Tennessee ~ Insurance Tax: Retaliatory Taxes Not Permitted

The Supreme Court of Tennessee, in reversing the Court of Appeals, has held that the Tennessee Claims Commissioner did not have authority to impose a retaliatory tax upon Pennsylvania-domiciled insurance companies. The claimants, five separate groups of Pennsylvania insurance companies, were authorized to provide workers’ compensation coverage in Tennessee. As a result of an audit, mainly of a retaliatory nature, the claimants were required to recalculate their Tennessee taxes to include certain Pennsylvania workers’ compensation charges and remit additional taxes. According to the Supreme Court of Tennessee, Pennsylvania workers’ compensation assessments do not result in a financial burden on Tennessee insurance companies doing business in Pennsylvania, thereby triggering the imposition of retaliatory taxes against the Pennsylvania insurance companies doing business in Tennessee. Because the workers’ compensation assessments must be paid by employer-policyholders in conjunction with their premium payments, the administrative risk of collecting and remitting those payments does not qualify as a burden on the insurance companies for purposes of the retaliatory tax. The judgments of the Court of Appeals are, therefore, reversed.

Chartis Casualty Company, et al. v. State of Tennessee, Tennessee Supreme Court, No. X2012529, October 2, 2015, ¶401-625



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