Calif. Commissioner will Not Appeal BOE Premium Tax

February 28, 2003

Calif. Insurance Commissioner John Garamendi announced he is not appealing the Board of Equalization’s unanimous decision that overturned former Commissioner Low’s determination that the gross premium tax applies to workers’ compensation deductible reimbursements.

“In the unlikely event we were able to convince the Board of Equalization to change its position and impose the tax on workers’ compensation deductibles, it is likely the insurance industry would sue the state leading to years of litigation and ultimately ending up in the Supreme Court. With the workers’ compensation insurance market already in turmoil, more uncertainty is the last thing we need. This is an issue for the Legislature to decide,” said Garamendi.

The California Department of Insurance will recommend to the Legislature this year that the gross premium tax be imposed on workers’ compensation deductibles in the future.

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