CHAPTER 13

An Act to amend and reenact §$ 58-486, 58-487, 58-488, 58-489, 58-490,
58-491, 58-492, and 58-498, as amended, of the Code of Virginia,
relating to the taxation of insurance companies; and to amend the
Code of Virginia by adding thereto in Title 58, Chapter 11, an article
numbered 2 and sections numbered 58-502.1 through 58-502.10 so as to
provide for declarations of estimated tax by insurance companies
which are subject to a State license tax measured by direct gross
premium income, and to provide for payment of the estimated tax.

[S 91]
Approved February 7, 1968

Be it enacted by the General Assembly of Virginia:
1. That §§ 58-486, 58-487, 58-488, 58-489, 58-490, 58-491, 58-492 and
58-498, as amended, of the Code of Virginia, be amended and reenacted
as follows:

§ 58-486. License tax on insurance companies generally; direct
gross premium income defined.—Every insurance company as defined in
§ 38.1-1 which issues policies or contracts for any kind of insurance
classified and defined in §§ 38.1-3 to 38.1-24 shall pay an annual license
tax, * measured by the direct gross premium income as hereinafter de-
fined derived from such business in this State during each year ending
the thirty-first day of December prior to the year for which such license
tax is to be paid, for the privilege of doing business in this State; pro-
vided that no license tax shall be paid upon premiums derived from work-
men’s compensation insurance on which a premium tax is imposed under
the provisions of § 65-120, nor upon consideration for contracts for an-
nuities as defined in § 38. 1-4,

As used in this chapter the words “direct gross premium income”
shall mean the gross amount of all premiums, assessments, dues and fees
collected, received or derived, or obligations taken therefor, from business
in this State during each year ending the thirty-first day of December,
excluding premiums received for reinsurance assumed from licensed in-
surance companies, without any deduction for dividends paid or deduc-
tion on any other account except for premiums returned on cancelled
policies, or on account of reduction in rates or reduction in the amount
insured, and excluding premiums received or derived to provide insurance
of the kinds classified in §§ 38.1-3 and 38.1-5 issued on a group basis
by an insurance company insuring its employees, agents and representa-
tives. In computing direct gross premium income on insurance issued
by mutual insurance companies other than life insurance companies, re-
funds io returns made to policyholders otherwise than for losses may be

educ

§ 58-487. License year; * companies commencing business.—The
license year shall begin on the first day of May and shall expire on the
thirtieth day of April of each year. No license shall be issued for less
than a year except to a company when it first commences business in this
State, in which case the initial license shall be issued for that part of
the year from the date of the issuance of the license to the thirtieth day
of April following.

§ 58-488. Amount of license tax for * company commencing bust-
ness.— * The license tax ona company commencing business in this State
shall be measured by an estimate of direct gross premium income reason-
ably expected to be derived from such business in this State from the
time of commencing business to the thirty-first day of December follow-
ing. Every estimate made under this section shall be subject to review
by the State Corporation Commission after the close of the year for which
estimate 1s made and any variance between the estimate and the actual
direct gross premium income shall be adjusted by the Commission by order
of refund or the assessment of additional license tax depending on whether
such estimate was in excess of or less than the actual direct gross pre-
mium income of such company for such year.

This section, as hereby amended, shall apply to companies commenc-
ing business in this State on or after January first, nineteen hundred and
sixty-nine.

§ 58-489. When tax payable-——The annual license tax shall be paid *
into the State treasury on or before the * fifteenth day of April of each
year. The license tax on a company commencing business in this State
on or after January first, nineteen hundred and sixty-nine shall be patd
into the State treasury before the license is issued.

§ 58-490. Amount of license tax for insurance other than life insur-
ance and annuities—For every year * every such company which issues
policies or contracts for any kind of insurance classified and defined in
§§ 38.1-5 to 38.1-24, except workmen’s compensation insurance on which
a@ premium tax is imposed under the provisions of § 65-120, shall pay a
license tax of two and three-fourths per centum of direct gross premium
income derived from such business in this State during the preceding year
ending the thirty-first day of December.

This section, as hereby amended, shall apply with respect to taxable
years as defined in § 58-502.1, beginning after December thirty-first, nine-
teen hundred and sixty-eight, and to license years beginning on and after
May first nineteen hundred and seventy.

§ 58-491. Amount of such tax for life insurance.—For every year *
every such company which issues policies or contracts for life insurance
as defined in § 38.1-3 shall pay a license tax of two and one-fourth per
centum of direct gross premium income derived from life insurance busi-
ness in this State during the preceding year ending the thirty-first day
of December; provided, however, that with respect to premiums paid for
additional benefits in the event of death, dismemberment or loss of sight
by accident or accidental means, or to provide a special surrender value,
special benefit or an annuity in the event of total and permanent dis-
ability, the rate of tax shall be two and three-fourths per centum.

