Form Tsb-M-11(7)c - Changes To Article 33-A, Tax On Independently Procured Insurance - New York State Department Of Taxtation And Finance

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Technical Memorandum
TSB-M-11(7)C, (7)I
Corporation Tax
Income Tax
July 5, 2011
Changes to Article 33-A, Tax on Independently Procured Insurance
To conform to federal legislation, New York State enacted
legislation that changed the method of taxation for insurance
contracts purchased or renewed from unauthorized insurers when
those contracts are not purchased or renewed through a New
York licensed excess line broker. The change applies to taxable
insurance contracts with effective dates on or after July 21, 2011.
Background
The federal Dodd-Frank Wall Street Reform and Consumer Protection Act, which
included, as Subtitle B, the Nonadmitted and Reinsurance Reform Act of 2010 (NRRA), required
states to change their current taxation methods for insurance purchased or renewed
independently from insurers not authorized to transact business in their states. The federal
legislation gives the home state of an insured the sole authority to regulate and collect taxes on
these transactions. To conform to the federal requirements, New York passed Part I of Chapter
61 of the Laws of 2011.
Prior to this legislation, the tax under Article 33-A was based on premiums for risks
located or resident in New York State, irrespective of the location of the insured. In cases where
premiums were paid for risks that were both within and without New York State, taxpayers were
required to allocate the premiums and pay tax on the amount of premiums allocated to New York
State.
Imposition of tax
Chapter 61 amended Article 33-A to impose tax on any person whose home state is New
York and who purchases or renews a taxable insurance contract from an insurer not authorized
to transact business in New York under a certificate of authority from the Superintendent of
Insurance, when the contract is not purchased or renewed through a New York licensed excess
line broker. See the definition of taxable insurance contract for the kinds of insurance subject to
Article 33-A.
The tax is calculated on premiums paid or payable, less returns, for these contracts.
Premiums subject to the tax will include 100% of premiums paid or payable to unauthorized
insurers when the home state of the insured is New York. The rate of tax continues to be 3.6%.
The amendments apply to taxable insurance contracts with effective dates on or after July 21,
2011.
W A Harriman Campus, Albany NY 12227

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