What type of tax must be filed and paid by a licensed broker on surplus lines insurance transactions?

A licensed broker engaged in surplus lines insurance transactions is required to file and pay a Surplus Lines Tax. This tax is specifically designated for surplus lines insurance, which is provided by non-admitted insurers. These carriers do not have the same regulatory approval as admitted insurance companies within the state, and therefore, they often operate under different tax structures.

The Surplus Lines Tax is intended to ensure that revenue generated from these transactions is appropriately taxed and contributed to the state's financial resources. Additionally, brokers must ensure compliance with state regulations concerning these taxes, as failure to do so can result in penalties and impact their licensing status.

Other taxes, such as the State Insurance Tax, might apply to admitted insurers but do not pertain to the surplus lines market specifically. Similarly, while federal excise tax and sales tax have their own structures and subject matters, they do not directly relate to the obligations imposed on brokers conducting surplus lines transactions. Thus, the requirement to pay the Surplus Lines Tax is both a distinctive aspect of operating within this market and an essential compliance measure for licensed brokers.