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Codified Laws

CHAPTER 10-44

INSURANCE COMPANY PREMIUM AND ANNUITY TAX

10-44-1    Definition of terms.

10-44-1.1    Rules of director of insurance.

10-44-2    Tax levied on premiums and consideration for annuities--Time of payment--Overpayment refund or credit--Rates.

10-44-2.1    Applicability of tax on premiums and consideration for annuities.

10-44-2.2    Premium tax on travel insurance--Tax allocation and reporting.

10-44-3    Farm mutual insurers and fraternal benefit societies exempt from tax.

10-44-4    Tax credit for principal office or regional home office.

10-44-5    Functions of regional home office and principal office--Rules.

10-44-6    Proof of maintenance of principal office or regional home office and payment of ad valorem taxes--Certificate allowing tax credit.

10-44-7    Payment required for certificate permitting continuance in business.

10-44-8    Exemption of taxpayer from other taxes.

10-44-9    Additional tax levied on fire insurance premiums.

10-44-9.1    Determining amount of fire insurance premium tax--Distribution.

10-44-9.2    Fire departments eligible for tax distribution certified annually by department.

10-44-9.3    10-44-9.3. Repealed by SL 1984, ch 30, § 8.

10-44-9.4    Allocation to counties--Amount.

10-44-9.5    Allocation to fire departments serving county--Amount.

10-44-9.6    Payments to fire departments--Uses of money--Accumulation of funds--Reallocation if fire department ceases to exist--Unused balance to general fund.

10-44-10    10-44-10 to 10-44-14. Repealed by SL 1977, ch 98, § 8.

10-44-15    Payment of fire insurance tax proceeds into firemen's pension fund.

10-44-16    Penalty on unpaid taxes and installments--Refunds.



10-44-1Definition of terms.

Terms used in this chapter mean:

(1)    "Company," any corporation, association, reciprocal or inter-insurance exchange, and any other organization whatsoever, whether foreign or domestic, transacting business in South Dakota under the insurance laws of this state, as insurer, indemnitor, or surety;

(2)    "Consideration for annuity contracts," the gross amount of consideration received by a company during the preceding calendar year for annuity contracts on lives of residents in this state less annuity considerations returned, termination allowances on group annuity contracts and so-called dividends on participating annuity contracts;

(3)    "Domestic company," any company organized under the laws of South Dakota;

(4)    "Foreign company," any company organized under the laws of a jurisdiction other than South Dakota;

(5)    "Premiums," as defined under § 58-11-1, (but not including premiums received for re-insurance and not including any consideration for annuity contracts) upon property or risks, resident or located within this state, less premium refunds, including refunds of deposits to subscribers of reciprocal or inter-insurance exchanges, and so-called dividends on participating policies.

Source: SL 1951, ch 456, § 1; SDC Supp 1960, § 57.35A01; SL 1993, ch 98, § 2; SL 1995, ch 66, § 1.



10-44-1.1Rules of director of insurance.

The director of the Division of Insurance may make reasonable rules to administer or interpret the provisions of this chapter to include, but not be limited to, definition of terms.

Source: SL 1982, ch 110, § 4.



10-44-2Tax levied on premiums and consideration for annuities--Time of payment--Overpayment refund or credit--Rates.

Any company doing insurance business in this state shall pay a tax at the rates specified in this section. The tax shall be paid to the Division of Insurance at the time the company files its annual statement, or, if no annual statement is required, then before March first of each year.

