The purpose of the proposed amendments to Rule 12B-8.001, F.A.C., is to incorporate statutory changes made by the 2019 Legislature regarding contributions to eligible nonprofit scholarship-funding organizations, as well as to remove obsolete ...

 

DEPARTMENT OF REVENUE

Miscellaneous Tax

RULE NOS.:RULE TITLES:

12B-8.001Premium Tax; Rate and Computation

12B-8.003Tax Statement; Overpayments

PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12B-8.001, F.A.C., is to incorporate statutory changes made by the 2019 Legislature regarding contributions to eligible nonprofit scholarship-funding organizations, as well as to remove obsolete language.

The purpose of the proposed amendments to Rule 12B-8.003, F.A.C., is to adopt, by reference, changes to four forms used in the administration of insurance premium taxes, fees, and surcharges. These revisions include both annual updates and legislative changes.

SUMMARY: Updates regarding contributions to eligible nonprofit scholarship-funding organizations. Changes to forms used in the administration of insurance premium taxes, fees, and surcharges; these forms include Form DR-907N [Instructions for Filing Insurance Premium Installment Payment (Form DR-907)]; Form DR-908 (Insurance Premium Taxes and Fees Return For Calendar Year 2019); Form DR-908N (Instructions For Preparing Form DR-908 Florida Insurance Premium Taxes and Fees Return); and Form DR-350900 (2019 Insurance Premium Tax Information for Schedules XII and XIII, Form DR-908).

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences regarding rules of this nature, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.

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.

RULEMAKING AUTHORITY: 213.06(1) FS.

LAW IMPLEMENTED: 92.525, 175.041, 175.101, 175.1015, 175.111, 175.121, 175.141, 175.151, 185.02, 185.03, 185.08, 185.085, 185.09, 185.10, 185.12, 185.13, 213.05, 213.053, 213.235, 213.37, 220.183, 220.191, 252.372, 288.99 (2010), 440.51, 443.1216, 624.11, 624.402, 624.4094, 624.4621, 624.4625, 624.475, 624.501, 624.509, 624.5091, 624.5092, 624.50921, 624.510, 624.5105, 624.511, 624.515, 624.516, 624.518, 624.519, 624.520, 624.521, 624.601, 624.610, 626.7451(11), 627.311, 627.351, 627.3512, 627.357(9), 627.7711, 627.943, 628.6015, 629.401, 629.5011, 632.626, 634.131, 634.313(2), 634.415(2), 636.066, 642.0301, 642.032 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: October 16, 2019, 10:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida. If a meeting is requested in writing, members of the public can also attend electronically via webinar; registration information will be posted to the Department’s website at http://floridarevenue.com/publicmeetings.

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tonya Fulford at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Danielle Boudreaux, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone], email [e-mail].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

12B-8.001 Premium Tax; Rate and Computation.

(1) No change.

(2) Installments of tax. An estimated tax shall be filed on April 15, June 15, and October 15 of each year which shows the estimated amount of tax due for the preceding quarter, except the June 15 installment shall be for the period ending June 30; payment of that estimated amount shall be made at the time the report is filed. No credit for any of the allowable credits may be made against the insurer’s premium tax until the annual premium tax return is filed. Taxpayers may not credit any estimated tax payments against their estimated premium tax. Any estimated payment credits not taken when available cannot be carried forward or carried back. On or before March 1 in each year, an annual return shall be filed showing, by quarters, the gross amount of receipts taxable for the preceding year and the installment payments made during the year. A final payment of tax due for that year shall be made at the time the taxpayer files his annual return. A 10 percent penalty shall be imposed on any underpayment or late payment due and payable with the annual return. Installments of tax are applicable to taxes imposed by Sections 175.101, 185.08, 252.372, 624.4621, 624.475, 624.509, 624.510, 624.515, 627.357, 628.6015, 629.5011 and 636.066, F.S.

(a) No change.

(b)1. Contributions to eligible nonprofit scholarship-funding organizations (SFOs) made on or after July 1, 2014, for insurance premium tax reduce the amount required to meet the prior year exception referenced in paragraph (a). For taxable years beginning before January 1, 2019, the The specific prior year exception amount reduced by a contribution to an SFO is determined by the date of contribution on the certificate of contribution issued by the SFO. For taxable years beginning on or after January 1, 2019, a taxpayer may, after earning a tax credit under section 624.51055, F.S., reduce any estimated payment in that taxable year by the amount of the credit. Cross reference: Rule Chapter 12-29, F.A.C.

