Instructions For Massachusetts Premium Excise Return For Insurance Companies Form 63-23p

Can an Insurance Company Obtain an Extension

Failure to meet any of the requirements detailed in this section may re-

sult in a penalty for filing an insufficient return. Such a penalty may be

of Time to File?

assessed at double the amount of the tax due.

Yes. Form 63-23P filers will receive an automatic six-month extension

of time to file Form 63-23P provided they pay any tax due in full on or

Please visit our website, , for additional copies of

before the original due date.

this return.

In 2015, the Department adopted an automated proc ess for extensions

What if the Taxpayer Is a Fiscal or Short Year Filer?

of time to file tax returns for corporate excise taxpayers, beginning with

File the 2016 return for calendar year 2016 and fiscal years that began

all returns due on or after November 30, 2015, as part of the new

in 2016 and ended in 2017. For a fiscal year return, fill in the tax year

MassTaxConnect system. Consistent with current rules, taxpayers meet-

space at the top of page 1. Short year filers should file using the tax

ing certain payment requirements will be given an automatic seven-

form for the calendar year within which the short year falls. If the short

month extension in the case of corporate excise taxpayers filing

year spans more than one calendar year, the filer should file use the

combined reports and a six-month extension for other corporate excise

tax form for the calendar year in which the short year began. If the cur-

taxpayers. Taxpayers filing unrelated business income tax returns will be

rent form is not available at the time the short year filer must file, the

given an eight-month extension. For further information, see TIR 15-15.

filer should follow the rules explained in TIR 11-12.

Note: An extension of time to file is not valid if the corporation fails to

When Are Estimated Tax Payments Required?

pay at least 50% of the total tax liability or the minimum tax of $456,

Any insurance company which reasonably estimates its excise to be

which ever is greater, through estimated payments or with Form 355-

in excess of $1,000 for the taxable year is required to make estimated

7004.

tax payments to the Commonwealth. Estimated payments must be

Any tax not paid on or before the due date — without regard to the ex-

made in quarterly installments of 40%, 25%, 25% and 10% of the es-

timated annual tax liability.

tension — shall be subject to an interest charge.

Note: New corporations in their first full taxable year with less than 10

What Are the Penalties for Late Returns?

employees have different estimated payment percentages — 30%,

Insurance excise returns that are not filed on or before the due date

25%, 25% and 20% respectively.

are subject to interest and penalty charges. The penalty for failure to

pay the total amount due with this form is 1% of the balance due per

Insurance companies that underpay, or fail to pay, their estimated

month (or fraction thereof), up to a maximum of 25%. A late payment

taxes may incur an additional penalty on the amount of the underpay-

penalty does not apply to amended returns when the amount shown

ment for the period of the underpayment. Form M-2220, Underpayment

on the original return was paid.

of Massachusetts Estimated Tax by Corporations, is used to compute

the additional charge.

The penalty for failure to file a return by the due date is 1% of the bal-

ance due per month (or fraction thereof), up to a maximum of 25%.

Any corporation having $1 million or more of federal taxable income in

any of its three preceding taxable years (as defined in Section 6655 (g)

Any tax not paid on or before the due date — without regard to the ex-

of the IRC) may only use its prior year’s tax liability to calculate its first

tension — is subject to interest.

quarterly estimated tax payment. Any reduction in the first installment

What Is a Valid Return?

payment that results from using this method must be added to the sec-

A valid return is one upon which all required amounts have been en-

ond installment payment.

tered for all of the appropriate items on the form. Applicable forms and

A company that claims the exception to the underpayment penalty of

documents may be enclosed to explain these amounts. Referencing

equaling the prior year’s tax liability must provide federal tax returns

enclosed items instead of properly entering all amounts onto the return

(front page only) for the three preceding taxable years to verify that fed-

is not sufficient. The return must be signed by either the treasurer or

eral taxable income is less than $1 million.

assistant treasurer of the company.

Note: Any insurance company required to file more than one type of

Documentation of Premiums

excise return must also file separate estimated payments since each

Domestic property and casualty insurers should include the following

type of tax is governed by a different section of the Massachusetts Gen-

schedules:

eral Laws.

• Exhibit of Premiums and Losses (Statutory page 14) for Business in

For more information on corporate estimated taxes, refer to M.G.L.,

the State of Massachusetts; and

Chapter 63B.

• Schedule T, Exhibit of Premiums Written; and

How Is the Excise Determined?

Domestic insurance companies are taxed both on premiums written

• Exhibit of Net Investment Income.

and finance charges imposed on those premiums in Massachusetts.

Foreign property and casualty insurers should include the following

These companies are also taxed on premiums in other jurisdictions

schedules:

where no tax is paid. A tax is also imposed on gross investment

income.

• Exhibit of Premiums and Losses (Statutory page 14) for Business in

the State of Massachusetts; and

Foreign insurance companies are taxed on gross premiums written or

renewed, and finance charges imposed on those premiums in Mas-

• Schedule T, Exhibit of Premiums Written.

sachusetts.

Preferred provider arrangements should include:

Organizations conducting preferred provider business are taxed on

• Any schedule, spreadsheet and/or correspondence with the Massa-

gross premiums received for persons residing in Massachusetts.

chusetts Division of Insurance verifying the premiums declared.

Reproduction of returns must be approved by DOR prior to filing and

meet the criteria provided in Technical Information Release 95-8.

Instructions For Massachusetts Premium Excise Return For Insurance Companies Form 63-23p - 2016 Page 3

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