BOE Plans to Expedite Hearing on Work Comp Deductible Taxation Appeal
By Michelle Logsdon - April 12, 2002The meter is running for insurance companies that did not pay back taxes on workers’ compensation deductibles by April 1. Interest is accruing on those bills leading the California Board of Equalization to expedite an appeal hearing for the groups contesting the new taxation.
“Because of the timeliness of this issue I would like to see it get to an appeals hearing within 90 days,” Dennis Maciel, the chief of the BOE’s excise taxes division, told adjustercom.com. “A hearing officer would attend and I’d like to get a decision at that time too.”
The American Insurance Association (AIA), American International Companies and Liberty Mutual Insurance Company had the law firm, Nielsen, Merksamer, Parrinello, Mueller & Naylor, send a letter to the BOE, April 5, challenging the Department of Insurance’s (DOI) taxation collection.
The DOI notified insurers in late February that deductibles collected in 2001 were subject to premium taxation. California’s premium tax rate is set statutorily at 2.35 percent. Insurers had to pay their taxes by April 1. The BOE issued deficiency notices to those who did not pay.
The DOI also informed the companies that it would assess charges for back taxes from years 1997-2000. Although deductibles have been a factor in the market since 1995, a statute of limitations restricted the DOI’s ability to ask for taxes on amounts collected before 1997.
The BOE board members, Claude Parrish, John Chiang, Dean Andal, and Johan Klehs were all contacted by adjustercom.com for comment on the appeal. Parrish said his preliminary opinion was that the DOI’s action seemed a bit overreaching. “It sounds as if they started digging through procedures to scrounge up more taxes. If that’s how it came about that would be real sad and inappropriate.”
None of the other board members had a comment at this time.
If the petitioners are unhappy with the result of the appeals hearing, Maciel said he would expedite a board hearing within 60 days of the decision. | 
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