If, during the previous year, a company paid more than five thousand dollars in premium taxes in this state, the company shall submit payments equal to one-quarter of the previous year's premium taxes to the Division of Insurance on April thirtieth, July thirty-first, October thirty-first, and January thirty-first. The quarterly payments shall be credited against the amount due from the company at the time the company files its annual statement, or if no annual statement is required, then on March first of each year. The director of the Division of Insurance may waive the requirement in writing for quarterly payments or reduce the amount of deposit if the director finds the requirement would impose an undue premium tax on a company because of a significant decline in sales within the state. If the sum of the quarterly payments exceeds the total taxes due, the director shall credit the overpayment against subsequent amounts due or, if requested in writing at the time the company files its annual statement, refund the overpayment to the company. If the overpayment cannot be credited, there is excess remaining after the credit is taken on the annual statement, or the refund is not requested, the division may refund the amount overpaid by May first of the following year. The rates are:

(1)    On each domestic company, two and one-half percent of premiums, except for life insurance policies, other than credit life as defined in chapter 58-19, of a face amount of seven thousand dollars or less, for which the rate is one and one-fourth percent of premiums; and one and one-fourth percent of the consideration for annuity contracts. However, the rate for life insurance, annuities, and court appearance bonds shall be computed as follows:

(a)    Two and one-half percent of premiums for a life policy on the first one hundred thousand dollars of annual premium, and eight one-hundredths of a percent for that portion of a policy's annual life premiums exceeding one hundred thousand dollars;

(b)    One and one-fourth percent of the consideration for an annuity contract on the first five hundred thousand dollars of consideration, and eight one-hundredths of a percent for that portion of the consideration on an annuity contract exceeding five hundred thousand dollars; and

(c)    One percent of premiums for court appearance bonds.

The tax also applies to premiums for insurance written on individuals residing outside this state or property located outside this state if no comparable tax is paid by the direct writing company to any other appropriate taxing authority. However, the tax applies only to premiums for insurance written after July 1, 1980, on individuals residing outside of the United States;

(2)    On each foreign company the rate shall be computed as follows:

(a)    Two and one-half percent of premiums, except for life insurance policies, other than credit life as defined in chapter 58-19, of a face amount of seven thousand dollars or less, for which the rate is one and one-fourth percent of premiums;

(b)    Two and one-half percent of premiums for a life policy on the first one hundred thousand dollars of annual premium, and eight one-hundredths of a percent for the portion of a policy's annual life premiums exceeding one hundred thousand dollars;

(c)    One and one-fourth percent of the consideration for an annuity contract on the first five hundred thousand dollars of consideration, and eight one-hundredths of a percent for that portion of the consideration on an annuity contract exceeding five hundred thousand dollars; and

(d)    One percent of premiums for court appearance bonds;

(3)    On each insurer not licensed or not authorized to do business in this state the rate shall be computed as follows:

(a)    Two and one-half percent of premiums, except for life insurance policies, other than credit life as defined in chapter 58-19, of a face amount of seven thousand dollars or less, for which the rate is one and one- fourth percent of premiums;

(b)    Two and one-half percent of premiums for a life policy on the first one hundred thousand dollars of annual premium, and eight one-hundredths of a percent for that portion of a policy's annual life premiums exceeding one hundred thousand dollars;

(c)    One and one-fourth percent of the consideration for an annuity contract on the first five hundred thousand dollars of consideration, and eight one-hundredths of a percent for that portion of the consideration on an annuity contract exceeding five hundred thousand dollars; and

(d)    One percent of premiums for court appearance bonds;

(4)    Fourteen dollars for each insurance policy issued or renewed for workers' compensation coverage.

Revenue from subdivision (4) of this section shall be deposited in the insurance operating fund of the state treasury and is dedicated to the Department of Labor and Regulation for purposes of automating the administration of the workers' compensation law and supporting the Workers' Compensation Advisory Council.

Source: SDC 1939, § 57.3510; SL 1939, ch 274; SL 1951, ch 456, § 2; SL 1955, ch 413; SL 1959, ch 210; SDC Supp 1960, § 57.35A02; SL 1966, ch 255; SL 1979, ch 83; SL 1980, ch 92; SL 1981, ch 99; SL 1982, ch 110, § 1; SL 1983, ch 84; SL 1986, ch 99, § 1; SL 1993, ch 97, § 1; SL 1993, ch 98, § 1; SL 1994, ch 93, § 1; SL 2001, ch 54, §§ 1, 8; SL 2002, ch 60, § 1; SL 2003, ch 245, §§ 1, 2; SL 2004, ch 91, § 1; SL 2006, ch 46, § 1; SL 2011, ch 1 (Ex. Ord. 11-1), § 33, eff. Apr. 12, 2011; SL 2011, ch 55, § 1.



