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. 38, September 20, 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).
