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Monday, September 23, 2013

Indiana Tax Court Requires Physical Presence in State for Premium Tax

By: ABIA Outside Counsel Chrys Lemon and Adam Maarec, McIntyre & Lemon, PLLC

In a challenge to Indiana's insurance premium and corporate income taxes, the Tax Court held that [1] "a physical presence standard applies for purposes of a premiums tax"; [and 2] there have been "decades of uniformity – wherein state courts have routinely declined to impose a premiums tax when foreign insurers/reinsurers lacked a physical presence in the taxing state."

In 2011, McIntyre & Lemon, PLLC analyzed whether state independent procurement (premium) taxes were applicable to captive insurance transactions, in light of the Nonadmitted and Reinsurance Reform Act (NRRA), in a white paper for the Vermont Captive Insurance Association. This court decision, consistent with our findings in the white paper, reinforces the constitutional limitations on state taxing authority.

Read the white paper.

UPS v. Indiana Dept. of Revenue.