March 27, 2020
Mr. Gale Garriott
Executive Director
Federation of Tax Administrators
444 North Capitol Street NW, Suite 348
Washington, DC 20001
Mr. Gregory Matson
Executive Director
Multistate Tax Commission
444 North Capitol Street NW, Suite 425
Washington, DC 20001
Re: COVID-19 Premium Tax Matters
Dear Gale and Greg:
Multistate Associates works extensively with the insurance industry on tax policy matters. As we talk with insurance clients, a significant concern in the wake of the COVID-19 pandemic is the filing of insurance premium tax returns.
States are generally extending filing and payment deadlines for most other industries who pay other taxes. We are concerned that the insurance industry is being inadvertently overlooked due to the fact that insurance companies generally pay premium taxes rather than corporate income taxes. Given this unique aspect of state insurance taxation, we are asking that whatever COVID-19 extensions, abatements of interest/penalties and other similar tax concessions that apply to corporate income and other business taxes also apply to insurance premium taxes.
More specifically, as a result of the COVID-19 pandemic and actions taken by national health authorities to limit the spread of the disease, the Internal Revenue Service (IRS) recently granted federal income tax relief to taxpayers. The IRS has automatically extended the tax filing and payment deadlines for federal income taxes from April 15, 2020 to July 15, 2020. Many state agencies across the country have mirrored the IRS and granted similar extensions for the taxes they administer.
Given such, we are respectfully requesting that you encourage your members to work with whichever agency in their state administers premium taxes to provide the same payment and filing relief to insurance companies. We recommend the same extension of time granted by the IRS also be granted for the filing and remittance of premium tax returns, extensions, estimated payments, payments and fees. In addition, given the impairment to comply with state tax obligations for taxes and fees, we further recommend that the agency in question grant penalty and interest relief during the extension period.
A communication by the state agencies responsible for insurance premium taxes — a directive, bulletin, or otherwise — providing such relief would be timely and greatly appreciated in light of the rapidly approaching April 15th deadline.
If you or other members of your staff have any questions or suggestions for us, please contact Bob Montellione at (973) 271-6093 or rmontellione@multistate.us.
I hope you, your teams, and your families are well, and I look forward to reconnecting in person when conditions allow.
Yours Truly,
Joseph R. Crosby