Tax write-offs of certificates of contributions

A. A member insurer shall have at its option the right to show a certificate of contribution as an asset in the form approved by the Commission pursuant to subsection H of § 38.2-1705 at the original face amount for the calendar year of issuance. Such amount shall be amortized over the 10 calendar years following the year the contribution was paid in amounts each equal to 10 percent of the amount of the contribution.

B. The member insurer may offset the amount of the certificate amortized in a calendar year as provided in subsection A. This amount shall be deducted from the premium tax liability incurred on business transacted in the Commonwealth for that year. However, the Association shall diligently pursue all rights available to it to recover its expenditures made in the fulfillment of its responsibilities under this chapter. If the Commission determines after a hearing that the Association is not diligently pursuing available measures of recovery, the Commission shall notify the Department and contributing member insurers will not be able to offset amounts amortized during the period that the Commission determines that the Association has not been diligently pursuing available measures of recovery.

C. Any sums for which a certificate of contribution has been issued that have been (i) amortized by contributing insurers and offset against premium taxes as provided in subsection B and (ii) subsequently refunded pursuant to subsection F of § 38.2-1705 shall be paid to the Department of Taxation and deposited with the State Treasurer for credit to the general fund of the Commonwealth.

D. The amount of any credit against premium taxes provided for in this section for a member insurer shall be reduced by the amount of reduction in federal income taxes for any deduction claimed by the member insurer for an assessment paid pursuant to this chapter.

E. A member insurer that is exempt from taxes referenced in subsection A may recoup its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the Commission. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the loss ratio, or agent commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the Association, and the excess amount shall be applied to reduce future assessments in the appropriate account.

1976, c. 330, § 38.1-482.27; 1986, c. 562; 1987, cc. 565, 655; 1991, c. 371; 1997, c. 160 ; 2010, c. 510 ; 2011, c. 850 ; 2018, c. 706 .