms are hereby incorporated by reference in this rule.

(2) Copies of these forms are available, without cost, by one (1) or more of the following methods: 1) downloading the form from the Department’s Internet site at www.myflorida.com/dor; or, 2) faxing a forms request to the Distribution Center at [phone]; or, 3) calling the Distribution Center at [phone]; or, 4) writing the Florida Department of Revenue, Distribution Center, 168A Blountstown Highway, Tallahassee, Florida 32304; or, 5) 2) faxing the Distribution Center at [phone]; or, 3) visiting any local Department of Revenue Service Center to personally obtain a copy; or, 4) calling the Forms Request Line during regular office hours at [phone] (in Florida only) or [phone]; or, 5) downloading selected forms from the Department’s Internet site at the address shown inside the parentheses (www.myflorida.com/dor). Persons with hearing or speech impairments may call the Department’s TDD at [phone].

(3) through (4) No change.

Form Number	Title	Effective Date
(5)(a) DR-907	Florida Insurance Premium Installment Payment (R. 01/06 01/05)	_____06/05
(b) DR-907N	Information for Filing Insurance Premium Installment Payment (Form DR-907) (R. 01/06 01/05)	_____06/05
(6)(a) DR-908	Insurance Premium Taxes and Fees Return for Calendar Year 2005 2004 (R. 01/06 01/05)	_____06/05
(b) DR-908N	Instructions for Preparing Form DR-908 Florida Insurance Premium Taxes and Fees Return (R. 01/06 01/05)	_____06/05
(7) DR-350900	2005 2004 Insurance Premium Tax Information for Schedules XII and XIII, DR-908 (R. 01/06 01/05)	_____06/05

Specific Authority 213.06(1) FS. Law Implemented 213.05, 213.37, 624.5092, 624.511, 624.518 FS. History–New 2‑3‑80, Formerly 12B‑8.03, Amended 3‑25‑90, 3‑10‑91, 2‑18‑93, 6‑16‑94, 12‑9‑97, 3‑23‑98, 7‑1‑99, 10-15-01, 8-1-02, 5-4-03, 9-28-04, 6-28-05, ________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Robert DuCasse, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]

NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Rodney Felix, Revenue Program Administrator I, Technical Assistance and Dispute Resolution, P. O. Box 7443, Tallahassee, Florida 32314-7443; telephone number [phone]

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 27, 2005

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: The proposed amendments to Rule Chapter 12B-8, F.A.C. (Insurance Premium Taxes, Fees and Surcharges), were noticed for a rule development workshop in the Florida Administrative Weekly on November 10, 2005 (Vol. 31, No. 45, pp. 4122-4125). A rule development workshop was held on November 30, 2005. No one appeared to provide comment regarding these proposed rule changes. No written comments have been received by the Department. A technical change to sub-sub-subparagraph (3)(e)3.a.(II) of proposed Rule 12B-8.001, F.A.C., was made by the Department.