Tuesday, January 10, 2012

Montana Agrees to Apply Its Own Tax Rate on Multi-State Surplus Lines Policies

As part of a decision amending surplus lines regulations, the Montana Commissioner of Securities and Insurance has agreed that producers should charge Montana's tax rate on multi-state surplus lines policies where Montana is the home state of the insured.

During the review of the proposed regulations, NAPSLO had urged the state to interpret the regulations so that when Montana is the home state on a risk, the entire gross premium – regardless of whether a multistate risk is covered – be taxed at the Montana rate, rather than using the tax rate of each state involved in the transaction on that portion of the risk.

The department agreed with NAPSLO’s position to “continue to tax at 100% of the premium where Montana is the home state until such time as it is participating in a tax sharing system with other states."

The decision formally notes that “the entire premium (gross premium) will be taxed at the Montana tax rate in 33-2-705, MCA, regardless of whether the coverage includes risks or exposures partially located or to be performed in another state.”

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