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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Tax on Insurers Law > Chapter 4 > entire chapter

Tax on Insurers Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 7. Insurance Taxation

Chapter 4. Assessment and Effect of Tax*


Article 1. Tax Returns and Initial Payments

Article 2. Initial Assessments

Article 3. Deficiency Assessments

Article 4. Effect of Tax


* Stats. 1961, p. 1984, operative January 1, 1962, amended the title of Chapter 4 by substituting "Effect of Tax" for "Levy".

Article 1. Tax Returns and Initial Payments

12301. Due date. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12301. Due date. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12301. Due date. (a) The taxes imposed upon insurers by Section 28 of Article XIII of the California Constitution and this part, except with respect to taxes on ocean marine insurance and retaliatory taxes, are due and payable annually on or before April 1 of the year following the calendar year in which the insurer engaged in the business of insurance or transacted insurance in this state. The taxes imposed with respect to ocean marine insurance are due and payable on or before June 15 of that year.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12302. Insurance tax return in duplicate. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12302. Insurance tax return in duplicate. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12302. Insurance tax return in duplicate. (a) On or before April 1 (or June 15 with respect to taxes on ocean marine insurance) every person that is subject to any tax imposed by Section 28 of Article XIII of the California Constitution or this part, in respect to the preceding calendar year shall file, in duplicate, an insurance tax return with the commissioner in the form as the commissioner may prescribe. The return shall show that information pertaining to its insurance business in this state as will reflect the basis of its tax as set forth in Chapter 2 (commencing with Section 12071) and Chapter 3 (commencing with Section 12201) of this part, the computation of the amount of tax for the period covered by the return, the total amount of any tax prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part, and any other information as the commissioner may require to carry out the purposes of this part. Separate returns shall be filed with respect to the following kinds of insurance:

(1) Life insurance (or life insurance and disability insurance).

(2) Ocean marine insurance.

(3) Title insurance.

(4) Insurance other than life insurance (or life insurance and disability insurance), ocean marine insurance or title insurance.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12303. Return to be signed; oath or declaration. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12303. Return to be signed; oath or declaration. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12303. Return to be signed; oath or declaration. (a) Every return required by this article to be filed with the commissioner shall be signed by the insurer or an executive officer of the insurer and shall be made under oath or contain a written declaration that it is made under penalty of perjury. A return of a foreign insurer may be signed and verified by its manager residing within this state. A return of an alien insurer may be signed and verified by the United States manager of the insurer.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12304. Blank forms furnished. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12304. Blank forms furnished. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12304. Blank forms furnished. (a) Blank forms of returns shall be furnished by the commissioner on application, but failure to secure the form shall not relieve any insurer from making or filing a timely return.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12305. Remittance of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12305. Remittance of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12305. Remittance of tax. (a) The insurer required to file a return shall deliver the return in duplicate, together with a remittance payable to the Controller, for the amount of tax computed and shown thereon, less any prepayments made pursuant to Article 5 (commencing with Section 12251) of Chapter 3 of this part, to the office of the commissioner.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12306. Extension of time. The commissioner, for good cause shown, may extend for not to exceed 30 days the time for filing a tax return or paying any amount required to be paid with the return. The extension may be granted at any time, provided that a request therefor is filed with the commissioner within or prior to the period for which the extension may be granted.

History—Added by Stats. 1961, p. 1985, operative January 1, 1962. Stats. 1965, p. 1831, in effect September 17, 1965, substituted "30" days for "10" days.

12307. Interest on extension. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12307. Interest on extension. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12307. Interest on extension. (a) Any insurer that is granted an extension shall pay, in addition to the tax, interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from April 1 until the date of payment.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

Article 2. Initial Assessments

12411. Duplicate copy of return forwarded to board. A duplicate copy of each tax return received by the commissioner shall be promptly forwarded to the board.

History—Added by Stats. 1961, p. 1985, operative January 1, 1962.

12412. Initial assessment of tax. [Repealed by Stats. 2013. Ch. 33 (SB 78) in effect June 27, 2013.]

12412. Initial assessment of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12412. Initial assessment of tax. (a) Upon receipt of the duplicate copy of the return of an insurer the board shall initially assess the tax in accordance with the data as reported by the insurer on the return.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12413. Notice of initial assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12413. Notice of initial assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12413. Notice of initial assessment. (a) The board shall promptly transmit notice of its initial assessment to the commissioner and the Controller, and if the initial assessment differs from the amount computed by the insurer, notice shall also be given to the insurer.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12414. Overpayments may be offset. In making an initial assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against penalties, and against any interest on an underpayment.

