Fill in Your Kentucky 74A118 Form

How to Fill Out Kentucky 74A118

Filling out the Kentucky 74A118 form is a straightforward process intended for insurance companies to report and remit insurance surcharge collected from policyholders. It's a crucial step that ensures compliance with the Commonwealth of Kentucky's Department of Revenue requirements. Properly completing and timely submitting this form prevents any unnecessary penalties or interest charges due to late submissions. Here's how to accurately complete the form:

1. Start by entering the tax month and year at the top of the form, under "FOR OFFICIAL USE ONLY -- STA. 61."
2. Provide the account number associated with your insurance company next to "Account Number."
3. If this is an amended return, check the box labeled "Check Here if Amended Return." Similarly, if this concerns Surplus Lines, mark the corresponding box.
4. In the "Name and Address" section, ensure you fill in the accurate and complete details as required.
5. Under "Report for Month of," input the month and year you're reporting for.
6. For lines 1 and 2 (A through D), carefully enter the total premiums, followed by deductions for amounts not subject to the surcharge. Make sure to include all required fields like premiums returned, collected premiums for various exemptions, and total amount not subject to surcharge.
7. Calculate the amount subject to surcharge by subtracting line 2D from line 1, and enter the result in line 3.
8. Multiply the amount on line 3 by .018 (current surcharge rate) and record the surcharge due in line 4.
9. If applicable, calculate and enter any penalties and interest in lines 5 and 6 respectively, based on the guidelines provided on the reverse side of the form.
10. Add lines 4, 5, and 6 to determine the total amount due and input this in line 7.
11. If there are any adjustments, attach the necessary documentation and note the adjustment amount in line 8.
12. Add or subtract the adjustment from the total amount due to find the total payment amount, and record this in line 9.
13. Indicate your payment method. If paid online, include the confirmation number.
14. Finish by having a principal officer and the preparer (if applicable) sign and date the bottom of the form, including printed names, titles, contact telephone numbers, and email addresses.
15. Review the form for accuracy and completeness. Then, make a check payable to Kentucky State Treasurer and mail your return with payment to the provided mailing address, ensuring it's postmarked by the due date to avoid any penalties.

Once completed, sending the Kentucky 74A118 form on time is crucial. This action not only keeps the records up-to-date but also showcases the insurance company's commitment to adhering to state laws. Keeping a copy of the submitted document and any correspondence from the Department of Revenue is recommended for future reference. Accuracy, timeliness, and completeness are the keys to successfully navigating this requirement.

1. What is the Kentucky 74A118 form used for?

   The Kentucky 74A118 form is a Monthly Insurance Surcharge Report required by the Department of Revenue for insurance companies operating in Kentucky. It's designed to ensure that insurers properly charge and collect a surcharge on most insurance premiums, assessments, or other charges collected, except those specifically exempted. This form assists in the consistent application of Kentucky's insurance surcharge laws, providing a structured means for reporting these amounts to the state.

2. Who needs to file the Kentucky 74A118 form?

   Every domestic, foreign, and alien insurer, excluding life and health insurers, that collects premiums on risks located in Kentucky must file the Kentucky 74A118 form. This requirement applies regardless of whether the insurer's premiums are subject to or exempted from Kentucky insurance premiums taxes. Insurers must file for each period, whether monthly or annually, even if no premiums were collected during that time. Special filing guidelines apply to surplus lines, with filings made under the agency name and FEIN or, in certain cases, the Department of Insurance number.

3. What types of insurance premiums are exempt from the surcharge?

   • Accident and health insurance premiums
   • Federal insured crop insurance premiums
   • Federal insured flood insurance premiums
   • Reinsurance premiums
   • Title insurance premiums
   • Workers' compensation insurance premiums
   • Premiums collected from certain policyholders, including the federal government, resident nonprofit educational and charitable institutions, and state or local government for real property coverage only.

   This list helps insurers determine which portions of their collected premiums should be calculated into the surcharge and which are exempt, ensuring accuracy in reporting and compliance with Kentucky law.

