Form Ins-7 - Nonadmitted Premiums Tax Annual Reconciliation / Return

GENERAL INSTRUCTIONS

NEW FOR 2011

insurance company with an annual tax liability not exceeding $1,000

may ﬁ le only an annual return with payment.

A new law makes changes to the application of surplus lines (non-

INTEREST AND PENALTIES

admitted insurance) premiums tax to agree with federal changes

For calender year 2012, the interest rate is 7%, compounded monthly.

enacted in 2010. With respect to premimums received on or after

The penalty for failure to ﬁ le a return on time is the greater of $25

July 1, 2011, the Maine tax is applied to premiums received from

or 10% of the tax due, unless the return is ﬁ led more than 60 days

persons whose principal place of business or principal residence is

after the receipt of a demand notice from the state tax assessor, in

in Maine, unless the insured risk is located entirely outside Maine.

which case the failure-to-ﬁ le penalty is the greater of $25 or 25%

If all of the insured risk is located outside Maine, the premiums are

of the tax due. The penalty for failure to pay a tax liability timely

not taxable to Maine but are taxable where the largest percentage

is 1% of the outstanding liability for each month or fraction thereof

of risk is located. The Maine tax also applies to self procured per-

during which the failure continues, to a maximum of 25% of the

sons whose principal place of business or principal residence is in

outstanding liability.

Maine and who, on or after July 1, 2011, purchased nonadmitted

insurance, the risk of which is entirely or partially in Maine. See 36

MRSA §§ 2513, 2519 & 2531.

WHOLE DOLLAR AMOUNTS

Enter money items as whole dollar amounts. Drop any amount under

WHO MUST FILE

50 cents to the lower dollar amount and increase any amount 50

Every licensed producer and self procured person that has

cents through 99 cents to the higher dollar amount.

nonadmitted gross direct insurance premiums as described in the

instructions for Line 1 below must ﬁ le Form INS-7.

FOR INFORMATION AND FORMS

Web site:

Election to Report on Behalf of Employee Producers. An agency

may elect to report and pay nonadmitted insurance premiums tax

Address:

Maine Revenue Services

on behalf of all of its employee producers. To make this election,

PO Box 9107

the agency must ﬁ le an Application for Tax Registration, completing

Augusta, ME 04332-9107

sections 1 and 11. Enter the name and federal ID number of the

Telephone:

(207) 624-9753

agency in section 1 and enter a note in section 11 stating that the

Monday-Friday, 8 a.m.- 5 p.m.

agency is electing to ﬁ le on behalf of its producers.

Order Forms:

(207) 624-7894

WHEN TO FILE

The annual return and the ﬁ nal tax payment for 2011 are due March 15, 2012.

STATUTORY REFERENCES

Title 36 MRSA §§ 2512 through 2531.

ESTIMATED PAYMENT OF TAX

Insurers must make estimated tax payments for the calendar year.

Required estimated payments for 2012 may be based either on the

SUPPORTING RECORDS

2012 tax liability or the 2011 tax liability. April and June installments

must each equal at least 35% of either the 2011 total tax liability or

Taxpayers should be prepared to provide supporting documentation

35% of the 2012 tax due. The October installment must equal 15%

for reported amounts. Adequate records must be maintained in a

of either the 2011 total tax liability or 15% of the 2012 tax due and

manner that ensures their accessibility by the state tax assessor for

the balance due must be submitted with the 2012 Form INS-7. An

a period of at least six years.

NOTE: Certain taxpayers with large annual tax liabilities are required to remit tax payments electronically. See Maine Rule 102 on the MRS web

site (select Laws & Rules) for details.

LINE INSTRUCTIONS

A premium is an amount paid or payable for an insurance policy,

Line 1.

Nonadmitted Gross Direct Insurance Premiums.

including all fees, such as membership, policy, survey, inspection,

Licensed producers, enter the gross direct premiums received January

service and ﬁ nance fees in consideration for an insurance policy.

1, 2011 through June 30, 2011 on risks located or resident in Maine. Also,

NOTE: Agencies reporting on behalf of employee producers must attach a

regardless of the location of the insured risk, enter premiums received July

schedule indicating the name, social security number and portion of taxable

1, 2011 through December 31, 2011 from persons whose principal place of

premiums attributable to each producer for whom the agency is ﬁ ling.

business or principal residence is in Maine and whose insured risk is entirely

2a. Return premiums.

Enter the amount of direct return premiums

or partially in Maine. In addition, regardless of the location of the insured

that were returned to the policyholder during the tax year. Include

risk, enter premiums paid July 1, 2011 through December 31, 2011 with

return premiums that were paid and subject to the Maine surplus

respect to insurance policies that meet all of the following: 1) the policy is

lines premiums tax in a prior year, as well as return premiums that

held by a person whose principal place of business or principal residence

were paid in 2011 and included on Line 1.

is outside Maine; 2) none of the insured risk of the policy is located in the

state of the insured’s principal place of business or principal residence; and

2b. Dividends paid, credited or allowed on direct premiums.

3) the greater percentage of the insured risk of the policy is in Maine.

Enter the amount of direct dividends paid to the policyholder during

the tax year. Include dividends paid that were subject to the Maine

Self procured persons whose principal place of business or principal

surplus lines premiums tax in a prior year, as well as dividends that

residence is in Maine and whose insured risk is entirely or partially in Maine,

were paid in 2011 and included on Line 1.

enter the total gross premiums paid July 1, 2011 through December 31, 2011,

Line 6.

Estimated

Payments.

Enter the overpayment carried

regardless of the location of the risk. Also, regardless of the location of the

forward from the previous tax year and any estimated payments

risk, a self procured person whose principal place of business or principal

made for the current tax year.

residence is outside Maine must enter premiums paid July 1, 2011 through

Line 9a. Portion of overpayment to be APPLIED to next year’s

December 31, 2011 with respect to insurance policies that meet both of the

ESTIMATED tax.

Use this line only if you want to have all or part

following: 1) none of the insured risk of the policy is located in the state of

of the overpayment on line 8 applied as an estimated payment to

the insured’s principal place of business or principal residence; and 2) the

next year’s Maine surplus lines premiums tax.

greater percentage of the insured risk of the policy is in Maine.

Form Ins-7 - Nonadmitted Premiums Tax Annual Reconciliation / Return - 2011 Page 2

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