This section, as hereby amended, shall apply with respect to taxable
years as defined in § 58-502.1, beginning after December thirty-first,
nineteen hundred and sixty-eight, and to license years beginning on and
after May first, nineteen hundred and seventy.

§ 58-492. Amount of such tax for insurance transacted by certain
mutual companies.—Notwithstanding other provisions of this chapter,
any domestic insurance company doing business solely in this State which
is purely mutual, has no capital stock and is not designed to accumulate
profits for the benefit of or pay dividends to its members, and any domestic
insurance company doing business solely in this State, with a capital stock
not exceeding twenty-five thousand dollars and which pays losses from
assessments against its policyholders or members, shall pay a license
tax * for every year * of one per centum of direct gross premium in-
come derived from business in this State during the preceding year end-
ing the thirty-first day of December.

This section, as hereby amended, shall apply with respect to taxable
years as defined in § 58-502.1, beginning after December thirty-first, nine-
teen hundred and sixty-eight, and to license years beginning on and after
May first, nineteen hundred and seventy.

§ 58-498. Penalties for failure to make report or pay tax; revoca-
tion of license; recovery by suit.—Every such company which fails to
make the report required by § 58-497 shall be fined fifty dollars for
each day’s failure to :nake the report, the fine to be imposed in the discre-
tion of the Circuit Court of the City of Richmond upon motion of the
Attorney General made at the suggestion of the State Corporation Com-
mission after ten days’ notice to the company of the time of such motion.

The State Corporation Commission shall, upon notification by the
Comptroller that the license tax has not been paid, revoke the license
of such company to transact insurance in this State.

The Comptroller shall, upon the failure of any such company to pay
the license tax within the time required by law, add a penalty of * five
per centum of the amount of such tax and proceed to recover the tax
and penalty by suit in the Circuit Court of the City of Richmond, or
by appropriate proceedings brought to subject any bonds or other secur-
ities deposited by such company with the Treasurer.

2. That the Code of Virginia be amended by adding thereto in Title 58,
Chapter 11, an article numbered 2 and sections numbered 58-502.1
through 58-502.10, the added article and sections being as follows:
§ 58-502.1. Meaning of “taxable year’ and “license year.” —(a) The
term “taxable year,” as used in this article, means the calendar year upon
the basis of which the direct gross premium income is computed under
this chapter. The term includes, in the case of direct gross premium in-
come for a fractional part of a calendar year, the period in which such
direct gross premium income is received or derived from business in this

tate.

(b) The term “license year,” as used in this article, means the twelve
months’ period beginning on May first next succeeding the taxable year
and ending on April thirtieth of the calendar year next following, the
same being the year in which annual reports of direct gross premium in-
come are required to be filed under § 58-497 and the annual tax paid with
respect thereto under § 58-489, less credit for estimated tax paid for the
taxable year as hereinafter provided.

§ 58-502.2. Declarations of estimated tax —(a) Requirement of
declaration.—Every insurance company which is subject to a State lt-
cense tax measured by direct gross premium income as provided in this
Chapter 11 of Title 58 of the Code of Virginia, as amended, shall make
a declaration of estimated tax for the taxable year if the tax imposed
by this chapter, for the license year, measured by direct gross premium
income, can reasonably be expected to exceed five hundred dollars.

( b) Estimated tax.—For purposes of this article, the term “estt-
mated tax’? means the amount which the insurance company estimates as
the amount of the tax imposed by this chapter for the license year, meas-
ured by direct gross premium income received or derived in the taxable
year.

(c) Contents of declaration.—The declaration shall contain such
pertinent information as the State Corporation Commission may by forms
or regulations prescribe.

(d) Amendment of declaration.—An insurance company may make
amendments of a declaration filed during the taxable year under regulations
prescribed by the Commission, not exceeding the number specified in
§ 58-502.38(b).

(e) Short taxable year—An insurance company with a taxable
year of less than twelve months shall make a declaration in accordance
with regulations prescribed by the State Corporation Commission.