2. Example: An insurer remitted three installment payments of $16,000 each on April 15, 2014; June 13, 2014; and October 15, 2014. The taxpayer also made a $17,000 contribution to an SFO and was issued a certificate of contribution on October 2, 2014, which generated a credit for the taxpayer. For the prior tax year ending December 31, 2013, tax of $80,000 was reported on the return (Form DR-908 Line 11 (Total Tax Due) less the sum of Line 9 (Filing Fees) and Line 10 (Commercial/Residential Policy Surcharge)). Taxpayer’s prior year exception computation is as follows:

Due dates of installments	(1st) 4/15/2014	(2nd) 6/15/2014	(3rd) 10/15/2014
Current year: Total cumulative amount paid (or credited) from the beginning of the taxable year through the installment date indicated	16,000.00	32,000.00	48,000.00
(a) Prior year exception amount	27% of tax 21,600.00	54% of tax 43,200.00	81% of tax 64,800.00
(b) Cumulative donations made on or after July 1, 2014, to SFOs from the beginning of the taxable year through the installment date indicated. Certificate of contribution must be issued on or before installment due date.	0.00	0.00	17,000.00
(c) The prior year exception adjusted for the credit for contributions to SFOs per Section 1002.395(5)(f), F.S., equals (a) less (b)	21,600.00	43,200.00	47,800.00
Installment meets prior year exception? To answer Yes, Current year must equal or exceed Prior year (c).	No	No	Yes

Taxpayer has met the prior year exception for the third installment through a combination of estimated payments and SFO credit so that installment penalty and installment interest will not apply for the third installment.

2.3. Example: An insurer remitted three estimated payments of $20,000 each on April 13, 2018 April 15, 2015; June 15, 2018 2015; and October 15, 2018 2015. The taxpayer also made three $10,000 contributions to an SFO and was issued three certificates of contribution on April 13, 2018 April 15, 2015; June 15, 2018 2015; and October 15, 2018 2015. For the prior insurance premium tax year ending December 31, 2017 2014, tax of $100,000 was reported on the return [(Form DR-908 Line 11 (Total Tax Due) less the sum of Line 9 (Filing Fees) and Line 10 (Commercial/Residential Policy Surcharge)]. Taxpayer’s prior year exception computation is as follows:

Due dates of installments	(1st) 4/15/2018 2015	(2nd) 6/15/2018 2015	(3rd) 10/15/2018 2015
Current year: Total cumulative amount paid (or credited) from the beginning of the taxable year through the installment date indicated	20,000.00	40,000.00	60,000.00
(a) Prior year exception amount	27% of tax 27,000.00	54% of tax 54,000.00	81% of tax 81,000.00
(b) Cumulative donations made on or after July 1, 2014, to SFOs from the beginning of the taxable year through the installment date indicated. Certificate of contribution must be issued on or before installment due date.	10,000.00	20,000.00	30,000.00
(c) The prior year exception adjusted for the credit for contributions to SFOs per Section 1002.395(5)(f), F.S., equals (a) less (b)	17,000.00	34,000.00	51,000.00
Installment meets prior year exception? To answer Yes, Current year must equal or exceed Prior year (c).	Yes	Yes	Yes

Taxpayer has met the prior year exception for all three installments through a combination of estimated payments and SFO credit so that estimated tax penalty and interest will not apply to any of the three installments.

3. Example: An insurer remitted three estimated payments of $20,000 each on April 15, 2019; June 14, 2019; and October 15, 2019. The taxpayer also made three $10,000 contributions to an SFO and was issued three certificates of contribution on April 19, 2019; October 18, 2019; and February 14, 2020. For the insurance premium tax year ending December 31, 2019, tax of $100,000 is reported on the return [Form DR-908 Line 11 (Total Tax Due) less the sum of Line 9 (Filing Fees) and Line 10 (Commercial/Residential Policy Surcharge)]. Taxpayer’s prior year exception computation is as follows:

Due dates of installments	(1st) 4/15/2019	(2nd) 6/15/2019	(3rd) 10/15/2019
Current year: Total cumulative amount paid (or credited) from the beginning of the taxable year through the installment date indicated	20,000.00	40,000.00	60,000.00
(a) Prior year exception amount	27% of tax 27,000.00	54% of tax 54,000.00	81% of tax 81,000.00
(b) Cumulative donations timely made to SFOs for the taxable year. Certificate of contribution must be issued for the taxable year.	30,000.00	30,000.00	30,000.00
(c) The prior year exception adjusted for the credit for contributions to SFOs per Section 1002.395(5)(f), F.S., equals (a) less (b)	0.00	24,000.00	51,000.00
Installment meets prior year exception? To answer Yes, Current year must equal or exceed Prior year (c).	Yes	Yes	Yes

Taxpayer has met the prior year exception for all three installments through a combination of estimated payments and SFO credit so that estimated tax penalty and interest will not apply to any of the three installments.

