Form 63-23p Instructions (Page 2 of 5) in pdf

How Is the Excise Determined?

their tax rate on gross investment income from the 1% tax rate if they

contribute the required amount to the initiative over a five-year period.

Domestic insurance companies are taxed both on premiums written

The reduced rate schedule is as follows: 0.8% for the first year on or

and finance charges imposed on those premiums in Massachusetts.

after January 1, 1999, in which it makes the required contribution and

These companies are also taxed on premiums in other jurisdictions

0.6% for the second year it makes the required contribution or 0.4%

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

for the third year it makes the required contribution. The tax rate is

income.

0.2% in the fourth year it makes the required contribution. No gross

Foreign insurance companies are taxed on gross premiums written

investment income tax shall be due for the tax years beginning on or

or renewed, and finance charges imposed on those premiums in

after the fifth year in which said company contributes its full propor-

Massachusetts.

tionate share. A Certificate of Contribution issued by the Property and

Organizations conducting preferred provider business are taxed on

Casualty Insurance Company Initiative must accompany the return if

gross premiums received for persons residing in Massachusetts.

claiming the lower rate. A company that does not make the required

contribution in any year will continue to be taxed at the rate for the last

Line Instructions

year in which it did make the required contribution.

Federal Audit

Line 3. If applicable, and not previously reported on Schedule T, in-

If your corporation has undergone a federal audit for some prior year,

clude the disbursement received from the Massachusetts Property In-

you must report any changes on Massachusetts Form CA-6, Applica-

surance Underwriting Association and/or Crime Insurance Program.

tion for Abatement/Amended Return, within three months after the

final determination of the correct taxable income by the IRS. Other-

Lines 4, 13 and 19: Credit Recapture and Installment Sales Tax.

wise, you will be subject to a penalty. If the federal change results in

If the corporation is required to recapture any amount of previously

less tax due to Massachusetts than was assessed or paid, you may

claimed EOAC, Low-Income Housing Credit Brownfields Credit or

apply for abatement under the federal change rules within one year of

Historic Rehabilitation Credit, complete Schedule H-2 and enter the

the final federal determination. Answering “yes” to this question does

result. Current year credits can then be used to offset the total excise

not relieve the company of this filing obligation.

due which will include the recapture amount.

Should the Whole Dollar Method Be Used?

Include in the total on lines 4, 13 and 19 the tax amount representing

Yes. All amounts entered must be rounded off to the nearest dollar.

an interest charge on the deferred tax on gain from certain installment

sales with a sales price over $150,000 if you are not a dealer and the

Note: Ocean marine premiums reported on your 2012 Ocean Marine

aggregate face amount of installment obligations arising during the tax

Profits Tax Return are deductible from net direct premiums.

year and outstanding as of the close of the tax year exceeds $5 mil-

Computation of Excise

lion. For more information see M.G.L. Ch. 62C, sec. 32A(a) and I.R.C.

Line 1. Multiply the amount from Part 1, line 5 by .0228 and enter in

sec. 453A (a)–(c).

line 1. If amount is negative, enter “0.”

Also include in the total the tax amount representing interest on the

Taxable premiums are derived from net direct premiums subject to

deferred gain from the installment sale of timeshares and residential

tax in Massachusetts from Schedule T of the NAIC Annual Statement,

lots, if the sale meets one of the following criteria:1) the sale is of a

and net direct premiums from other states or countries where no tax

timeshare right for 6 weeks or less; 2) the sale is for the recreational

has been paid. Include in this amount any finance and service charges

use of specified campgrounds; or 3) the sale is for a residential lot and

from Schedule T.

neither the dealer nor someone related to the dealer is obligated to

make any improvements on the lot. For more information see M.G.L.

Form 63-23P filers are allowed a dividend deduction for premiums re-

Ch. 62C, sec. 32A (b) and I.R.C. sec. 453(l)(2)(B).

turned or credited to policyholders in Massachusetts as dividends on

direct business from Schedule T of the NAIC Annual Statement.

If you are a partner in a partnership or a shareholder in an S corpora-

tion, the entity will be sending you the information you need to calcu-

Net direct premiums are gross premiums, exclusive of reinsurance

late the addition to tax under this provision. For more information see

assumed as written in:

TIR 10-11.

• all policies issued or renewed (including dividends applied to pay-

Line 6: Premiums. Enter the amount of total net direct premiums

ment of renewals, and policy and membership fees whether or not ac-

subject to tax in Massachusetts from Schedule T of the NAIC Annual

tually received by the company);

Statement. Include in this amount any finance and service charges

• all additional premiums charged on policies issued in this or in pre-

from Schedule T. If amount is negative, enter “0.”

vious years; and

Net Direct Premiums are gross premiums, exclusive of reinsurance

• all assessments made upon policyholders, for insurance of property

assumed, as written in:

or interests in Massachusetts or which are subjects of insurance is-

• all policies issued or renewed (including dividends applied to pay-

sued through companies or agents in this state;

ment of renewals, and policy and membership fees whether or not ac-

Less

tually received by the company);

• premiums on direct policies written but not taken or canceled through

• all additional premiums charged on policies issued in this or in pre-

default of payment; and

vious years; and

• premiums returned to policyholders on canceled policies of direct in-

• all assessments made upon policyholders, for insurance of property

surance, but without deduction or exclusion in any manner of reinsur-

or interests in Massachusetts or which are subjects of insurance is-

ance ceded, dividends, commissions, expenses or losses.

sued through companies or agents in this State;

Line 2: Income. Enter in the subtotal section of line 2 the amount from

Part 2, line 10. Multiply this amount by the applicable tax rate checked

in the registration section. Property and casualty insurers may reduce

Form 63-23p Instructions Page 2

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