The Kentucky Department of Insurance published a Bulletin addressed to all insurers and surplus lines brokers licensed in the state on the measures being taken following the dissolution of the city of Vicco. The city did not file for certification of its status as a city within the Commonwealth, and after a public hearing, an order of dissolution was issued.
The Final Order was executed on March 1, 2024. Consequently, any ordinance or law in effect in Vicco are null and void. Insurers and surplus lines brokers collecting local government premium taxes (LGPT) for Vicco must cease all collection of taxes and return to policyholders any LGPT collected after March 1, 2024. Insurers and surplus lines brokers may also offer a credit to policyholders on future premiums. If insurers fail to remit the taxes within 30 days there may be administrative action taken, including civil penalties and adding interest to the payments.
Vicco is located near Knott and Perry counties. Insurers and surplus lines brokers are advised to be attentive to any location within Vicco that is now subject to a different tax from another county. For example, Vicco had a 5% tax rate for all lines except for health and life, while Knott County currently has a 4% tax rate. Vicco residents of Knott County should have the 1% difference refunded to them, and 4% sent to Knott County.
Lastly, insurers have had trouble sending tax payments to Vicco in the past few years as they have been pending dissolution and were instructed by the Department to hold those funds in an escrow account. Any LGPT held by insurers or surplus lines brokers before March 1, 2024, should be submitted to unclaimed property through the Kentucky State Treasurer within 30 days of the publishing of the Bulletin (4/1/2024).
The Bulletin can be found here.