2014 Kentucky Revised Statutes
CHAPTER 91A - FINANCE AND REVENUE OF CITIES
91A.0804 Exclusive remedy for adjustments relating to license fees or taxes imposed under KRS 91A.080.
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<![CDATA[91A.0804 Exclusive remedy for adjustments relating to license fees or taxes
imposed under KRS 91A.080.
(1)
(2)
(3)
The provisions of this section shall provide the sole and exclusive method for
the filing of amended returns and requests or assessments by any insurance
company, local government, or policyholder for nonpayment, underpayment, or
overpayment of any license fees or taxes imposed pursuant to KRS 91A.080
and the appeals from the denial or refusal thereof.
For tax periods beginning after December 31, 2008, all amended returns,
requests for refunds or credits, and assessments shall be made within two (2)
years of the due date of the annual reconciliation provided for in KRS
91A.080(8) for the tax period during which the error was made, except that in
the case of fraudulent failure to file a return or the filing of a fraudulent return,
the underpayment may be assessed at any time. The provisions of this
subsection shall not apply to any refund or credit to an insurance company or
policyholder or assessment by a local government that is affected by litigation
pending on July 15, 2008.
(a) Any insurance company that has paid a license fee or tax imposed by a
local government pursuant to KRS 91A.080 may request a refund or
credit for any overpayment of a license fee or tax or any payment when
no tax was due within the time provided in subsection (2) of this section.
(b) A request for a refund or credit by an insurance company shall be made
by mailing an amended return and supporting documentation to the local
government to which the fee or tax was paid. A complete refund request
shall include the amended return and supporting documentation showing
the total amount of overpayment of license fee or tax that the insurance
company believes was erroneously paid and a breakdown of information
for each policy upon which a refund or credit is requested, including the
location of the risk by street address or, if a street address is unavailable,
another appropriate identifier of the physical location, the amount of the
erroneous payment, the premium charged, the amount of tax or fee
actually collected, the type or types of risk insured, and the period the
policy was in force during the taxable year or years.
(c) For refund and credit requests submitted for payments made during tax
periods after December 31, 2009, the insurance company shall produce
proof that it employed risk location systems or programs meeting the
requirements of KRS 91A.0806 during the time for which the refund or
credit is requested or a copy of a Department of Insurance order issued
pursuant to the administrative regulation promulgated under KRS
91A.0806(3). If the insurance company fails or is unable to produce such
proof or a copy of the Department of Insurance order, the local
government shall be entitled to keep a penalty in the amount of ten
percent (10%) of the refund or credit that would have otherwise been due
the insurance company. Any dispute regarding the imposition of a penalty
shall be resolved under paragraph (d) of this subsection.
(d) If a local government fails to accept the completed amended return or
refuses to issue the requested refund or credit within ninety (90) days of
its receipt, the insurance company may make application to the
(e)
(4)
(a)
(b)
(c)
(5)
(a)
Department of Insurance to review the claim. The application shall be filed
with the Department of Insurance within thirty (30) days of receipt of the
response from the local government or, in the case of a local
government's failure to respond, within thirty (30) days of the end of the
ninety (90) day period provided in this paragraph. The Department of
Insurance shall, within sixty (60) days of the receipt of the complete
application, issue an order of final agency action that the request for
refund or credit is or is not warranted in whole or in part. The
commissioner of the Department of Insurance may grant one (1)
extension of thirty (30) days for the issuance of the order. As provided in
KRS 304.2-310, either party may file an administrative appeal from the
order of the Department of Insurance within sixty (60) days of the
issuance of the order.
No insurance company shall apply a credit to taxes or fees imposed by
KRS 91A.080 without written agreement from the local government,
without an order of final agency action from the Department of Insurance
order that the refund is due, or without an administrative ruling from the
Department of Insurance order that a refund is due. Each violation of this
paragraph shall be punishable as provided in KRS 91A.080(7)(b) and (c).