4. How are penalties and interest calculated for late filings or payments of the Kentucky 74A118 form?

   The penalty for failing to file the insurance premium surcharge report by the due date is 2 percent of the surcharge due for each 30 days or fraction thereof that the report is late, up to a maximum of 20 percent, with a minimum penalty of $10. Similarly, the penalty for failing to pay the insurance premium surcharge by the due date is calculated at the same rates. Additionally, interest at the "tax increase rate" applies to all insurance premium surcharge liabilities not paid by the original due date, calculated from the original due date to the date of payment. These measures emphasize the importance of timely filing and payment, encouraging compliance with state regulations.

Filling out the Kentucky 74A118 Monthly Insurance Surcharge Report requires careful attention to detail to ensure accuracy and compliance with state regulations. Unfortunately, several common mistakes can lead to errors on the form, potentially resulting in penalties or delays.

1. Incorrect Account Number: One common error is the inaccurate entry of the account number. This number is crucial for the Kentucky Department of Revenue to identify the filer and properly credit the surcharge payment. Ensure the account number is double-checked against official documents to avoid processing issues.

2. Failure to Deduct Exempt Premiums: Often, filers overlook the need to deduct premiums that are not subject to the surcharge, including those for accident and health insurance, federal insured crop insurance, and workers' compensation, among others. As a result, the amount subject to surcharge may be erroneously inflated, leading to overpayment.

3. Incorrect Calculation of Surcharge: Calculating the surcharge due can be tricky, especially if the base amount subject to surcharge is not correctly determined. Remember, the surcharge is applied at the current rate of .018 to the amount subject to surcharge. Misinterpretation of this rate or calculation errors can significantly impact the surcharge due.

4. Omitting Adjustments: If there have been any adjustments, such as refunds or credits returned to policyholders on terminated policies, these must be included in the report. Failure to attach supporting documentation for adjustments can lead to discrepancies and potential challenges by the Department of Revenue.

5. Forgetting to Sign and Date the Form: An overlooked yet critical mistake is the failure to sign and date the form. The certification by a principal officer of the company attests to the accuracy and completeness of the report. An unsigned form is considered incomplete and may be rejected.

Avoiding these common mistakes requires diligent review and understanding of the form's requirements. It is beneficial to:

• Review each line item thoroughly.
• Consult the general information and instructions provided by the Kentucky Department of Revenue.
• Use the correct account number and ensure all exemptions and adjustments are accurately documented.
• Calculate the surcharge due carefully, applying the current rate correctly.
• Double-check that all required signatures and dates are present before submission.

By paying close attention to these details, filers can ensure their Kentucky 74A118 form is correctly completed, thus avoiding unnecessary delays or penalties and staying in compliance with Kentucky's insurance regulations.

When preparing the Kentucky 74A118 Monthly Insurance Surcharge Report, insurers often find themselves interacting with a variety of other documentation. This process is critical in ensuring compliance with state regulations, managing financial reporting accurately, and fulfilling legal responsibilities in the insurance sector. Let’s take a closer look at four other forms and documents that are frequently used alongside the 74A118 form to streamline these processes.

• Form 51A113 (Insurance Premiums Tax Return): This form is crucial for insurers as it details the premiums tax due to the state of Kentucky. It provides a comprehensive record of the total insurance premiums collected, which is instrumental for calculating the surcharge that needs to be reported on the 74A118 form.
• Form 51A260 (Premium Tax and Surcharge Quarterly Return): Utilized by insurers for quarterly reporting, this document helps with the interim financial assessments regarding premiums tax and surcharge. It allows for a regular check on the accumulations that will inform the annual or monthly filings, ensuring any adjustments can be made in a timely manner.
• NAIC Quarterly and Annual Statements: While not specific to Kentucky, these National Association of Insurance Commissioners (NAIC) statements are essential for insurers operating in any state. These comprehensive reports on an insurer's financial health include premium volumes, losses, and expenses, which are necessary to complete the Kentucky 74A118 form accurately.
• Policy Termination Notices: These are not standardized forms but crucial documents within the insurance process. They indicate when a policy has been terminated, triggering the need for a refund of the surcharge collected, as noted in the 74A118 form instructions. Accurate tracking and reporting of these terminations are vital for compliance and financial accuracy.