10-44-2.1Applicability of tax on premiums and consideration for annuities.

The provisions of § 10-44-2 and this section shall be retroactive to July 1, 2001, and shall apply to any premium tax for any life insurance policy with an annual premium exceeding one hundred thousand dollars and to any annuity with an annual consideration exceeding five hundred thousand dollars.

Source: SL 2006, ch 46, § 2.



10-44-2.2. Premium tax on travel insurance--Tax allocation and reporting.

An insurer shall pay premium tax as provided in § 10-44-2 on travel insurance premiums paid by:

(1)    An individual primary policyholder who is a resident of this state;

(2)    A primary certificate holder who is a resident of this state who elects coverage under a group travel insurance policy; or

(3)    A blanket travel insurance policyholder that is a resident in, or has its principal place of business or the principal place of business of an affiliate or subsidiary that has purchased blanket travel insurance in, this state, for eligible blanket group members, subject to any apportionment rules that apply to the insurer across multiple taxing jurisdictions or that permit the insurer to allocate premium on an apportioned basis in a reasonable and equitable manner in those jurisdictions.

A travel insurer shall document the state of residence or principal place of business of the policyholder or certificate holder and report as premium only the amount allocable to travel insurance and not any amounts received for travel assistance services or cancellation fee waivers.

Source: SL 2022, ch 185, § 11.



10-44-3Farm mutual insurers and fraternal benefit societies exempt from tax.

Farm mutual insurers organized and operating under chapter 58-35 and fraternal benefit societies organized, licensed, or operating under chapter 58-37A are hereby declared to constitute a distinct and separate classification of insurance companies and shall be exempt from the tax imposed by this chapter.

Source: SL 1951, ch 456, § 3; SDC Supp 1960, § 57.35A03; SL 2007, ch 55, § 1.



10-44-4Tax credit for principal office or regional home office.

Any insurer subject to payment of tax provided for in § 10-44-2, and which has in this state its principal office, or a regional home office as defined in § 10-44-5, for over one-half the tax year is entitled to the following credits and deductions against such tax:

(1)    An amount equal to fifty percent of the tax as determined under § 10-44-2; and

(2)    An amount equal to ad valorem taxes or payments made in lieu of taxes paid by such insurer, whether direct or in the form of rent, on that proportion of the premises occupied as a principal or regional home office during the year next preceding the filing of its annual tax return.

However, in no event shall such credits and deductions reduce the amount of tax to less than thirty percent of the amount of the tax otherwise payable without the application of the credit provided by this section. Any insurer who qualifies for a credit pursuant to this section shall meet the requirements provided for in § 58-5-93.

Source: SDC Supp 1960, § 57.35A02 as added by SL 1967, ch 330; SL 1982, ch 110, § 2; SL 2004, ch 92, § 1.



10-44-5Functions of regional home office and principal office--Rules.

A regional home office, for the purposes of § 10-44-4, means an office performing, for an area covering one or more states, the following functions: the marketing, claims, underwriting, and policyholder servicing. A regional home office may also perform the following functions: actuarial; medical (where required); law; advertising and publications; public relations; and supervision and training of sales and service forces. A principal office shall perform the same functions in addition to decision making and corporate activities. The director may promulgate rules pursuant to chapter 1-26 to define the functions that qualify for the regional home office credit.

Source: SDC Supp 1960, § 57.35A02 as added by SL 1967, ch 330; SL 1982, ch 110, § 2A; SL 1993, ch 97, § 2; SL 2004, ch 92, § 2.



