1.
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The federal excise tax does not apply to excess line transactions placed with any
insurer
which is domiciled in the United States. Those are the insurers that ELANY publishes
on the foreign insurance company eligible list.
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2.
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The federal excise tax, generally, applies only to transactions with non-U.S. or
alien
insurers which are domiciled in countries which do not have an exemption under a
treaty agreement between their country and the United States.
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3.
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Some countries have a qualified exemption and some countries have no exemption
whatsoever. Please refer to Section C Treaty Exemptions of the Sutherland Asbill &
Brennan LLP Opinion of Counsel attached.
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4.
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The excess line broker is one of the parties which have legal responsibility to
pay the tax
when it applies so make sure the tax is collected and paid on transactions when the tax
applies.
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5.
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The last domestic party in the chain of premium payment is primarily responsible
for
remitting the tax to the Internal Revenue Service. However, all of the following parties
can be held jointly and severally liable: 1) the insured, 2) a beneficiary, 3) policyholder,
4) the insurer, 5) the broker who obtained the coverage. (See IRS Foreign Insurance
Excise Tax-Audit Technique Guide).
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6.
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The obligation to file the tax return belongs to the person who pays the premium
to the
foreign insurer (or to any nonresident person such as a foreign broker). [See IRS
Publication 510 (2011)]
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ELANY
DISCLAIMER:
"This is not intended to be nor should it be construed as legal advice. Consult with your
own legal counsel.”