Any policyholder who has paid to an insurance company a license fee or
tax imposed by a local government pursuant to KRS 91A.080 may
request a refund or credit for an overpayment of a license fee or tax or
any payment when no tax was due within the time provided in subsection
(2) of this section.
A request for a refund or credit by a policyholder shall be made by mailing
the request to the insurance company to which the fee or tax was paid.
The request shall include the name of the policyholder, the address of the
location of the risk insured, the amount of overpayment of license fee or
tax that was erroneously paid, the dates of coverage, the amount of the
fee or tax that was paid, and the type of risk insured.
If an insurance company fails to make payment or to grant credit to a
policyholder as requested within ninety (90) days of its receipt, the
policyholder may make application to the Department of Insurance to
review the request. The application shall be filed with the Department of
Insurance within thirty (30) days of receipt of the response from the
insurance company or, in the case of an insurance company's failure to
respond, within thirty (30) days of the end of the ninety (90) day period
provided in this paragraph. The Department of Insurance shall, within
sixty (60) days of the receipt of the complete application, issue an order of
final agency action that the request for refund or credit is or is not
warranted in whole or in part. The commissioner of the Department of
Insurance may grant one (1) extension of thirty (30) days for the issuance
of the order. As provided in KRS 304.2-310, either party may file an
administrative appeal from the order of the Department of Insurance
within sixty (60) days of the issuance of the order.
If a local government has a reasonable basis to believe that a license fee
or tax imposed by it in accordance with KRS 91A.080 has not been paid
(b)
(c)
(d)
(e)
(6)
An
or has been underpaid, the local government shall request the
Department of Insurance to conduct an audit pursuant to the provisions of
KRS 91A.080(7) within the time provided in subsection (2) of this section.
If the findings of the audit show that an insurance company did not pay or
underpaid the local government, the local government may send an
assessment by mail to the insurance company. The notice of assessment
shall state the total amount of payment due from the insurance company
based upon the findings of the audit conducted pursuant to KRS
91A.080(7), the geographic area affected, and the applicable license fee
or tax rate.
The insurance company may respond to the assessment by either paying
the assessment in full within ninety (90) days of its receipt or by filing an
appeal of the findings of the audit and the assessment with the
Department of Insurance within ninety (90) days of the receipt of the
assessment. An insurance company appealing the audit findings and
assessment shall make application to the Department of Insurance and
provide notice of the challenge to the local government by certified mail.
The Department of Insurance shall, within sixty (60) days of the receipt of
the completed application, issue an order of final agency action upon the
findings of the audit and a determination that the assessment is or is not
warranted in whole or in part. The commissioner of the Department of
Insurance may grant one (1) extension of thirty (30) days for the issuance
of the order. As provided in KRS 304.2-310, either party may file an
administrative appeal from the order of the Department of Insurance
within sixty (60) days of the issuance of the order.
If the insurance company fails to make the full payment as requested by
the local government or fails to file an application of appeal with the
Department of Insurance within ninety (90) days of receipt of the
assessment, the findings of the audit and the assessment shall be
deemed final, and the local government may provide notification to the
Department of Insurance to impose a penalty in accordance with KRS
91A.080(7)(c). Any penalty imposed because of an insurance company's
failure to timely pay the assessment shall be in addition to any penalties
imposed as a result of the audit. The notification shall be filed with the
Department of Insurance within thirty (30) days of the end of the ninety
(90) day period provided in paragraph (c) of this subsection. The
Department of Insurance shall issue an order to the insurance company
to pay the assessment and any additional penalties imposed within thirty
(30) days of the order, or the Department of Insurance may revoke the
license of the insurance company under the provisions of KRS
91A.080(7) and KRS Chapter 304.