10-44-6Proof of maintenance of principal office or regional home office and payment of ad valorem taxes--Certificate allowing tax credit.

Any insurer claiming the credits and deductions provided by § 10-44-4 shall furnish satisfactory proof by March first of each year, on forms to be prescribed by the director of the Division of Insurance, that the insurer maintained its principal office or regional home office within this state and paid ad valorem taxes. Upon receipt of proof, the director of the Division of Insurance shall issue his certificate, allowing the credits and deductions provided for in § 10-44-4 with respect to the tax imposed by § 10-44-2.

Source: SDC Supp 1960, § 57.35A02 as added by SL 1967, ch 330; SL 1982, ch 110, § 3; SL 1984, ch 30, § 4.



10-44-7Payment required for certificate permitting continuance in business.

The director of the Division of Insurance may not issue a certificate permitting a company to continue doing business in this state until payment of the tax imposed by § 10-44-2.

Source: SL 1951, ch 456, § 2; SL 1955, ch 413; SL 1959, ch 210; SDC Supp 1960, § 57.35A02; SL 1984, ch 30, § 5.



10-44-8Exemption of taxpayer from other taxes.

Each company required to pay a tax under this chapter is exempt from all other taxes, state and local, except taxes upon real property as may be owned by the company and the retail sales tax and the use tax on tangible personal property and any product transferred electronically. An insurance policy or annuity contract is considered intangible personal property for the purposes of this section.

Source: SL 1951, ch 456, § 5; SDC Supp 1960, § 57.35A05; SL 1983, ch 356, § 7; SL 1992, ch 80, § 209; SL 2008, ch 51, § 69.



10-44-9Additional tax levied on fire insurance premiums.

Every insurance company doing fire insurance business in this state, including a fire reciprocal insurer under chapter 58-34, shall pay in addition to the tax set forth in § 10-44-2 one-half of one percentum of the gross premium receipts of such company on all fire insurance business done in this state during the year next preceding as shown by its annual statement.

Source: SDC Supp 1960, § 57.35A02 (1) as added by SL 1966, ch 255.



10-44-9.1. Determining amount of fire insurance premium tax--Distribution.

On July fifteenth of each year, the secretary of the Department of Labor and Regulation shall determine the amount of fire insurance premium tax collected by the state under the provisions of §§ 10-44-2 and 10-44-9 for the previous calendar year. Ten percent of the tax collected pursuant to § 10-44-9 is hereby annually appropriated to the Department of Public Safety for distribution to the South Dakota Firefighters Association, Incorporated, for training at state and district fire schools. Fifty percent of the amount remaining shall be distributed according to § 10-44-9.4.

All amounts determined for distribution are hereby appropriated out of the general fund to the Department of Public Safety. Each fire department receiving funds from the fire insurance premium tax shall continue to receive an amount not less than the amount received on July 1, 1989.

Source: SL 1977, ch 98, § 1; SL 1984, ch 30, § 6; SL 1990, ch 84; SL 1994, ch 94, § 1; SL 1995, ch 67; SL 2003, ch 272 (Ex. Ord. 03-1), §§ 20, 121; SL 2006, ch 31, § 3; SL 2011, ch 1 (Ex. Ord. 11-1), § 162, eff. Apr. 12, 2011; SL 2021, ch 50, § 1.



10-44-9.2Fire departments eligible for tax distribution certified annually by department.

Any fire department which was formed at least one year prior to making application, which has not less than fifteen members and one fire truck with pumper housed in a heated building, and which has complied with § 34-29B-9 shall be certified annually on or before the last day of May by the Department of Public Safety for distribution of the fire insurance premium tax.

Source: SDC 1939, § 57.3511; SL 1959, ch 440, § 2; SL 1966, ch 254; SDCL, § 10-44-11; SL 1977, ch 98, § 2; SL 1984, ch 30, § 7; SL 1984, ch 343, §§ 17, 18; SL 1990, ch 85; SL 1994, ch 94, § 2; SL 2003, ch 272, §§ 20, 121.



