CODE OF VIRGINIA

TAX WRITE-OFFS OF CERTIFICATES OF CONTRIBUTION (§ 38.2-1611.1)

A. A member insurer shall have at its option the right to show a certificate of
contribution as an asset in the form approved by the Commission pursuant to
subdivision 3a of subsection A of § 38.2-1606 at the original face amount for
the calendar year of issuance. Such amount may be amortized as follows:

   1.  Certificates of contribution issued prior to January 1, 1998, shall be
   amortized in each succeeding calendar year through December 31, 1997, at an
   amount not to exceed 0.05 of one percent of the member’s direct gross
   premium income for the classes of insurance in the account for which the
   member insurer is assessed. As used herein, the definition of direct gross
   premium income shall be the same as that specified in § 58.1-2500. If the
   amount of the certificate has not been fully amortized by the contributing
   insurer by December 31, 1997, the unamortized balance of the certificate
   amount shall be amortized, at the option of the contributing insurer, either
   (i) in the same manner as the certificate was amortized prior to January 1,
   1998; however, if not amortized in full prior to calendar year 2010, the
   unamortized balance of the certificate shall be amortized in full during
   calendar year 2010, or (ii) over the 10 successive calendar years commencing
   January 1, 1998, in amounts each equal to 10 percent of such unamortized
   balance. A contributing insurer whose certificate has not been fully amortized
   by December 31, 1997, shall notify the Commission in writing of the
   amortization schedule option it has selected on or before March 1, 1998;
   however, if a contributing insurer fails to notify the Commission by such
   date, the insurer shall be deemed to have selected the option described in
   clause (i) of the preceding sentence.

   2.  Certificates of contribution issued on or after January 1, 1998, shall be
   amortized over the 10 calendar years following the year the contribution was
   paid in amounts each equal to 10 percent of the amount of the contribution.

B. The insurer may offset the amount of the certificate amortized in a calendar
year as provided in subsection A. This amount shall be deducted from the premium
tax liability incurred on business transacted in this Commonwealth for that
year. However, the Association shall diligently pursue all rights available to
it to recover its expenditures made in the fulfillment of its responsibilities
under this chapter. In the event the Commission determines after a hearing that
the Association is not diligently pursuing available measures of recovery, the
Commission shall notify the Department of Taxation and participating insurers
will not be able to offset amounts amortized during the period that the
Commission determines that the Association has not been diligently pursuing
available measures of recovery.

C. Any sums that have been (i) amortized by contributing insurers and offset
against premium taxes as provided in subsection B and (ii) subsequently refunded
pursuant to subdivision A 3 of § 38.2-1606 or subdivision B 6 of § 38.2-1606
shall be paid to the Department of Taxation and deposited with the State
Treasurer for credit to the general fund of this Commonwealth.

D. The amount of any credit against premium taxes provided for in this section
for an insurer shall be reduced by the amount of reduction in federal income
taxes for any deduction claimed by the insurer for an assessment paid pursuant
to this chapter.

HISTORY: 1987, cc. 565, 655; 1991, c. 371; 1997, c. 160; 2011, c. 850; 2014, c.
154.