To navigate the complex landscape of insurance regulatory requirements in Kentucky, it’s essential to understand how these documents work together. By ensuring that all relevant forms and documents are accurately completed and appropriately integrated, insurers can better manage their compliance efforts, leading to a more efficient and effective operation. Whether dealing with monthly surcharges, quarterly premiums, or annual financial health assessments, the interconnectedness of these documents plays a critical role in the overarching process of insurance reporting and regulation compliance.

The Kentucky 74A118 form, a Monthly Insurance Surcharge Report, has similarities with the Quarterly Federal Excise Tax Return (Form 720) used by the IRS. Both documents are used to report and calculate taxes or surcharges due for specific periods. Form 720 is filed quarterly and covers excise taxes on a wide range of goods and services, including some insurance policies. Like the 74A118 form, it requires detailed reporting of taxable amounts and calculates taxes due, along with adjustments and penalties as applicable. These forms share the objective of ensuring compliance with tax obligations related to insurance or other transactions.

Another related document is the Unemployment Insurance (UI) Tax Return that businesses file with their state's unemployment insurance program. This return, similar to the 74A118 form, involves reporting amounts related to payroll and calculating a due amount based on specific rates. While the UI Tax Return focuses on unemployment insurance contributions from employers based on their payroll, the 74A118 form deals with insurance surcharges. Both require detailed financial information regarding certain payments and involve calculations to determine the amounts due to governmental agencies.

The State Premium Tax Return, which insurance companies must file in many jurisdictions, also shares similarities with the Kentucky 74A118 form. This return involves reporting premiums received and calculating taxes due to the state based on those premiums. Like the 74A118, the State Premium Tax Return focuses on insurance activities and requires detailed premium information, exemptions, and adjustments. These forms ensure that insurance companies meet their state tax obligations related to their premium income.

Form 944, Employer's Annual Federal Tax Return, filed with the IRS, bears resemblance to the Kentucky 74A118 in that both are periodic tax-related filings required by government entities. Form 944 is designed for small employers to report withheld income tax and both employee and employer Social Security and Medicare taxes. Though the specifics of what's being reported differ, with Form 944 focusing on employment taxes and the 74A118 on insurance surcharges, both necessitate accurate reporting of financial transactions within a specific period and the calculation of a payment obligation.

The Sales and Use Tax Return, filed with state and local tax authorities, shares purposes with the Kentucky 74A118 form. Retailers use this form to report sales, calculate taxes collected from customers, and pay those taxes to the government. Similarly, the 74A118 form involves calculating and reporting a surcharge collected, in this case, related to insurance. Both forms play crucial roles in the collection and remittance of taxes or surcharges to governmental agencies, ensuring compliance with applicable laws and financial regulations.

When filling out the Kentucky 74A118 form, it's important to pay attention to detail to ensure accuracy and compliance. Here's a helpful list of dos and don'ts:

• Do include all premiums, assessments, and other charges collected on risks located in Kentucky, excluding municipal taxes, in the total on line 1.
• Do not forget to deduct amounts not subject to surcharge, such as premiums returned on terminated policies or premiums collected for exempted policy types, before calculating the amount subject to the surcharge.
• Do claim deductions accurately for premiums returned to policyholders on terminated policies, as well as for exempt or partially exempt premiums, to avoid overstating your surcharge liability.
• Do not overlook the requirement to return the surcharge to policyholders along with premiums returned on terminated policies. This is a mandatory step.
• Do ensure you report and remit all premium surcharge monies collected during the preceding month, less any monies returned to policyholders, by the 20th day of each month.
• Do not delay the submission of your report and payment of the surcharge. Late submissions are subject to penalties and interest charges, which can significantly increase your liability.