History—Added by Stats. 1961, p. 1985, operative January 1, 1962.

Article 3. Deficiency Assessments

12421. Determination of correct amount of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12421. Determination of correct amount of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12421. Determination of correct amount of tax. (a) As soon as practicable after an insurer's or surplus line broker's return is filed, the commissioner shall examine it, together with any information within his or her possession or that may come into his or her possession, and he or she shall determine the correct amount of tax of the insurer or surplus line broker.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12422. Proposed deficiency assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12422. Proposed deficiency assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12422. Proposed deficiency assessment. (a) If the commissioner determines that the amount of tax disclosed by the insurer's tax return and assessed by the board is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(b) If the commissioner determines that the amount of tax disclosed by the surplus line broker's tax return is less than the amount of tax disclosed by his or her examination, he or she shall propose, in writing, to the board a deficiency assessment for the difference. The proposal shall set forth the basis for the deficiency assessment and the details of its computation.

(c) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12423. Estimate where no return filed. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12423. Estimate where no return filed. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12423. Estimate where no return filed. (a) If an insurer or surplus line broker fails to file a return, the commissioner may require a return by mailing notice to the insurer or surplus line broker to file a return by a specified date or he or she may without requiring a return, or upon no return having been filed pursuant to the demand therefor, make an estimate of the amount of tax due for the calendar year or years in respect to which the insurer or surplus line broker failed to file the return. The estimate shall be made from any available information which is in the commissioner's possession or may come into his or her possession, and the commissioner shall propose, in writing, to the board a deficiency assessment for the amount of the estimated tax. The proposal shall set forth the basis of the estimate and the details of the computation of the tax.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12424. Board to assess deficiency. The board shall make a deficiency assessment on the basis of a proposal submitted to it by the commissioner pursuant to Section 12422 or 12423.

History—Added by Stats. 1961, p. 1986, operative January 1, 1962.

12425. More than one deficiency assessment. One or more deficiency assessments may be proposed or made for the amount of tax due for one or for more than one calendar year.

History—Added by Stats. 1961, p. 1986, operative January 1, 1962.

12426. Overpayments may be offset. In making a deficiency assessment the board may offset an overpayment for one calendar year against an underpayment for another calendar year, against penalties and against any interest on an underpayment.

History—Added by Stats. 1961, p. 1986, operative January 1, 1962.

12427. Notice of deficiency assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12427. Notice of deficiency assessment. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12427. Notice of deficiency assessment. (a) The board shall promptly notify the insurer or surplus line broker of a deficiency assessment made against the insurer or surplus line broker.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12428. Petition for redetermination. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12428. Petition for redetermination. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12428. Petition for redetermination. (a) An insurer or surplus line broker against which a deficiency assessment is made under Section 12424 or 12425 may petition for redetermination of the deficiency assessment within 30 days after service upon the insurer or surplus line broker of the notice thereof, by filing with the board a written petition setting forth the grounds of objection to the deficiency assessment and the correction sought. At the time the petition is filed with the board, a copy of the petition shall be filed with the commissioner.

If a petition for redetermination is not filed within the period prescribed by this section, the deficiency assessment becomes final and due and payable at the expiration of that period.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12429. Oral hearing. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12429. Oral hearing. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12429. Oral hearing. (a) If a petition for redetermination of a deficiency assessment is filed within the time allowed under Section 12428, the board shall reconsider the deficiency assessment and, if the insurer or surplus line broker has so requested in the petition, shall grant an oral hearing for the presentation of evidence and argument before the board or its authorized representative. The board shall give the petitioner and the commissioner at least 20 days' notice of the time and place of hearing. The hearing may be continued from time to time as may be necessary.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12430. Decrease or increase before finality date. The board may decrease or increase the amount of the deficiency assessment before the deficiency assessment becomes final, but the amount may be increased only if a claim for the increase is asserted by the commissioner or the board at or before the hearing.

History—Added by Stats. 1961, p. 1987, operative January 1, 1962.

