ORDERS:
AMENDED FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before me pursuant to the petition of the South Carolina Department of
Insurance ("DOI"), which is seeking an order to revoke NLC Mutual Insurance Company's authority
to transact business for its failure to timely file a premium tax return for September 1997. After
notice to the parties, a hearing was conducted on July 20, 1998.
Because NLC was not required to file a premium return until March 1 of the following year,
I find that the petition against NLC must be dismissed with prejudice. Any issues raised or presented
in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied.
ALJD Rule 29(C).
FINDINGS OF FACT
I make the following Findings of Fact, taking into account the burden on the parties to
establish their respective cases by a preponderance of the evidence and taking into consideration the
credibility of the witnesses:
NLC Mutual Insurance Company (NLC) is licensed to do business as an insurance
company in South Carolina.
NLC filed its September 1997 quarterly insurance premium and retaliatory tax return
on September 22, 1997. The return must be received by DOI on or before September 1.
NLC incurred no tax liability for the September 1997 return.
On November 17, 1997, NLC requested a hearing before the Director of Insurance.
DOI, in a proposed consent order, fined NLC $2,000 for failing to file its September
1997 return by September 1, 1997.
DOI seeks to revoke NLC's certificate of authority to transact the business of
insurance in South Carolina pursuant to S.C. Code Ann. §§ 38-7-60(4) and 38-5-120(A) (Supp.
1997).
NLC sought a contested case hearing pursuant to S.C. Code Ann. § 38-5-140 (Supp.
1997).
NLC has never incurred any tax liability on a quarterly basis and has repeatedly
requested a waiver of the quarterly filing.
A provision on the quarterly tax return states, "Check if Quarterly Tax is less than
$1000, and insurer elects not to pay taxes due this quarter." NLC never checked this box because
no taxes were due to be paid.
CONCLUSIONS OF LAW
Based upon the Findings of Fact, I conclude as a matter of law the following:
The Administrative Law Judge Division has jurisdiction over this dispute as a
contested case pursuant to the Administrative Procedures Act, S.C. Code Ann. §§ 1-23-310 et seq.
(Rev. 1986 & Supp. 1997) and S.C. Code Ann. § 1-23-600(B) (Supp. 1997).
NLC is required to file a return of premiums collected by the insurer for the previous
calendar year by March 1 of the following year. S.C. Code Ann. § 38-7-60(1)(Supp. 1997). License
fees must also be reported on this return.
S.C. Code Ann. § 38-7-60(3) provides in part that "[t]he premium and other taxes
imposed on insurers pursuant to Sections 38-7-20, 38-7-30, 38-7-40, 38-7-50, and 38-7-90 must be
paid to the director or his designee in quarterly installments on or before March first, June first,
September first, and December first of each calendar year."
However, S.C. Code Ann. § 38-7-60(3) does not require a return to be filed quarterly
where no premium is due. S.C. Code Ann. § 38-7-60(3)(b) (emphasis added) provides that "[a]n
insurer whose quarterly tax installments are less than one thousand dollars per payment may elect
not to pay its tax liability on a quarterly basis and, instead, may elect to report and pay its entire tax
liability on the return filed in accordance with [§ 38-7-60(1)]."
S.C. Code Ann. § 38-7-60(1) provides as follows:
Not later than March first of each year, every insurer licensed by the director or his
designee shall file with him a return of premiums collected by the insurer in the State
during the immediately preceding calendar year ending on December thirty-first. The
return must be made on forms prescribed by the director or his designee and must be
made under oath by the insurer's employee or representative responsible for the
preparation of fee and tax returns, as well as the insurer's chief executive officer.
Although, NLC filed a return after September 1, it was not required to file a premium
return on September 1, 1997 because it owed no premium or retaliatory taxes for that quarter.
Rather, under S.C. Code Ann. § 38-7-60, NLC was not required to file a premium return until March
1 of the following year.
NLC repeated requested a waiver of the quarterly tax return because no premium was
due. The provision on the form allowing an insurer to check the box implies that taxes in an amount
under $1000 is due but will not be paid until the annual return due March 1. There is no provision
on the forms to notify DOI that the insurer is electing to report and pay the tax with the annual return.
Under the facts presented, NLC has not violated S.C. Code Ann. § 38-7-60 (Supp.
1997).
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
ORDERED, that this matter be dismissed with prejudice in favor of the Respondent, NLC
Mutual Insurance Company.
AND IT IS SO ORDERED.
__________________________________
ALISON RENEE LEE
Administrative Law Judge
August 12, 1998
Columbia, South Carolina. |