§ 58-502.3. Time for filing declarations of estimated tax by insur-
ance compantes.—(a) General rule——The declaration of estimated tax
required of insurance companies by § 58-502.2 shall be filed as follows:

If the requirements of § 58- The declaration shall be filed on or
502.2 are first met— before—
before the 1st day of the 4th
month of the taxable year .. the 15th day of the 4th month
of the taxable year

after the last day of the 8rd
month and before the 1st day
of the 6th month of the tax-
ADDIE YCAT ....ccccocecscccssseccccsscccees the 15th day of the 6th month
of the taxable year
after the last day of the 5th
month and before the 1st
day of the 9th month of the
CATADLE YEAT ..ers..sreesesereccessecees the 15th day of the 9th month
after the last day of the 8th
month and before the 1st day
of the 12th month of the
Taxable YCAP ........sscsscssccescees the 15th day of the 12th month
of the taxable year

(b) Amendment.—An amendment of a declaration may be filed in
any interval between installment dates prescribed for the taxable year,
but only one.amendment may be filed in each such interval.

(c) Short taxable year.—The application of this section to taxable
years of less than twelve months shall be in accordance with regulations
prescribed by the State Corporation Commission.

§ 58-502.4. Installment payments of estimated tax by insurance
companies.—(a) Amount and time for payment of each installment.—The
amount of estimated tax (as defined in § 58-502.2(b)) with respect to
which a declaration is required under § 58-502.2 shall be paid in install-
ments in accordance with the following table:

The following percentages of the es-
timated tax shall be paid on the

15th day of the
If the declaration is timely filed on
or before the 15th day of the— 4th 6th 9th 12th
month month month month
4th month of the taxable year ...... 25 25 25 25

6th month of the taxable year (but
after the 15th day of the 4th
MONEN) ...cecccosscccsvesccccscsccccsscscccccsscees wees 881, 8314 831,
9th month of the taxable year (but
after the 15th day of the 6th
MONT) ....cerrccccsccrcccccssccseccccscccccceceecs weve aeee 50 20
12th month of the taxable year (but
after the 15th day of the 9th
MONEN) .....ccccccccessccsscccesssccescccecevcosens 100
(b) Timely filing.—A declaration is ‘timely filed of it is “not required
by § 58-502.8(a) to be filed on a date (determined without regard to any
he adali of time for filing the declaration) before the date it is actually

(c) Late filing.—If the declaration is filed after the time prescribed
in § 58-502.8(a) (determined without regard to any extension of time
for filing the declaration), there shall be paid at the time of such filing all
anstallments of estimated tax which would have been payable on or be-
fore such time if the declaration had been filed within the time pre-
scribed in § 58-502.8(a), and the remaining installments shall be paid at
the times at which, and in the amounts in which, they would have been
payable tf the declaration had been so filed.

(d) Amendment of declaration—If any amendment of a declara-
tion is filed, the amount of each remaining installment (if any) shall
be the amount which would have been payable if the new estimate had
been made when the first estimate for the taxable year was made, in-
creased or decreased (as the case may be), by the amount computed by divid-
ang: (1) The difference between (a) the amount of estimated tax required
to be paid before the date on which the amendment is made, and (b)
the amount of estimated tax which would have been required to be paid
before such date if the new estimate had been made when the first estt-
mate was made, by (2) the number of installments remaining to be paid
on or after the date on which the amendment 1s made.

(e) Application to short taxable year.—The application of this sec-
tion to taxable years of less than twelve months shall be in accordance
with regulations prescribed by the State Corporation Commission.
(f) Installments paid in advance.—At the election of the insurance
company, any installment of the estimated tax may be paid before the
date prescribed for its payment.

(g) Payments are on account of tax for license year.—Payment
of the estimated tax measured by direct gross premium income, or any
installment thereof, shall be considered payment on account of the license
tax imposed by this chapter for the license year.

(h) Extensions of time.—The State Corporation Commission may
grant a reasonable extension of time for payment of estimated tax (or
any installment), or for filing any declaration pursuant to this article, on
condition that the taxpayer shall pay interest on the amount involved at
the rate of one-half of one percent per month or fraction thereof from
the time the payment was due until the time of payment.

§ 58-502.5. Where declarations filed and how payments made; re-
funding overpayments.—(a) Every insurance company required by this
article to file a declaration of estimated tax shall file the same with the
State Corporation Commission, and all payments shall be made into the
State treasury.

(b) If any insurance company overestimates and overpays esti-
mated tax, the State Corporation Commission shall order a refund of the
amount of the overpayment to the taxpayer. The overpayment shall be
refunded out of the State treasury on the order of the State Corpo-
ration Commission upon the Comptroller. The State Corporation Commis-
ston may act under this paragraph within two years from the thirty-
first day of December of the year in which such overpayment was

é.