12431. Finality date. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12431. Finality date. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12431. Finality date. (a) The order or decision of the board upon a petition for redetermination of a deficiency assessment becomes final 30 days after service on the insurer or surplus line broker of a notice thereof, and any resulting deficiency assessment is due and payable at the time the order or decision becomes final.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12432. Statute of limitations. Except for a notice given pursuant to Section 12430 or 12431, or in the case of fraud or the failure to file a return, every notice of a deficiency assessment shall be given within four years after April 1st of the year following the year for which the amount of tax is assessed or within four years after the return is filed, whichever period expires the later. In the case of failure to file a return the notice shall be given within eight years after April 1st of the year following the year for which the amount of tax is assessed.

History—Added by Stats. 1961, p. 1987, operative January 1, 1962. Stats. 1969, p. 1475, in effect August 14, 1969, operative January 1, 1970, substituted "April 1st" for "June 15th" in the first and second sentences.

12433. Waiver of limitation. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12433. Waiver of limitation. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12433. Waiver of limitation. (a) If before the expiration of the time prescribed in Section 12432 for giving of a notice of deficiency assessment the insurer or surplus line broker has consented in writing to the giving of the notice after that time, the notice may be given at any time prior to the expiration of the time agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12434. Service of notice. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12434. Service of notice. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12434. Service of notice. (a) Any notice required by this article shall be placed in a sealed envelope, with postage paid, addressed to the insurer or surplus line broker at its address as it appears in the records of the commissioner or the board. The giving of notice shall be deemed complete at the time of deposit of the notice in the United States Post Office, or a mailbox, subpost office, substation or mail chute or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason. In lieu of mailing, a notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of the delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12435. Copies of notice. A copy of each notice of a deficiency assessment made by the board shall be transmitted to the commissioner and the Controller. The Controller shall keep an appropriate record of all such assessments and any payments thereon.

History—Added by Stats. 1961, p. 1987, operative January 1, 1962. Former Section 12434, repealed by stats. 1961, p. 1985, provided for notice to insurers whose tax had been assessed in an amount differing from the amount of tax liability as computed by the insurer.

12491. Lien of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12491. Lien of tax. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12491. Lien of tax. (a) Every tax levied upon an insurer under the provisions of Article XIII of the California Constitution and of this part is a lien upon all property and franchises of every kind and nature belonging to the insurer, and has the effect of a judgment against the insurer.

(b) (1) Every tax levied upon a surplus line broker under Part 7.5 (commencing with Section 13201) is a lien upon all property and franchises of every kind and nature belonging to the surplus line broker, and has the effect of a judgment against the surplus line broker.

(2) A lien levied pursuant to this subdivision shall not exceed the amount of unpaid tax collected by the surplus line broker.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12492. When lien attaches. Every lien attaches as of 12:01 a.m. on the first day of March of the calendar year in which the tax is levied.

History—Added by Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 1967, p. 2244, operative January 1, 1968, substituted "as of 12:01 a.m. on the first day of" for "on the first Monday in" March.

12493. Lien has effect of execution. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12493. Lien has effect of execution. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12493. Lien has effect of execution. (a) Every lien has the effect of an execution duly levied against all property of a delinquent insurer or surplus line broker.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12494. Removal of lien. [Repealed by Stats. 2011, Ch. 11x1 (ABx1 21), effective January 1, 2013.]

12494. Removal of lien. [Repealed by Stats. 2013, Ch. 33 (SB 78) in effect June 27, 2013.]

12494. Removal of lien. [Repealed by Stats. 2013, Ch. 33 (SB 78), effective January 1, 2015.]

12494. Removal of lien. (a) No judgment is satisfied nor lien removed until either:

(1) The taxes, interest, penalties, and costs are paid.

(2) The insurer's or surplus line broker's property is sold for the payment thereof.

(b) This section shall become operative on July 1, 2013.

History—Added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013, but operative July 1, 2013.

12495. No dissolution or bankruptcy discharge until taxes paid. No court shall make and enter a final discharge in bankruptcy or decree of dissolution, nor shall any county clerk or the Secretary of State file a discharge, decree, or any other document by which the term of existence of a corporation or surplus line broker's business is reduced, or a surplus line broker's assets are transferred to a new owner until all taxes, interest, penalties, and costs are paid and discharged.

History—Added Stats. 1941, Ch. 113, operative July 1, 1943. Stats. 1959, p. 1892, in effect April 1, 1959, inserted "interest," between "taxes," and "penalties." Stats. 2005, Ch. 231 (AB 1424), in effect January 1, 2006, added "or surplus line broker's business" after "existence of a corporation", added "a surplus line broker's assets are transferred to a new owner" and deleted "terminated" after "existence of a corporation is reduced, or."