The Kentucky Department of Insurance published a bulletin informing insurers and surplus lines brokers about changes to procedures on Local Government Premium Tax (LGPT)in accordance with Kentucky statutes.
LGPTs are taxes placed on insurers engaging in business in the state by local governments.The physical location of the risk within a local government's corporate limits is crucial in determining the LGPT.
ZIP codes may not be used to determine LGPT. Insurers issuing or renewing more than 2,000 policies in the state annually are required to use a Verified Risk Location system.
If the LGPT is included in the premium charged to consumers, the amount charged for the term and the name of the taxing jurisdiction must be disclosed. Disclosure is not required if the insurer does not collect the LGPT from policyholders.
LGPTs are due to the taxing jurisdiction 30 days after the end of each calendar quarter. They must be filed using Form LGT-141 or a similar form. Surplus lines brokers must also file quarterly.
Exemptions to LGPT liability include premiums collection on: policies of group health insurance provided for state employees; health insurance policies; workers' compensation insurance; annuities; and federal flood insurance, among others.
Insurers or agents may charge a collection fee of no more than 15 percent of the LGPT collected or 2 percent of the taxable premium, whichever is less. Any license fee or LGPT not paid by the due date will collect interest until paid.
The bulletin can be found here.