Who is responsible for paying the Surplus Lines tax?

The surplus lines tax is primarily the responsibility of the surplus lines broker. When a broker places business with a surplus lines insurer, they are required to collect and report the surplus lines tax to the state. This is a crucial part of the broker's role, as they ensure compliance with state regulations regarding surplus lines insurance placement.

The broker processes the placement of insurance that is not available from admitted carriers, and with that, they are entrusted with the responsibility of managing the taxes associated with those transactions. Therefore, the broker must be familiar with the tax rates and filing requirements for surplus lines in their respective state, ensuring that the tax is correctly calculated and remitted to the state tax authority.

While the policyholder ultimately pays for the insurance premiums, including any related taxes, it is the broker who is accountable for the accurate reporting and payment of the surplus lines tax. This delineates the responsibility clearly, placing it squarely on the surplus lines broker's shoulders in compliance with regulatory obligations.