Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2017

Tax on Insurers Annotations

Reduced Rate—Policies Paid by Individual Policyholder

Under Revenue and Taxation Code section 12202, the reduced rate applies only to premiums from policies that are actually held and paid by pension or profit-sharing plan policyholders which are exempt or qualified under the relevant sections of the Internal Revenue Code. The policyholder must be "exclusively" a qualified pension or profit-sharing plan. Evidence sufficient to satisfy the requirement of a qualifying policyholder includes the letter of qualification issued by the Internal Revenue Service. Policies for which premiums are paid by an individual after termination from a pension or profit-sharing plan are no longer regarded as issued to a pension or profit-sharing plan within the meaning of Revenue and Taxation Code section 12202. Premiums from such policies are subject to tax at the full rate. 3/24/89A. (Am. 2003–3).