2006 Code of Virginia § 38.2-1709 - Tax write-offs of certificates of contributions

38.2-1709. Tax write-offs of certificates of contributions.

A. A member insurer shall have at its option the right to show a certificateof contribution as an asset in the form approved by the Commission pursuantto subsection H of 38.2-1705 at the original face amount for the calendaryear of issuance. Such amount may be amortized as follows:

1. Certificates of contribution issued prior to January 1, 1998, shall beamortized in each succeeding calendar year through December 31, 1997, at anamount not to exceed 0.05 of one percent of the member's direct gross premiumincome for the classes of insurance in the account for which the memberinsurer is assessed. As used herein, the definition of direct gross premiumincome shall be the same as that specified in 58.1-2500. If the amount ofthe certificate has not been fully amortized by the contributing insurer byDecember 31, 1997, the unamortized balance of the certificate amount shall beamortized, at the option of the contributing insurer, either (i) in the samemanner as the certificate was amortized prior to January 1, 1998; however, ifnot amortized in full prior to calendar year 2010, the unamortized balance ofthe certificate shall be amortized in full during calendar year 2010, or (ii)over the ten successive calendar years commencing January 1, 1998, in amountseach equal to ten percent of such unamortized balance. A contributing insurerwhose certificate has not been fully amortized by December 31, 1997, shallnotify the Commission in writing of the amortization schedule option it hasselected on or before March 1, 1998; however, if a contributing insurer failsto notify the Commission by such date, the insurer shall be deemed to haveselected the option described in clause (i) of the preceding sentence.

2. Certificates of contribution issued on or after January 1, 1998, shall beamortized over the ten calendar years following the year the contribution waspaid in amounts each equal to ten percent of the amount of the contribution.

B. The insurer may offset the amount of the certificate amortized in acalendar year as provided in subsection A. This amount shall be deducted fromthe premium tax liability incurred on business transacted in thisCommonwealth for that year. However, the Association shall diligently pursueall rights available to it to recover its expenditures made in thefulfillment of its responsibilities under this chapter. In the event theCommission determines after a hearing that the Association is not diligentlypursuing available measures of recovery, participating insurers will not beable to offset amounts amortized during the period that the Commissiondetermines that the Association has not been diligently pursuing availablemeasures of recovery.

C. Any sums that have been (i) amortized by contributing insurers and offsetagainst premium taxes as provided in subsection B and (ii) subsequentlyrefunded pursuant to subsection F of 38.2-1705 shall be paid to theCommission and deposited with the State Treasurer for credit to the generalfund of this Commonwealth.

D. The amount of any credit against premium taxes provided for in thissection for an insurer shall be reduced by the amount of reduction in federalincome taxes for any deduction claimed by the insurer for an assessment paidpursuant to this chapter.

(1976, c. 330, 38.1-482.27; 1986, c. 562; 1987, cc. 565, 655; 1991, c. 371;1997, c. 160.)