Section 2500.110  Annual Retaliatory Tax

a)         Pursuant to Section 444 of the Code, foreign and alien companies are required to pay a retaliatory tax in the amount of the difference between the sum of the state of incorporation's basis minus the sum of the State of Illinois' basis, if the resulting amount is a positive number.

1)         For calendar years starting January 1, 1998 and thereafter, the State of Illinois' basis is the sum of the amounts actually paid for the following items:

A)        Annual Statement Filing Fee;

B)        Certificate of Authority Fee;

C)        Financial Regulation Fee;

D)        Policy Form Filing Fee;

E)        The amount of Illinois corporate and replacement income tax, decreased by the amount, if any, of any corporate and replacement income tax cash refund received in the same calendar year, if that cash refund had been considered part of the amount of Illinois corporate and replacement income tax paid in the calculation of the annual retaliatory tax in a preceding year;

F)         Fire Department tax;

G)        Annual Privilege tax;

H)        State Fire Marshal tax paid pursuant to Section 12 of the Fire Investigation Act; and

I)         Other insurance fees paid pursuant to Section 408 of the Code.

2)         For calendar years starting January 1, 1998 and thereafter, the state of incorporation's basis is the sum of the amounts that an Illinois domiciled company would have paid in the foreign or alien domiciliary state or country if it transacted similar operations there as did the foreign or alien company in Illinois, for the following items or their equivalent:

A)        Annual Statement Filing Fee;

B)        Certificate of Authority Fee;

C)        Financial Regulation Fee;

D)        Policy Form Filing Fee;

E)        Fire Department tax;

F)         Annual Privilege tax, Premium tax or Franchise tax;

G)        State Fire Marshal tax paid pursuant to Section 12 of the Fire Investigation Act; and

H)        Other insurance taxes and fees paid in the foreign or alien company's state of domicile, similar to those listed in subsection (b), that may have the following characteristics:

i)          The basis of the calculation of the tax or fee is a portion of premiums written;

ii)         The tax or fee is assessed pursuant to state authority; and

iii)        The tax or fee is assessed on a basis in which the liability for the tax, fee or assessment is intended as an adjustment of past premium charges or as a means of disposing of a deficit in any state mandated insurance program in which premium rates were regulated by the state.

3)         For the purposes of this Section, the State of Illinois' basis and the state of incorporation's basis do not, among others, include the following items, or their equivalent:

A)        Cost Containment Fees or fees principally for collecting underwriting data;

B)        Workers' Compensation Rate adjustment, Second Injury adjustments, or other assessments of a workers' compensation system;

C)        Interstate Insurance Receivership Commission assessments;

D)        Illinois Guaranty Fund assessments;

E)        Auto Theft assessment; and

F)         Assessments not referenced by or contained in Article XXV of the Code.

b)         The fact that a foreign or alien company is domiciled in a state or country in which franchise and/or premium taxpayers may be granted an extension of time to pay their franchise and/or premium taxes in that state shall not affect the requirements of Section 444.1 of the Code that the foreign or alien company must file an annual return and pay its retaliatory tax on or before March 15.

c)         Supplemental retaliatory tax returns shall be filed as required by Section 444.1(4) of the Code.

(Source:  Added at 44 Ill. Reg. 3419, effective February 24, 2020)