Opinion ID: 2556592
Heading Depth: 1
Heading Rank: 3

Heading: The Sun Life Insurance Policies

Text: Sun Life, a wholly-owned subsidiary of Sun Life Financial, Inc., is an insurance company incorporated in Delaware. Between 2000 and 2001, Sun Life issued seven employer-owned and trust-owned life insurance policies, as defined under 18 Del. C. §§ 2704(e)(3) and (e)(4). [8] Those seven policies were each issued through separate private placement memoranda. [9] After issuing those seven policies, Sun Life filed with the Department its initial 2001 Premium Tax and Fees Report (the Original 2001 Report). Sun Life treated those policies as separate cases and did not claim any tax overpayment or refund. [10] Two years later, on February 25, 2003, Sun Life filed an amended 2001 Premium Tax and Fees Report (the Amended 2001 Report), which claimed a $661,141 overpayment of premium taxes and requested a refund in that amount. The reason for the overpayment, Sun Life explained, was that its Original 2001 Report incorrectly treated each employer/trust-owned life insurance contract as a separate case, rather than treating all seven polices collectively as one unitary case under 18 Del. C. § 702(c)(2). That scenario was repeated for Sun Life's 2002 and 2003 tax reports. In its initial 2002 Premium Tax and Fees Report (the Original 2002 Report), Sun Life claimed an overpayment, and requested a refund, of $1,473,804. Of that amount, $1,329,651 was not disputed by the Department. Two years later, in June 2004, Sun Life filed an amended 2002 Premium Tax and Fees Report (the Amended 2002 Report), wherein Sun Life reduced its requested refund to the undisputed $1,329,651 amount. After it received that refund in September 2004, Sun Life filed a second amended 2002 Premium Tax and Fees Report (the Second Amended 2002 Report) in January 2005. In its Second Amended 2002 Report, Sun Life revised its requested refund amount to $144,153, which was the balance of the $1,473,804 claimed overpayment in its Original 2002 Report, less the $1,329,651 September 2004 refund. Again, Sun Life's explanation for the overpayment was that it had (erroneously) reported four employer/trust-owned life insurance contracts as one unitary case. Based on that same rationale, Sun Life later filed its 2003 Premium Tax and Fees Report (the 2003 Report), wherein it claimed an overpayment, and sought a refund, of $45,145. Each of Sun Life's claimed overpayments was premised on its legal contention that under amended Section 702(c)(2), Sun Life may lawfully aggregate multiple employer/trust-owned life insurance policies into one unitary case. Sun Life claims that it overpaid taxes totaling $850,439 for tax years 2001, 2002, and 2003an amount it claims that the Department should have, but did not, refund. That amount ($850,439) is what is at stake in this litigation. On July 26, 2005, an administrative hearing was held on Sun Life's refund claim. On November 25, 2008, the Commissioner held that Sun Life could not aggregate the premiums it received from the seven policies into one case, because those policies were issued under separate private placements, not under a private placement as Section 702(c)(2)b requires. [11] On appeal, the Superior Court reversed the Commissioner's determination. The court held that the 1998 amendment to Section 702(c)(2), which deleted the word single from the phrase a single private placement, constituted a material change to the statutory definition of case. [12] That material change, the court found, rendered the meaning of case ambiguous. [13] Because no clear legislative history evidenced the General Assembly's intent when it enacted the 1998 amendment, the Superior Court resolved the ambiguity in favor of the taxpayer, Sun Life. [14] The Department appeals from that ruling.