Work Comp Deductible Tax Appealed By Michelle Logsdon - April 11, 2002
Three groups have jointly filed an appeal with the California Board of Equalization (BOE) concerning the Department of Insurance’s (DOI) recent move to collect back taxes on workers’ compensation deductibles.
The American Insurance Association (AIA), American International Companies and Liberty Mutual Insurance Company challenged the move April 5.
The appeal asked for the withdrawal of DOI’s action and for no further requests of insurers for deductible amounts paid.
“We strongly disagree with the Department’s assertion that reimbursements under deductible policies are ‘premium’ subject to gross premium taxation,” said Mark Webb, AIA vice president, western region. “Statutory language, legislative history, an opinion by the California Attorney General’s Office and the Department’s own actions and correspondence provide the basis of our legal challenge to this new tax.”
BOE and DOI officials did not return phone calls today.
DOI issued a letter Feb. 27 notifying insurers to submit exact amounts of work comp deductibles received during tax year 1997. The companies were supposed to pay their taxes by April 1. BOE has issued deficiency notices to those who have not paid.
DOI wants taxes on the deductibles back to year 1997. That total amount is projected to be more than $100 million.
Adjuster / Examiner Claims Examiner Santa Ana Unified School District Santa Ana, CA
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