(c) through (d) No change.

(3) Credits Against the Tax.

(a) through (c) No change.

(d)1. through 4. No change.

5. Expiration. With the exception of the carryovers allowed in Section 624.5105(1)(e), F.S., the provisions of Section 624.5105, F.S., will expire and be void on June 30, 2015.

(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. 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., Tallahassee, FL 32399-0100. This notification must be made at the earlier of within 30 days of such action or 30 days prior to 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 December 31, 2005 [the earlier of December 31, 2005 (30 days after the date of transfer), or January 31, 2006 (30 days prior to the due date of the 2005 IPT return, the return on which the transferred CAPCO credits could initially be claimed)], 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.

(e) (f) Credit for Contributions to Nonprofit Scholarship-Funding Organizations. See Rule Chapter 12-29, F.A.C., for provisions on credits against the tax for contributions made to eligible nonprofit scholarship-funding organizations.

(4) through (9) No change.

Rulemaking Authority 213.06(1), 220.183(4)(d), 288.99(11) (2010), 624.5105(4)(b), 1002.395(13) FS. Law Implemented 175.101, 175.1015, 175.121, 175.141, 185.08(3), 185.085, 185.10, 185.12, 213.05, 213.235, 220.183(3), 288.99(11) (2010), 624.4621, 624.46226, 624.4625, 624.475, 624.509, 624.5092, 624.50921, 624.510, 624.5105, 624.51055, 624.511, 624.518, 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), 1002.395 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, 6-20-06, 9-1-09, 4-26-10, 6-6-11, 1-25-12, 7-28-15, XX-XX-XX.

 

12B-8.003 Tax Statement; Overpayments.

(1) through (3) No change.

Form Number	Title	Effective Date
(4)(a)	No change
(b) DR-907N	Instructions for Filing Insurance Premium Installment Payment (Form DR-907) (http://www.flrules.org/Gateway/reference.asp?No=Ref-     10182)	XX/XX 01/19
(5)(a) DR-908	Insurance Premium Taxes and Fees Return for Calendar Year 2019 2018 (http://www.flrules.org/Gateway/reference.asp?No=Ref-     10183)	XX/XX 01/19
(b) DR-908N	Instructions for Preparing Form DR-908 Florida Insurance Premium Taxes and Fees Return (http://www.flrules.org/Gateway/reference.asp?No=Ref-    10184)	XX/XX 01/19
(6) DR-350900	2019 2018 Insurance Premium Tax Information for Schedules XII and XIII, Form DR-908 (http://www.flrules.org/Gateway/reference.asp?No=Ref-     10185)	XX/XX 01/19

Rulemaking Authority 213.06(1) FS. Law Implemented 92.525, 175.041, 175.101, 175.1015, 175.111, 175.121, 175.141, 175.151, 185.02, 185.03, 185.08, 185.085, 185.09, 185.10, 185.12, 185.13, 213.05, 213.053, 213.235, 213.37, 220.183, 220.191, 252.372, 288.99 (2010), 440.51, 443.1216, 624.11, 624.402, 624.4094, 624.4621, 624.4625, 624.475, 624.501, 624.509, 624.5091, 624.5092, 624.50921, 624.510, 624.5105, 624.511, 624.515, 624.516, 624.518, 624.519, 624.520, 624.521, 624.601, 624.610, 626.7451(11), 627.311, 627.351, 627.3512, 627.357(9), 627.7711, 627.943, 628.6015, 629.401, 629.5011, 632.626, 634.131, 634.313(2), 634.415(2), 636.066, 642.0301, 642.032 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, 6-20-06, 4-5-07, 1-1-08, 1-27-09, 1-11-10, 1-12-11, 1-25-12, 1-17-13, 1-20-14, 1-20-15, 1-11-16, 1-10-17, 1-17-18, 1-8-19,____.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Tammy Miller

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: September 24, 2019

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: August 21, 2019