Remember, completing the form accurately and on time is crucial to comply with Kentucky state regulations and avoid unnecessary penalties. Paying close attention to exemptions and accurate calculations will ensure the correct surcharge is reported and remitted.

Many people find insurance forms and their requirements complex and confusing. This is true for the Kentucky 74A118 form, which has its own set of common misunderstandations. Here, we'll clarify a few of these misconceptions to provide a better understanding of the form's requirements and processes.

• All insurance policies are subject to the surcharge. This is incorrect. The Kentucky 74A118 form specifically lists types of insurance that are exempt from the surcharge, including accident and health insurance, federal insured crop and flood insurance, reinsurance, title insurance, and workers’ compensation insurance. Knowing which policies are exempt can significantly impact the amount reported and the surcharge calculation.

• The form is only for insurance companies based in Kentucky. This is not the case. The form must be completed by every domestic, foreign, and alien insurer that collects premiums on risks located in Kentucky, regardless of where the insurance company is based. The surcharge applies equally to any insurer operating within Kentucky, ensuring that all applicable risks are appropriately surcharged.

• Monthly filing is mandatory for all insurers. Actually, there are exemptions to this rule. Insurers with an annual liability of less than $1,000 for each of the previous two calendar years may opt to report and remit all premium surcharge monies collected on a calendar year basis by January 20th of the following year, instead of filing monthly. This can reduce administrative burden for smaller or less active insurers.

• The surcharge rate is flexible. On the contrary, the surcharge rate is a fixed percentage set by the state. As of the latest revision of the form, the rate is applied at .018 (or 1.8%) per $100 of premiums, assessments, or other charges collected. This rate ensures consistency across all reporting and makes it simpler for companies to calculate what they owe.

• Penalties are negotiable. The penalties for late filing or payment are strictly defined by Kentucky statutes. The penalty for failing to file or pay the insurance premium surcharge by the due date is 2 percent of the surcharge due for each 30 days or fraction thereof that the report or payment is late, up to a maximum of 20 percent, with a minimum penalty of $10. These penalties are enforced to encourage timely compliance with the surcharge reporting requirements.

Understanding these aspects of the Kentucky 74A118 form can help insurers accurately fulfill their filing requirements, avoid unnecessary penalties, and ensure they are correctly applying the surcharge to applicable premium charges. When in doubt, referring directly to the official guidelines or seeking clarification from the Kentucky Department of Revenue can provide further assistance.

When preparing the Kentucky 74A118 form, it's crucial to ensure accuracy and completeness to comply with state requirements. Here are five key takeaways to guide you through this process:

• Deadline Compliance: The form must be submitted to the Department of Revenue by the 20th day of each month, accounting for all premium surcharge monies collected in the preceding month. For insurers with an annual liability of less than $1,000 in the previous two years, submissions can be made annually by the 20th of January.
• Accuracy in Reporting Premiums: Only the premiums that have been collected should be reported on line 1. This includes total premiums, assessments, and other charges for risks located in Kentucky, excluding municipal taxes and specific exemptions.
• Deductions and Exemptions: It's important to apply deductions for premiums not subject to the surcharge accurately. This includes premiums returned on terminated policies, specific types of insurance such as workers’ compensation, and premiums collected from certain policyholders like the federal government or nonprofit institutions.
• Calculation of Surcharge Due: The amount subject to surcharge is calculated by deducting exempt and non-subject amounts from the total reported premiums. The surcharge due is then determined by applying the current rate (.018) to this amount.
• Penalties and Interest: Failing to file or pay the surcharge by the due date results in penalties. The penalty for late filing is 2 percent of the surcharge due for each 30 days or fraction thereof, up to a maximum of 20 percent, with a minimum penalty of $10. Interest is applied to overdue payments at the “tax increase rate” from the original due date to the payment date.

Understanding these key aspects will help ensure that the Kentucky 74A118 form is completed accurately and submitted on time, thus avoiding penalties and interest charges. Additionally, remember to attach supporting documentation for any adjustments and maintain a copy of the form for your records.