Taxes, Fees, & Assessments

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What is considered premium for the purpose of calculating the premium receipts tax due?

According to Florida law (F.S. 626.932), the term “premium” means the consideration for insurance by whatever name called and includes:

  • Any assessment,
  • Any membership,
  • Policy,
  • Survey,
  • Inspection,
  • Service, or
  • Similar fee or charge

in consideration for an insurance contract, which items are deemed to be a part of the premium.

The per-policy fee charged by the filing surplus lines agent and authorized by F.S. 626.916(4) is also included within the meaning of the term “premium.” 

However, the service fee imposed by F.S. 626.9325 is excluded from the meaning of the term “premium.”
Is international/non-U.S. premium taxable?
No. International/non-U.S. premiums do not have to be filed with FSLSO. For more information on this topic, refer to Bulletin 2012-03 regarding filing changes on multistate risks bearing non-U.S. premium.
What entities are considered exempt from surplus lines tax?

An entity should be a governmental (state, county, municipality) entity to be exempt from surplus lines tax. Non-profit 501(c)(3) organizations are typically exempt from sales tax but are not exempt from surplus lines tax unless proven otherwise by the entity and its filing surplus lines agent.  

Vessels, cargo, and aircraft risks, as described under F.S. 626.917, are also exempt from the surplus lines tax. This exemption does not apply to boats or aircraft used solely for personal pleasure, family use, or the transportation of executives, employees, and guests of the insured.
Does Florida have regulatory restrictions on what a surplus lines agent may charge as a fee and are the fees considered premium for taxation purposes?

Acceptable fees include a policy fee charged by the filing surplus lines agent, inspection fees, survey fees, membership fees, or similar fees charged in consideration for the insurance contract per F.S. 626.916. These fees are considered premium for taxation purposes.

A surplus lines agent may charge a “reasonable” per-policy fee that must be reported to the FSLSO. This fee is taxable and must be itemized separately to the insured before purchase and enumerated in the policy.

Further, a retail agent may charge a “reasonable” per-policy fee for surplus lines policies, which must also be itemized separately to the insured before purchase. This fee is not required to be enumerated in the policy and is not included in the definition of "taxable premium" in statute.
What is the maximum amount an insurance company can charge for a policy fee?
There is no limit on fees imposed by a surplus lines insurer. Still, the fee amount should be charged in consideration for the insurance contract, remitted to the insurer, and not retained by the agent or MGA.
Where can I find the current tax, service fee, and assessment rates?
The current tax, service fee, and assessment rates can be found on the Tax/Fee/Assessment Table page.
What coverage codes does the EMPA surcharge apply to?

Applicable coverage codes: 

  • 1000 Commercial Property
  • 1001 Builders Risk - Commercial
  • 1003 Apartments - Commercial
  • 1005 Commercial Package
  • 1006 Condominium - Commercial
  • 1017 Collateral Protection (force placed coverage)
  • 2000 Homeowners-HO-1
  • 2001 Homeowners-HO-2
  • 2002 Homeowners-HO-3
  • 2003 Homeowners-HO-4 - Tenant
  • 2004 Homeowners-HO-5
  • 2005 Homeowners-HO-6 - Condo Unit Owners
  • 2006 Homeowners-HO-8
  • 2007 Builders Risk - Residential
  • 2009 Dwelling Property
  • 2010 Farmowners Multi-Peril
  • 2011 Mobile Homeowners

State and governmental entities are NOT exempt and therefore are also assessable.
How does the new 4.94% tax rate affect endorsements and cancellations on policies effective prior to July 1, 2020?

All new and renewal policies effective prior to July 1, 2020, and any subsequent endorsements on those policies will still be taxed at the original rate of 5%.

For example, the tax rate for a policy, effective January 1, 2020, is 5% of the gross premium. An additional premium endorsement effective July 1, 2020 would also be taxed at 5%. If the policy is cancelled effective August 1, 2020, the tax credit is 5% of the returned premium.

When these transactions are reported to FSLSO via SLIP or Batch, the system will calculate the appropriate taxes based on the effective date of the new or renewal policy.

The tax rate reduction does not apply to independently procured coverage (IPC). IPC policies are subject to a premium tax at the rate of 5% pursuant to F.S. 626.938.
How does the 4.94% tax rate affect multistate policies with effective dates prior to July 1, 2020?

It does not affect multistate policies with effective dates prior to July 1, 2020.

Multistate policies effective prior to July 1, 2020, with Florida as the home state, are taxed at 5% for the Florida portion and the applicable state tax rate for the other states. 

For example, if you have a Florida home state policy effective on June 30, 2020, broken out as follows:

  • Florida = $5,000
  • Georgia = $2,000
  • Alabama = $2,000

It would be reported in SLIP+ as Florida = $5,000, Georgia = $2,000, and Alabama = $2,000.

Premium is taxed at the rate of the state of exposure. Any subsequent endorsements must be reported to FSLSO with the state-by-state premium allocation and taxed at the rate of the state of exposure.
How does the latest 4.94% tax rate affect multistate policies with effective dates on or after July 1, 2020?

Multistate policies effective on or after July 1, 2020, with Florida as the home state, are taxed at 4.94% for the Florida portion and 4.94% for the rest of the states, as well. 

For example, if you have a Florida home state policy effective on July 2, 2020, broken out as follows:

  • Florida = $5,000
  • Georgia = $2,000
  • Alabama = $2,000

It would be reported in SLIP+ as: Florida = $5,000 and Non-Florida = $4,000.

Premium is taxed at 4.94%, regardless of the state in which there is exposure. Any subsequent endorsements would be reported to FSLSO with the Florida and Non-Florida premium breakdown, and the entire premium would be taxed at 4.94%.

The tax rate reduction does not apply to independently procured coverage (IPC). IPC policies are subject to a premium tax at the rate of 5% pursuant to F.S. 626.938. IPC multistate policies where Florida is the home state are taxed based on that respective state's tax rate and percentage of exposure.
Why does my Billing Report not match my Transaction Report?

The Transaction Report provides a snapshot of the transactions reported during a selected time frame. The Billing Report lists all of the transactions, penalties, and correction records included in the quarterly tax invoice.

The Transaction Report does not include the following information, which can cause a difference in the report totals:

  1. Penalties from Premium Reconciliation or Production Ledger Review that were assessed on identified unfiled transactions, and
  2. Any corrections made to transactions filed in a previous quarter.