The Department of Insurance may determine the scope of any audit
requested under this subsection and KRS 91A.080. Nothing in this
chapter shall preclude the Department of Insurance from exercising its
discretion to conduct an audit or examination of any insurance company
under its authority as otherwise provided in KRS Chapter 304.
administrative hearing held pursuant to this section shall be conducted
(7)
(8)
(9)
pursuant to KRS Chapter 13B. The hearing officer may compel any information
necessary to make a determination. Information concerning rates, the names
and addresses as of policyholders, and the expiration date of policies shall be
proprietary and confidential, shall not be divulged to any person or organization
not a party to the hearing, shall not be subject to disclosure or to the provisions
of KRS 61.870 to 61.884, and the record shall be sealed at the conclusion of
the hearing.
If a refund or credit is received by an insurance company that passed the fee
or tax on to the policyholder, and the amount refunded or credited is not owed
to another local government, the insurance company shall pass the full amount
of the refund or credit, including any collection fee that has been retained by
the insurance company pursuant to KRS 91A.080(4), on to the policyholder
from whom the fee or tax was collected within ninety (90) days of receipt of the
refund or credit. For a refund or credit received by an insurance company for
tax periods after December 31, 2009, that is not owed to another local
government, the insurance company shall pay a penalty fee of ten percent
(10%) of the total amount of the refund or credit due to the policyholder if the
insurance company is unable to produce proof of the use of a risk location
system as required under subsection (3)(c) of this section.
No legal action shall be filed by any party prior to the exhaustion of all
administrative remedies provided under this section.
(a) Information on specific policies and policyholders provided to local
governments pursuant to subsection (3) of this section shall be
considered confidential and proprietary information of an insurance
company and shall not be disclosed or subject to disclosure under KRS
61.870 to 61.884. No present or former official or employee of a local
government or any other person shall, intentionally and without
authorization, inspect or divulge any information acquired by him or her of
the affairs of any insurance company, or information regarding specific
policies, policyholders, tax schedules, returns, or reports required to be
filed with a local government, or any information produced by a hearing or
investigation, insofar as the information may have to do with the
proprietary information of the insurance company. All county
judges/executive, mayors, local government legislative body members,
and local government employees whose duties include the fiscal affairs of
their local government, shall be deemed to have the necessary
authorization to inspect such information. Any person who violates the
provisions of this paragraph shall be guilty of a Class A misdemeanor for
each offense and the disclosure of information on each policyholder shall
constitute a separate offense.
(b) Except for local governments that have been certified by the Internal
Revenue Service or its agent as being in compliance with IRS safeguard
requirements and authorized to receive federal tax information, any
proprietary information provided to a local government for the purposes of
compliance with subsection (3) of this section and all copies or other
records related to such information shall be destroyed in an irreversible,
secure, and confidential manner in accordance with KRS 171.410 to
171.740 and the administrative regulations promulgated or approved
thereunder. A local government failing to destroy proprietary information
in accordance with this paragraph shall be subject to a civil penalty
payable to the insurance company of five hundred dollars ($500) for each
offense, and the disclosure of information on each policyholder shall
constitute a separate offense. An insurance company may commence a
civil action in a court of competent jurisdiction for payment of the civil
penalty. The total civil penalty shall not exceed ten thousand dollars
($10,000) per incident.
(c) This subsection shall not preclude the disclosure of information to the
Department of Insurance or to the legal representative of the local
government for purposes of administrative hearings or legal appeals
therefrom, nor shall it prohibit the local government from verifying the
accuracy of the information with an individual policyholder to whom the
information pertains.
(10) The filing of amended returns, requests for refunds or credits, assessments,
and all applications and notification by any party to the Department of
Insurance for review under this section, shall be sent to the designated party or
parties by certified mail, return receipt requested.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 77, effective July 15, 2010; and
ch. 165, sec. 1, effective July 15, 2010. -- Created 2008 Ky. Acts ch. 94, sec. 2,
effective July 15, 2008.
Legislative Research Commission Note (7/15/2010). This section was amended
by 2010 Ky. Acts chs. 24 and 165, which do not appear to be in conflict and
have been codified together.
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