North Carolina § 58-21-85 - Surplus lines tax.

§ 58-21-85. Surplus lines tax.

Gross premiums charged, less any return premiums, for surplus lines insurance on insureds for whom North Carolina is the home state are subject to a premium receipts tax of five percent (5%), which shall be collected in a manner approved by the Commissioner, in addition to the full amount of the gross premium charged by the insurer for the insurance. The tax on any portion of the premium unearned at termination of insurance having been credited by the State to the licensee shall be returned by the licensee directly to the policyholder. The surplus lines licensee is prohibited from absorbing such tax and from rebating for any reason, any part of such tax. To the extent that other states in which portions of the properties, risks, or exposures reside have failed to enter into a compact or reciprocal allocation procedure with this State, the premium tax collected shall be retained by this State. At the same time that he files his quarterly report as set forth in G.S. 58-21-80, each surplus lines licensee shall pay the premium receipts tax due for the period covered by the report. This section does not apply to risks of State government agencies nor to risks of local government risk pools created and operating under Article 23 of this Chapter. The surplus lines licensee placing the insurance and claiming the exemption in subsection (c) of this section shall affirmatively show in writing to the Commissioner that the risk qualifies for the exemption. History (1985, c. 688, s. 1; 1985 (Reg. Sess., 1986), c. 928, s. 11; 1987, c. 727, ss. 2, 3; c. 864, s. 37; 2011-120, s. 9; 2015-101, s. 6; 2015-281, s. 14; 2018-120, s. 2.1( l ).) Effect of Amendments. - Session Laws 2011-120, s. 9, effective July 21, 2011, in subsection (a), inserted "on insureds for whom North Carolina is the home state" in the first sentence, and added the last sentence. Session Laws 2015-101, s. 6, as amended by Session Laws 2015-281, s. 14, effective January 1, 2017, in subsection (a), substituted "in a manner approved" for "by the surplus lines licensee as specified" in the first, and deleted "by the surplus lines licensee or through the producing broker, if any" following "policyholder directly" in the second sentence; and deleted former subsection (b), which read: "At the same time that he files his quarterly report as set forth in G.S. 58-21-80 , each surplus lines licensee shall pay the premium receipts tax due for the period covered by the report." Session Laws 2018-120, s. 2.1( l ), effective June 28, 2018, substituted "by the licensee directly to the policyholder" for "to the policyholder directly" in the second sentence of subsection (a). Opinions of Attorney General Exemption for Cherokee Indian Reservation. - North Carolina cannot impose a surplus lines premium tax on property located upon or activity occurring within the reservation where the legal incidence of that tax falls upon the tribe. See opinion of Attorney General to Mr. Peter A. Kolbe, General Counsel, North Carolina Department of Insurance, 2004 N.C.A.G. 6 (8/18/04).