The New York State Department of Taxation and Finance issued two advisory opinions determining that surplus lines insurance companies are subject to uncapped insurance franchise tax instead of premium tax.

  • The Department’s position treats authorized non-life insurance companies differently than unauthorized non-life insurance companies.
  • The Department rejected the insurance companies’ argument that New York’s direct placement tax or surplus lines tax is imposed in lieu of the insurance franchise tax for surplus lines companies.
  • The conclusions in these advisory opinions may violate the federal Nonadmitted and Reinsurance Reform Act and may be contrary to legislative intent.

View the full Legal Alert.