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Form 63-20P Instructions

Who Must File Form 63-20P?

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

result in a penalty for filing an insufficient return. Such a penalty may

All domestic life insurance companies, as defined by Massachusetts

be assessed at double the amount of the excise due.

General Laws (M.G.L.) Chapter 175, sec. 118 and 47, which are sub-

ject to M.G.L., Ch. 63, sec. 20, and which do any or all of their busi-

When are Estimated Tax Payments Required?

ness in Massachusetts, must complete and file Form 63-20P.

Any insurance company which reasonably estimates its excise to be

A domestic life insurance company is a company incorporated or

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

formed in the Commonwealth.

tax payments to the Commonwealth. Estimated payments must be

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

All classes of foreign life insurance companies on accident and health

timated annual tax liability.

business subject to M.G.L., Ch. 63, secs. 23, 24 and 24A must file

Form 63-20P.

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

10 employees have different estimated payment percentages —

All foreign life insurance companies subject to M.G.L. Ch. 63, secs.

30%, 25%, 25% and 20% respectively.

20, 21 and 24A must file Form 63-20P.

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

A foreign company is any company organized or formed in any state

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

or country other than Massachusetts.

payment for the period of the underpayment. Form M-2220, Under-

payment of Massachusetts Estimated Tax by Corporations, is used to

When Must Form 63-20P Be Filed?

compute the additional charge.

Form 63-20P must be filed on or before the 15th day of the third month

after the close of the company’s taxable year.

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

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

Can an Insurance Company Obtain an Extension

6655 (g) of the IRC) may only use its prior year’s tax liability to calcu-

of Time to File?

late its first quarterly estimated tax payment. Any reduction in the first

Form 63-20P filers may request a six-month extension of time to file

installment payment that results from using this method must be

Form 63-20P by submitting Massachusetts Form 355-7004 Misc. on

added to the second installment payment.

or before the original due date of the return. Any tax due at the time

A company that claims the exception to the underpayment penalty of

of filing Form 355-7004 Misc. must be paid in full.

equaling the prior year’s tax liability must provide federal tax re-

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

turns (front page only) for the three preceding taxable years to verify

pay at least 50% of the total tax liability through estimated payments

that federal taxable income is less than $1 million.

or with Form 355-7004 Misc.

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

What Are the Penalties for Late Returns?

excise return must also file separate estimated tax payments since

Insurance excise returns which are not filed on or before the due

each type of tax is governed by a different section of the Massachu-

date are subject to interest and penalty charges. The penalty for fail-

setts General Laws.

ure to pay the total payment due with this form is 1% of the balance

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

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

Chapter 63B.

tax reported as due on the return. A late payment penalty does not

apply to amended returns when the amount shown on the original re-

How Is the Excise Determined?

turn was paid.

Domestic life insurance companies are taxed both on life and acci-

dent and health premiums written in Massachusetts and on premi-

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

ums written in other jurisdictions where no tax is paid. Form 63-20P

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

filers must also add in dividends applied to purchase paid-up additions

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

and/or to shorten the premium paying period. The tax rate is 2%,

tension — is subject to interest.

after claiming allowable deductions.

What is a Valid Return?

Form 63-20P filers are allowed deductions for dividends to policyhold-

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

ers, including those:

tered for all of the appropriate items on the form. Data sheets, account

• paid in cash;

forms, or other documents may be attached to explain these amounts.

• applied in reduction of renewal premiums;

Referencing items to attachments instead of properly entering all

• left to accumulate at interest;

amounts onto the return is not sufficient. The return must be signed

• applied to purchase paid-up additions; or

by either the treasurer or the assistant treasurer of the company.

• applied to shorten the premium paying period.

To be valid, a return must also include the following:

Deductions are also allowed to Form 63-20P filers for returned premi-

ums (not including cash surrender values) and/or premiums for Com-

• Schedule T, Exhibit of Premiums Written from the NAIC Annual

pany Employees’ Group Life and Accident & Health plans, only if

Statement;

previously included in line 1 of Part I.

• Certificate of the Massachusetts Capital Resource Company (if ap-

A deduction for preferred provider arrangement premiums is allowed to

plicable); and

those companies who have been approved by the Commissioner of

• DL-1A, Part II — Excise on Net Value of Policies (if applicable).

Insurance as preferred provider organizations, if those premiums were

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

previously included in line 1 of Part I and reported on Form 63-23P,

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

Premium Excise Return.

Form 63-20p - Massachusetts Premium Excise Return For Life Insurance Companies - 2012 Page 2

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