10-44-9.3
     10-44-9.3.   Repealed by SL 1984, ch 30, § 8.



10-44-9.4Allocation to counties--Amount.

On or about July fifteenth of each year, the secretary of public safety shall send to each county auditor a list of certified county fire departments and a warrant in an amount equal to one-half of the amount appropriated pursuant to § 10-44-9.1, times the ratio of the assessed valuation of the county to the assessed valuation of the state, plus one-half of the amount appropriated pursuant to § 10-44-9.1, times the ratio of the population of the county to the population of the state. The secretary of public safety shall base the allocation on figures contained in the most recent published annual statistical report of the Department of Revenue and census or population estimates of the United States Department of Commerce Bureau of the Census. Warrants shall be drawn by the state auditor.

Source: SL 1951, ch 456, § 4; SL 1957, ch 469; SL 1959, ch 440, § 1; SDC Supp 1960, § 57.35A04; SDCL § 10-44-13; SL 1977, ch 98, § 4; SL 1978, ch 84; SL 1984, ch 30, § 9; SL 2003, ch 272 (Ex. Ord. 03-1), §§ 20, 82, 121; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.



10-44-9.5Allocation to fire departments serving county--Amount.

Upon receipt of the funds as provided in § 10-44-9.4 each county auditor shall determine the amount to be received by each certified fire department servicing the county, including those domiciled outside the county. All the funds received shall be divided one-half in the same ratio as the assessed valuation of all property within the service area of the department to the assessed valuation of all property within the service areas of all fire departments within the county, and one-half in the same ratio as the population of the area serviced by the department to the population within the service areas of all fire departments within the county. The county auditor shall base the allocation on figures contained in the most recent published annual statistical report of the Department of Revenue, and census or population estimates of the United States Department of Commerce Bureau of the Census.

Source: SL 1977, ch 98, § 5; SL 1984, ch 30, § 10; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.



10-44-9.6Payments to fire departments--Uses of money--Accumulation of funds--Reallocation if fire department ceases to exist--Unused balance to general fund.

After the allocation of funds as provided in § 10-44-9.5, the county shall pay over to each of the certified fire departments servicing the county the amount of money determined to be their share under § 10-44-9.5. The money paid shall be used only for paying operating expenses, pension contributions, and the cost of capital improvements for the fire departments.

A fire department may accumulate funds in its account from year to year. If a fire department ceases to exist, the funds in that account shall be reallocated to the remaining certified fire departments servicing the county in the same proportion as the last previous distribution. If no other certified fire departments operate in the county the balance of the fund shall be paid into the state general fund.

Source: SL 1951, ch 456, § 4; SL 1957, ch 469; SL 1959, ch 440, § 1; SDC Supp 1960, § 57.35A04; SDCL, § 10-44-14; SL 1977, ch 98, § 6.



10-44-10
     10-44-10 to 10-44-14.   Repealed by SL 1977, ch 98, § 8.



10-44-15Payment of fire insurance tax proceeds into firemen's pension fund.

Any municipality of the first class having a paid fire department with three or more full-time members shall be required to pay over the money so received as provided by § 9-16-23.

Source: SL 1951, ch 456, § 4; SL 1957, ch 469; SL 1959, ch 440, § 1; SDC Supp 1960, § 57.03A04; SL 1977, ch 98, § 7; SL 1992, ch 60, § 2.



10-44-16Penalty on unpaid taxes and installments--Refunds.

All taxes and installments not paid when due shall be paid together with a penalty assessment on the unpaid balance at the rate of one and one-half percent per month, or fraction thereof. The Division of Insurance may refund any penalty or interest paid in error. Upon written request by a receiver, the director of the Division of Insurance may extend the time for payment of the tax and may waive any penalty assessment.

Source: SL 1982, ch 110, § 5A; SL 1984, ch 84; SL 1993, ch 97, § 3.