Tax Compliance Checklist

Pull last year's federal return and confirm the filing form for the current entity: Form 1120-PC for P&C carriers, 1120-L for life and health carriers, 1120 or 1065 for agencies and MGAs. Acquisitions and entity restructurings during the year are the most common reason the prior-year form is wrong for the current year.

Tie the federal return's loss and LAE deduction to Schedule P of the NAIC annual statement. IRS exam teams routinely cross-check Schedule P discounting under IRC §846; reserves booked gross of discount on the return are a frequent finding.

Specified policy acquisition expenses must be capitalized at the §848 percentages: 1.75% for annuity, 2.05% for group life and health, 7.7% for other life. Confirm the net premium base by line of business before applying the rate.

For P&C filers, build the §832(b) computation: earned premium less losses incurred (with §846 discounting) less expenses incurred plus 5.25% of unearned premium reserve change. Cross-check against the Schedule F reinsurance recoverables before signing off.

Calendar-year insurance filers are due March 15 (1120-S, 1065) or April 15 (1120, 1120-PC, 1120-L). File Form 7004 for an automatic extension if the actuarial sign-off on reserves will not land in time — but pay any estimated balance with the extension to avoid §6651 penalties.

Run the written-premium-by-state report from PolicyCenter or the AMS, broken out by line of business and admitted vs. surplus-lines. State premium tax bases differ — gross written, direct written, or net of return premium — so confirm each state's definition before summing.

Separate any non-admitted (E&S) premium written through wholesale brokers. Surplus-lines tax and stamping-office filings have different remittance windows than admitted premium tax — typically 30–60 days post-bind in many states, with stamping fees due to bodies like SLA-CA, SLTX, or FSLSO.

Remit premium tax to each home-state of the insured under NRRA, and file with the stamping office where required. The producer of record is the compliance backstop even when the wholesale broker handles the filing — confirm wholesale-broker confirmations are received for every E&S transaction.

For each non-domiciliary admitted state, compare the foreign carrier's tax burden to what a hypothetical insurer domiciled in that state would owe in the carrier's home state. The higher number controls. Common miss: forgetting to include fire marshal taxes and guaranty fund assessments in the comparison.

KY, IL, GA, FL, and TN have municipal-level premium taxes layered on top of state tax. Kentucky's Local Government Premium Tax alone covers 300+ jurisdictions with quarterly remittance to each. Use a service like KY DOI's online portal or LexisNexis Insurance Premium Tax Tools rather than tracking manually.

Confirm whether each producer is W-2, 1099, or statutory employee under IRC §3121(d)(3)(B) (full-time life insurance salespeople). Misclassification under the IRS 20-factor test is a perennial agency audit finding — captive producers with set hours and exclusive carrier appointments often look like employees, not contractors.

Form 941 is due the last day of the month following each quarter. Reconcile the four 941s to the W-3 transmittal at year-end; mismatches between Box 2 wages and 941 line 5a are the most common IRS CP-2100 notice trigger.

Any 1099-NEC for non-employee compensation of $600 or more is due to recipients and the IRS by January 31 — no automatic 30-day extension. Pull the commission disbursement report from the AMS and reconcile to W-9s on file before generating the 1099 batch.

Match Applied Epic or AMS360 commission ledger entries to bank disbursements and to the 1099 totals. Sub-producer overrides, contingent commissions, and profit-sharing booked late in the year are the most frequent source of variance.

NY Reg 187, CA SB 250, and equivalents require written commission disclosure to commercial insureds above set thresholds. While not strictly a tax filing, missed disclosures often surface during the same year-end audit and can void the commission's deductibility position.