                                 CODE OF VIRGINIA

TAX WRITE-OFFS OF CERTIFICATES OF CONTRIBUTIONS (§ 38.2-1709)

A. A member insurer shall have at its option the right to show a certificate of
contribution as an asset in the form approved by the Commission pursuant to
subsection H of &#xA7; 38.2-1705 at the original face amount for the calendar
year of issuance. Such amount shall be amortized over the 10 calendar years
following the year the contribution was paid in amounts each equal to 10 percent
of the amount of the contribution.

B. The member insurer may offset the amount of the certificate amortized in a
calendar year as provided in subsection A. This amount shall be deducted from
the premium tax liability incurred on business transacted in the Commonwealth
for that year. However, the Association shall diligently pursue all rights
available to it to recover its expenditures made in the fulfillment of its
responsibilities under this chapter. If the Commission determines after a
hearing that the Association is not diligently pursuing available measures of
recovery, the Commission shall notify the Department and contributing member
insurers will not be able to offset amounts amortized during the period that the
Commission determines that the Association has not been diligently pursuing
available measures of recovery.

C. Any sums for which a certificate of contribution has been issued that have
been (i) amortized by contributing insurers and offset against premium taxes as
provided in subsection B and (ii) subsequently refunded pursuant to subsection F
of &#xA7; 38.2-1705 shall be paid to the Department of Taxation and deposited
with the State Treasurer for credit to the general fund of the Commonwealth.

D. The amount of any credit against premium taxes provided for in this section
for a member insurer shall be reduced by the amount of reduction in federal
income taxes for any deduction claimed by the member insurer for an assessment
paid pursuant to this chapter.

E. A member insurer that is exempt from taxes referenced in subsection A may
recoup its assessments by a surcharge on its premiums in a sum reasonably
calculated to recoup the assessments over a reasonable period of time, as
approved by the Commission. Amounts recouped shall not be considered premiums
for any other purpose, including the computation of gross premium tax, the loss
ratio, or agent commission. If a member insurer collects excess surcharges, the
member insurer shall remit the excess amount to the Association, and the excess
amount shall be applied to reduce future assessments in the appropriate account.

HISTORY: 1976, c. 330, § 38.1-482.27; 1986, c. 562; 1987, cc. 565, 655; 1991,
c. 371; 1997, c. 160; 2010, c. 510; 2011, c. 850; 2018, c. 706.