Premium Tax, Stamping Fees, and Reporting Obligations
Premium tax
North Carolina imposes a surplus lines premium tax on gross premium written, less lawful returned premiums. The tax is generally 5% under the surplus lines law. The surplus lines licensee is responsible for collecting and remitting it and for filing the required report with the Commissioner. The tax is separate from the insurer's own tax obligations and is not waived because the insurer is nonadmitted.
Stamping fees and reporting
- NCSLA charges a stamping fee on stamped surplus lines transactions; it is an administrative fee, not a premium tax.
- The fee schedule is set through NCSLA procedures, so use the current schedule rather than a remembered rate.
- Reports must reconcile policy premiums, cancellations, return premiums, and tax.
- Multistate risks may require home-state allocation under NRRA rules; do not assume all premium is North Carolina premium.
Worked example
A policy writes $20,000 premium, with $4,000 returned at cancellation. At a 5% tax rate, taxable premium is $16,000 and tax is $800, plus the applicable stamping fee. Reasoning: tax follows net written premium, and return premium reduces the base only when properly documented and reported.
Traps
Do not call the stamping fee a tax. Do not remit tax on gross premium after a cancellation without accounting for return premium. Do not miss the annual filing deadline. Do not ignore home-state allocation for a multistate insured.