Maryland Surplus Lines Tax Filing: 3% Rate, Deadlines, and Penalties

Maryland surplus lines tax filing runs on two separate schedules: a quarterly combined affidavit and report, and a semi-annual premium receipts tax return. The tax is 3% of net premiums placed with non-admitted insurers, and the semi-annual returns are due March 15 and September 15 each year.¹ Miss either deadline and you owe a 5% penalty plus interest running from the original due date.²

The Two Filings and When They Are Due

Brokers often conflate the quarterly report with the tax return. They are different documents, submitted through different channels, on different deadlines. Both are mandatory.³

Quarterly Affidavit and Report

A combined affidavit and quarterly report is due roughly six weeks after each calendar quarter closes:

First quarter (January through March): May 15
Second quarter (April through June): August 15
Third quarter (July through September): November 15
Fourth quarter (October through December): February 15

Semi-Annual Premium Receipts Tax Return

The tax itself is reported and paid twice a year, each return covering six months of business:

Business written July through December: due March 15
Business written January through June: due September 15

What the 3% Applies To

The tax is calculated on gross premiums charged for the surplus lines policy, minus any premiums returned on cancellation or mid-term adjustment.¹ Take the total premium, subtract refunds, and multiply by 0.03.

The broker must charge the full 3% to the insured on top of the gross premium at the time the cover note, certificate, or policy is delivered. The broker cannot absorb the tax or rebate any portion of it back.¹ When a cancellation happens after the tax has already been reported, return the tax to the insured and take the credit on your next filing.

One exemption to be aware of: surplus lines coverage on risks of the State of Maryland or any political subdivision is not subject to the tax.¹ Separately, brokers who have paid or been assessed examination expenses under the Insurance Article may credit those amounts against the premium receipts tax owed.⁴

How to Submit and Pay

Quarterly affidavits and reports go through the MIA’s online surplus lines system at apps.insurance.maryland.gov/SurplusLines/. First-time users need to register for an account before filing.³

Semi-annual tax returns, together with the payment voucher, are emailed to surpluslinefiling.mia@maryland.gov. Payment is by check, payable to the Maryland Insurance Administration, accompanied by the Surplus Lines Tax Payment Voucher.⁵ Because checks have to travel, mail at least a week before March 15 or September 15. The MIA publishes all the required forms (Quarterly Combined Affidavit, Surplus Lines Quarterly Report, Premium Receipts Tax Report, and the Payment Voucher) on its website. Note that each report filed with the Commissioner becomes a public record open to inspection.⁴

Information Each Filing Needs

Every filing calls for the gross premium charged, any return premiums, the name of the non-admitted insurer, the policy number, and the effective date of coverage. These let the MIA assign each policy to the right reporting period and verify the tax math.

Keep separate records of all business transacted under your certificate of qualification, including daily reports and copies of every binder or cover note. Maryland requires these records to be kept for three years after issuance and to be available for the Commissioner’s examination at any reasonable time during that period.⁶ Three years is the floor; holding records longer is sensible if older filings could still be audited.

Penalties for Late Payment

Any tax not paid by the due date carries a 5% penalty plus interest from the original due date.² The interest rate is set under the Tax-General Article and can change over time.⁷

If an audit later determines you owed more than you reported, that shortfall accrues interest at 6% per year from the original due date until paid.² The penalty and the running interest both apply, so the cost of a late or understated filing compounds quickly.

Multi-State Policies and the Home-State Rule

If a policy covers risks in more than one state, only the insured’s home state can collect premium tax on non-admitted insurance. The federal Nonadmitted and Reinsurance Reform Act preempts every other state’s claim.⁸

Maryland built this directly into its code. For any policy effective on or after July 21, 2011, if Maryland is the insured’s home state, the 3% applies to the entire premium, even if some of the covered property or operations sit in other states.¹ The reverse is also true: if the insured’s home state is somewhere else, Maryland collects nothing, even on Maryland-located risks within the policy.

Home state is generally where the insured keeps its principal place of business, or where an individual resides. If none of the insured risk is located in that state, the home state is whichever state has the largest share of the taxable premium. For affiliated groups, use the home state of the member with the largest premium allocation under the policy.

When There Is No Broker

If a Maryland resident or business procures insurance directly from a non-admitted carrier without going through a broker, the tax does not disappear. The reporting and payment obligation shifts to the policyholder. Direct procurement is uncommon, but ignoring it exposes the insured to the same 5% penalty and interest a broker would face.

1
Maryland General Assembly. Maryland Code Insurance 3-324 – Premium Receipts Tax on Surplus Lines Insurance
2
Maryland General Assembly. Maryland Code Insurance 6-108 – Penalty and Interest
3
Maryland Insurance Administration. Surplus Lines – Home Page
4
Maryland General Assembly. Maryland Code Insurance 3-325 – Report of Premium Receipts Tax
5
Maryland Insurance Administration. Filing Requirements for Surplus Lines Brokers in Maryland
6
Maryland General Assembly. Maryland Code Insurance 3-322 – Record Keeping
7
Maryland Insurance Administration. Premium Taxes
8
Office of the Law Revision Counsel. 15 USC 8201 – Reporting, Payment, and Allocation of Premium Taxes