(a) In addition to collecting the full amount of gross premiums written by an insurer for surplus lines insurance, the surplus lines broker shall collect and pay to the director a tax of 2.7 percent on the net premium, which is the total gross premiums written, less any return premiums, for the insurance. Where the home state of the insured is this state and the insurance covers properties, risks, or exposures located or to be performed both in and out of this state, the tax payable shall be computed based on an amount equal to 2.7 percent on that portion of the net premiums allocated under (f) of this section to this state, plus an amount equal to the portion of the premiums allocated under (f) of this section to other states or territories based on the tax rates and fees applicable to other properties, risks, or exposures located or to be performed outside of this state.
(b) The surplus lines broker may not absorb the tax or any part of it and may not rebate, for any reason, any part of the tax.
(c) If, under AS 21.09.210, an admitted insurer is required to collect and pay premium tax on a portion of a subscription policy, the surplus lines broker is not required to collect any amount that would constitute double taxation of that portion of the insurance.
(d) The director may participate in an agreement with another state formed for the purpose of collecting and disbursing to a remitting state any funds collected under (a) of this section applicable to other properties, risks, or exposures located or to be performed outside of this state. To the extent that another state where a portion of the properties, risks, or exposures resides has failed to enter into an agreement with this state, the director shall retain all of the net premium tax collected by this state.
(e) At the time of filing the quarterly report as set out in AS 21.34.170, each surplus lines broker shall pay the premium tax due for transactions occurring during the period covered by the report. The tax must be paid by electronic or other means as specified by the director.
(f) In determining the amount of premiums taxable in this state, all premiums written, procured, or received in this state shall be considered written on properties, risks, or exposures located or to be performed in this state except premiums that are properly allocated or apportioned and reported as taxable premiums of a remitting state. Allocation of the amount of premiums taxable for surplus lines insurance covering properties, risks, or exposures only partially located or to be performed in this state shall be determined by reference to an allocation schedule established by regulation adopted by the director subject to the following:
(1) if a policy covers more than one classification, the following apply:
(A) for any portion of the coverage identified by a classification on the allocation schedule, the tax shall be computed by using the allocation schedule for the corresponding portion of the premium;
(B) for any portion of the coverage not identified by a classification on the allocation schedule, the tax shall be computed by using an alternative equitable method of allocation for the property or risk;
(C) for any portion of the coverage where the premium is indivisible, the tax shall be computed by using the method of allocation that pertains to the classification describing the predominant coverage;
(2) if the information provided by the surplus lines broker is insufficient to substantiate the method of allocation used by the surplus lines broker, or if the director determines that the broker’s method is incorrect, the director shall determine the equitable and appropriate amount of tax due to this state as follows:
(A) by use of the allocation schedule if the risk is appropriately identified in the schedule;
(B) if the allocation schedule does not identify a classification appropriate to the coverage, the director may give significant weight to documented evidence of the underwriting bases and other rating criteria used by the insurer; the director may also consider other available information to the extent sufficient and relevant, including the percentage of the insured’s physical assets in this state, the percentage of the insured’s sales in this state, the percentage of income or resources derived from this state, and the amount of premium tax paid to another jurisdiction for the policy.
(g) If the amount of tax due under (a) of this section is less than $50 in any jurisdiction, the tax must be paid in the jurisdiction in which the reports and summary of exported business are filed.
(h) The director shall, at least annually, furnish to the commissioner of a remitting state a copy of all filings reporting an allocation of taxes required by this section.
(i) This section does not apply to insurance of risks of state government or its political subdivisions, to an agency of state government or its political subdivisions, or to insurance of aircraft primarily engaged in interstate or foreign commerce.
(j) A surplus lines broker shall pay to the division a late payment fee of $50 a month plus five percent of the tax due each calendar month or part of a month during which the broker fails to pay the full amount of the tax or a portion of the tax and interest at the rate of one percent of the tax due each calendar month or part of a month for the period the broker fails to pay the tax. The late payment fee, not including interest, may not exceed $250 plus 25 percent of the tax due. The tax payment shall be made in the form required by the director, or a penalty shall be added to the tax equal to 25 percent of the tax due, not to exceed $2,000, with a minimum penalty of $100. In addition to any other penalty provided by law, if the provisions of this section are wilfully violated, a civil penalty may be assessed of not more than $10,000. The director may suspend or revoke the license of a broker that fails to pay its taxes, a penalty, or a late payment fee required under this section.