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

 

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting