7.2 The 4.94% Surplus Lines Premium Tax (s. 626.932)

The surplus lines premium receipts tax in s. 626.932 is the most heavily tested number on the exam. You need the rate, who collects it, when it is collected and remitted, the interest on late payments, the exemptions, the multistate rule, and where the money goes.

The Rate and the Collection Duty: s. 626.932(1)

• Surplus lines premiums are subject to a premium receipts tax of 4.94% of all gross premiums charged.
• The surplus lines agent collects the tax from the insured at the time of delivery of the cover note, certificate, policy, or other initial confirmation of insurance, in addition to the full gross premium the insurer charges.
• The agent is prohibited from absorbing the tax and from rebating any part of the tax or of the agent's commission, as an inducement or for any other reason.

Rate history: policies effective before July 1, 2020 were taxed at 5%. Chapter 2020-10 lowered the rate to 4.94% for policies effective on or after July 1, 2020. Endorsements and cancellations on older policies still use 5% because the rate follows the policy's effective date.

Remitting the Tax: s. 626.932(2)

• For each calendar quarter's business as reported to the FSLSO, the agent makes the tax payable to the department and remits it to the FSLSO at the same time as the quarterly affidavit under s. 626.931, which is the 45th day after the quarter ends.
• The FSLSO forwards the tax and any interest to DFS within 10 days of receipt.
• Delinquent tax bears interest at 9% per year, compounded annually, from the day it becomes delinquent.

Multistate Risks: s. 626.932(3) and the NRRA

Under the federal Nonadmitted and Reinsurance Reform Act of 2010 (NRRA), only the insured's home state may require payment of premium tax on nonadmitted insurance. The home state is generally the state of the insured's principal place of business, or principal residence for an individual. If 100% of the insured risk is located outside that state, the home state is the state to which the greatest percentage of the insured's taxable premium is allocated.

If a surplus lines policy covers risks only partly in Florida and Florida is the home state:

• the tax is computed on the gross premium, meaning the entire premium, at 4.94%; and
• the agent reports the premium for the Florida risk and the premium for risk outside Florida separately to the FSLSO, as the FSLSO directs.

The FSLSO applies 4.94% to the whole premium of a Florida-home-state policy effective on or after July 1, 2020. It files the premium as a Florida portion and a non-Florida portion, with no allocation among other states' tax rates. Premium for risk outside the United States and its territories does not have to be filed with the FSLSO.

Exemptions: s. 626.932(4)

The tax does not apply to:

1. insurance of vessels, cargo, or aircraft written under s. 626.917, the wet marine and aviation track; or
2. insurance of risks of the state government or its agencies, or of any county or municipality or its agencies.

The FSLSO adds two practical points. Nonprofit 501(c)(3) organizations are not exempt merely because they are exempt from sales tax; the exemption is for governmental entities. And pleasure boats and aircraft are taxable, because s. 626.917 excludes them.

Where the Money Goes: s. 626.932(5)

Worked Examples

Example 1: single-state policy. A Florida contractor's general liability premium is $18,500 plus a $200 surplus lines agent fee, effective October 1, 2026. Taxable premium = $18,700. Tax = $18,700 x 0.0494 = $923.78, collected at delivery of the cover note.

Example 2: multistate policy with Florida as home state. An Orlando-headquartered company's property policy covers Florida locations ($60,000 premium) and Georgia and Alabama locations ($40,000 premium). Tax = $100,000 x 0.0494 = $4,940. The agent reports $60,000 as Florida premium and $40,000 as non-Florida premium.

Example 3: government risk. A city's excess liability policy is placed in the surplus lines market. It is exempt from the tax under s. 626.932(4). The FSLSO service fee is also waived for government risks (s. 626.9325(4)). The EMPA surcharge, however, does not exempt governmental entities if the policy type is one the surcharge covers.

Example 4: late payment. A $12,000 quarterly tax is paid 30 days late. Interest = $12,000 x 0.09 x 30/365 = about $88.77, and the agent also faces a fine of up to $500 per day under s. 626.936(2).

Tax Summary