§ 58-502.6. Failure by insurance company to pay estimated tax.—
(a) Addition to the tax.—In case of any underpayment of estimated tax
by an insurance company, except as provided in subsection (d), there shall
be added to the tax for the license year an amount determined at the
rate of six percent per annum upon the amount of the underpayment
(determined under subsection (b)) for the period of the underpayment
(determined under subsection (c) ).

(b) Amount of underpayment.—For purposes of subsection (a),
the amount of the underpayment shall be the excess of —

(1) The amount of the installment which would be required to be
paid if the estimated tax were equal to eighty percent of the tax ascer-
tained for the license year, over

(2) The amount, if any, of the installment paid on or before the
last date prescribed for payment.

(c) Pertod of underpayment.—The period of the underpayment
shall run from the date the installment was required to be paid to
whichever of the following dates is the earlier—

(1) The fifteenth day of the fourth month following the close of
the taxable year.

(2) With respect to any portion of the underpayment, the date on
which such portion is paid. For purposes of this paragraph, a payment
of estimated tax on any installment date shall be considered a payment
of any previous underpayment only to the extent such payment exceeds
the amount of the installment determined under subsection (b)(1) for
such installment date.

(d) Exception.—Notwithstanding the provisions of the preceding
subsections, the addition to the tax with respect to any underpayment of
any installment shall not be imposed if the total amount of all payments
of estimated tax made on or before the last date prescribed for the pay-
ment of such installment equals or exceeds the amount which would have
been required to be paid on or before such date if the estimated tax were
whichever of the following is the lesser—
(1) The tax as ascertained for the preceding license year, and the
tax for such preceding license year was computed on the basis of a taz-
able year of twelve months.

(2) An amount equal to the tax computed at the rate applicable
to the license year but otherwise on the basis of the facts shown on the
report of the insurance company for, and the law applicable to, the pre-
ceding license year.

(8) (A) An amount equal to eighty percent of the tax measured
by direct gross premium income received or derived in the taxable year
computed by placing on an annualized basis the taxable direct gross
premium income:

(i) for the first three months of the taxable year, in the case of the
installment required to be paid in the fourth month,

(ii) for the first three months or for the first five months of the
taxable year, in the case of the installment required to be paid in the
sizth month,

(it) for the first six months or for the first eight months of the
taxable year, in the case of the installment required to be paid in the
ninth month, and

(iv) for the first nine months or for the first eleven months of the
taxable year, in the case of the installment required to be paid in the
twelfth month of the taxable year.

For purposes of this paragraph, the taxable direct gross pre-
mium income shall be placed on an annualized basis by (1) multiplying
by twelve the taxable direct gross premium income referred to in sub-
paragraph (A), and (ti) dividing the resulting amount by the number
of months in the taxable year (8, 5, 6, 8, 9, or 11, as the case may be)
referred toin subparagraph (A).

(e) Short taxable year.—The application of this section to taxable
years of less than twelve months shall be in accordance with regulations
prescribed by the State Corporation Commission.

§ 58-502.7. Other provisions of this chapter not affected by this
article, except, etc; insurance companies going out of business. —Nothing
in this article contained shall be construed as affecting other provisions
of this chapter except to the extent required to give this article full effect.
Moreover, if an insurance company goes out of business or ceases to be
an insurance company in this State in any taxable or license year, such
an event shall not relieve the company of the payment of the tax meas-
ured by direct gross premium income for the period in which the com-
pany operated as an insurance company and received or derived direct
gross premium income from business in this State.

§ 58-502.8. Taxable and license years to which §§ 58-502.1 through
58-502.7 applicable-—The foregoing sections of this article shall apply
with respect to taxable years beginning after December thirty-first, nine-
teen hundred and sixty-eight, and to license years beginning on and after
May first, nineteen hundred and seventy.

§ 58-502.9. Double taxation respecting the same direct gross pre-
mium income negated.—This chapter shall not be construed as requiring
the inclusion in the base for measuring the tax imposed by this chapter
for any year any direct gross premium income which had been previously
included in the base for measuring the tax imposed by this chapter re-
specting any license year or part thereof, and the tax paid thereon.

§ 58-502.10. Article does not affect liability for tax respecting di-
rect gross premium income received or derived tn 1968.—This article
shall not be construed as applying to or affecting in any way the tax
imposed by this chapter measured by direct gross premium income re-
ceived or derived in the calendar year nineteen hundred and sixty-eight
by any insurance company to which this article applies, and such direct
gross premium income shall be reported to the State Corporation Com-
mission and taxed, and the taz shall be paid as prescribed by law by April
fifteenth, nineteen hundred and sixty-nine, the same as if this article had
not been enacted.