The Oklahoma surplus lines tax is 6% of the gross premium on any policy placed with a non-admitted insurer when Oklahoma is the insured’s home state. The licensed surplus lines broker usually collects the tax from the policyholder and remits it quarterly through the state’s online portal. If a business bought the coverage directly from a non-admitted carrier without a broker, the business owes the tax and files it on the same schedule.
What the 6% Applies To
The tax is calculated on gross premium, and “gross premium” is broader than the base rate for the risk. Under Oklahoma Administrative Code 365:25-3-12, it includes the base premium plus all fees associated with the policy, including broker fees and service charges.1Oklahoma Insurance Department. Surplus Lines Broker Frequently Asked Questions A $2,000 premium with a $200 service fee produces a 6% tax on $2,200.
Return premiums reduce the base. When a policy is cancelled mid-term and part of the premium is refunded, the tax is calculated on the net figure after the return.2Justia. Oklahoma Code 36-1115 – Tax on Surplus Lines – Surplus Lines Insurer
A separate 0.175% SLAS transaction fee is collected alongside the tax on filings submitted through the state’s current reporting platform. It covers the clearinghouse’s administrative costs and is paid at the same time as the premium tax, not billed separately.3Oklahoma Insurance Department. Bulletin No. 12-2023 – Adoption of SLIP Platform for Reporting and Payment of Surplus Lines Taxes
Only the Home State Collects
If Oklahoma is the insured’s home state, Oklahoma gets the full 6% on the entire premium, even for policies covering property or risks in other states. Under the federal Nonadmitted and Reinsurance Reform Act, 15 U.S.C. § 8201, only the home state may collect premium tax on nonadmitted insurance, so no other state where a covered location sits can impose its own surplus lines tax on the same policy.4Office of the Law Revision Counsel. 15 USC Chapter 108 – State-Based Insurance Reform The home state may require an allocation report showing how premium is distributed across states, but payment goes to one place.
Who Owes the Tax
In most placements, the licensed surplus lines broker handles the tax. Under 36 O.S. § 1115, every person licensed to place surplus lines coverage in Oklahoma must collect the 6% from the policyholder and remit it to the Insurance Commissioner.2Justia. Oklahoma Code 36-1115 – Tax on Surplus Lines – Surplus Lines Insurer For the policyholder, the tax appears as a line item on the invoice and requires no separate filing.
Independently procured insurance is different. When a business obtains coverage directly from a non-admitted insurer without going through an Oklahoma-licensed surplus lines broker, the 6% still applies to the gross premium, and the business itself must report and pay it to the Insurance Commissioner on the same quarterly schedule brokers use.2Justia. Oklahoma Code 36-1115 – Tax on Surplus Lines – Surplus Lines Insurer Companies that place their own coverage take on the administrative work most policyholders never see.
Filing Through SLIP
Oklahoma moved surplus lines reporting to the Surplus Lines Information Portal (SLIP) effective January 1, 2024. Every policy with an effective date on or after that date is filed through SLIP; OPTins still handles policies with earlier effective dates. Paper and email filings are no longer accepted.3Oklahoma Insurance Department. Bulletin No. 12-2023 – Adoption of SLIP Platform for Reporting and Payment of Surplus Lines Taxes
SLIP accepts two input methods: individual transaction entry for low volumes, and XML batch uploads for high volumes. Payment is made exclusively by ACH debit inside the platform. At the close of each quarter, SLIP delivers premium tax and SLAS fee invoices to the filer’s inbox within the portal.3Oklahoma Insurance Department. Bulletin No. 12-2023 – Adoption of SLIP Platform for Reporting and Payment of Surplus Lines Taxes
Quarterly Deadlines
Returns and payments are due by the last day of the month after each quarter closes:3Oklahoma Insurance Department. Bulletin No. 12-2023 – Adoption of SLIP Platform for Reporting and Payment of Surplus Lines Taxes
- Q1 (January through March): due April 30
- Q2 (April through June): due July 31
- Q3 (July through September): due October 31
- Q4 (October through December): due January 31
Zero Quarters and the Annual Report
A broker who writes no surplus lines business in a quarter does not need to file a zero quarterly report. The annual report is another matter. Every individual or entity that held an active surplus lines license at any point during the year must file an annual tax report, even if no business was placed all year.5Oklahoma Insurance Department. Premium Tax Treating a quiet year as nothing to file is a common slip.
Penalties for Late Payment
The penalty under 36 O.S. § 1116 depends on who was supposed to pay. A licensed surplus lines broker can be assessed a civil penalty of up to $25 per day of delinquency, per policy. Ten late policies can accrue up to $250 per day until the tax is paid. The Insurance Commissioner may collect the tax by distraint and recover penalties through a court action in the state’s name.6New York Codes, Rules and Regulations. Oklahoma Code 36 – Penalty for Failure to Remit Tax
For a business or individual that independently procured coverage, the penalty is 1% of the premiums paid or agreed to be paid for each calendar month of delinquency, or $25, whichever is greater. On a $100,000 premium, the monthly penalty runs $1,000 on top of the tax owed.6New York Codes, Rules and Regulations. Oklahoma Code 36 – Penalty for Failure to Remit Tax
Diligent Search Before Any Placement
The tax question is settled once a surplus lines policy exists, but the policy can only exist if the broker first confirms the coverage isn’t available in the admitted market. Oklahoma’s statute doesn’t set a specific number, and the Insurance Department has said the state follows the industry standard of at least three diligent-effort searches. The broker keeps the documentation on file and must be able to produce it, but does not submit it with the filing.1Oklahoma Insurance Department. Surplus Lines Broker Frequently Asked Questions
Oklahoma does not maintain an export list, so no coverage type is pre-exempt from the search. Brokers who are used to states where common commercial lines skip this step can get caught out.1Oklahoma Insurance Department. Surplus Lines Broker Frequently Asked Questions Placements must also go to a carrier on Oklahoma’s approved list of registered surplus lines insurers.7Oklahoma Insurance Department. Surplus Lines
Large commercial buyers that qualify as exempt commercial purchasers under 15 U.S.C. § 8206 can waive the diligent search, provided a qualified risk manager negotiates the coverage, the purchaser meets premium and size thresholds, the broker discloses that admitted coverage with greater regulatory protection may be available, and the purchaser requests in writing to proceed with the non-admitted insurer.8Office of the Law Revision Counsel. 15 USC 8206 – Definitions The waiver covers the search only. The 6% Oklahoma premium tax still applies in full.