California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 6.2 - Reporting and Filing Premium Taxes › Section 2327.1 - Selection of Cash or Accrual Basis

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) An insurer is required to pay taxes on
				  all premiums received during the tax year.
(b) An insurer may file its return for
				  premium taxes on either a cash basis or accrual basis so long as the amount of
				  taxes paid is equivalent to or greater than the amount of taxes that would be
				  due for premiums received by the insurer.
(c) If an insurer elects to file on an
				  accrual basis the insurer must pay premium taxes on all Direct Premium reported
				  on its return and the State must receive said premium taxes at the same time or
				  earlier than if the premium taxes would have been paid by the insurer if it
				  would have filed using a cash basis, and such a filing results in the State
				  receiving an amount greater than or equal to the amount it would have received
				  in premium taxes had the insurer filed using a cash basis.
(d) An insurer is permitted, but not
				  required, to switch from an accrual basis to a cash basis under which it files
				  its premium taxes for any open tax year. However, once an insurer elects to
				  switch from an accrual basis to a cash basis the insurer thereafter is always
				  required to file on a cash basis.
(e) Except in the case of a merger completed
				  during the tax year in question between an accrual basis taxpayer and a cash
				  basis taxpayer, it shall not be permitted for an insurer to file its premium
				  taxes in part on an accrual and in part on a cash basis. Under such
				  circumstances, the surviving insurer shall be permitted to file its premium
				  taxes in part on an accrual and in part on a cash basis only for the tax year
				  in which the merger occurred. The Commissioner, in the Commissioner's sole
				  discretion, may allow the surviving insurer to file its premium taxes in part
				  on an accrual basis and in part on a cash basis for a particular subsequent tax
				  year.
1. New
					 section filed 8-22-2012; operative 9-21-2012 (Register 2012, No.
					 34).
2. Change without regulatory effect amending subsection (e)
					 filed 7-14-2021 pursuant to section
					 100, title 1, California Code of
					 Regulations (Register 2021, No. 29). Filing deadline specified in Government
					 Code section
					 11349.3(a)
					 extended 60 calendar days pursuant to Executive Order
					 N-40-20.
Note: Authority cited: Section
						13170,
						Revenue and Taxation Code. Reference: Article XIII, Section
						28, California Constitution;
						Sections
						12001,
						12201,
						12221,
						12231,
						12232,
						12302,
						12303,
						12304,
						12421
						and
						12422,
						Revenue and Taxation Code; Sections
						19,
						20,
						21,
						28,
						47,
						736,
						1530 and
						12740,
						Insurance Code. State Board of Equalization Memorandum Opinion in California
						Automobile Insurance Company (December 12,
						2006).