Could a Florida insurer include payments to independent automobile-damage appraisers in its salary tax credit?

Plain-English summary

Florida excluded payments to the independent automobile-damage appraisers from the insurer's salary tax credit. The credit applied to salaries paid to qualifying employees located or based in Florida, while section 624.509(5) expressly excluded independent contractors.

The appraisers assessed vehicle damage and repair costs on a job-by-job basis, performed work for several companies, and were not employees of the insurer or its consolidated group. They also were not licensed within the insurance roles that the statute treated as employees for credit purposes.

What this means for you

Payments for services performed in Florida did not qualify by themselves. The claimant had to be the employer, and the worker had to fit the statutory employee categories.

Common questions

Q: Did the appraisers' claim-related work make them employees? No.

Q: Did common-law employment exist? No, under the presented facts.

Q: Could their payments enter the salary-credit computation? No.

Citations and references

• Fla. Stat. § 624.509(5) — insurance premium-tax salary credit
• Fla. Stat. §§ 443.036(17), 626.081, 626.091, 626.101, and 626.112 — employee and licensing provisions cited in the ruling
• Fla. Admin. Code r. 12B-8.001(3)(b) — qualifying salary-credit employees
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B8-001

Original ruling text

SUMMARY

QUESTION: Are payments made to independent appraisers
includable in the computation of the salary tax credit?

ANSWER - Based on Facts Below: Payments made by an
insurance company to appraisers, who are not employees of
the company, are excluded from the computation of the
salary tax credit.

Dec 22, 1999

Re: Technical Assistance Advisement 99(B)8-001
Insurance Premium Tax - Salary Tax Credit
Section 624.509(5), F.S.
XXX, hereinafter referred to as "A"

Dear :

Your letter dated XX, requested a Technical Assistance
Advisement concerning the includability of payments made to
independent appraisers in the computation of the salary tax
credit. This response to your request constitutes a Technical
Assistance Advisement under Chapter 12-11, Florida
Administrative Code, and is issued to you under the authority of
s. 213.22, Florida Statutes.

FACTS

"A" is a property and casualty insurance company pursuant to the
Florida Statutes. "A" contracts with certain individuals and
firms to make damage assessments for automobile accidents.
These individuals and firms provide services to the taxpayer on
a job by job basis. These individuals are responsible for
determining the extent of damage to a vehicle and the cost of
repair. The individuals that perform the services are not
employees of the taxpayer or employees of the consolidated group
of which the taxpayer is a member. These individuals are

referred to as "appraisers" and are not licensed with the state
for purposes of any insurance statute.

QUESTION

Are "A's" payments made to individuals to perform appraisal
functions included in the salary tax credit calculation under s.
624.509(5), F.S.? If "A's" payments to the appraisers qualify
for the credit, what documents must be attached to the premium
tax return to meet the compliance requirements to claim the
salary credit?

DISCUSSION AND ANALYSIS OF LAW

Subsection 624.509(5), F.S., states in part:...

There shall be allowed a credit against the net tax imposed
by this section equal to 15 percent of the amount paid by
the insurer in salaries to employees located or based
within this state and who are covered by the provisions of
chapter 443. For purposes of this subsection:

(b) The term employees does not include independent
contractors or any person whose duties require that the
person hold a valid license under the Florida Insurance
Code, except persons defined in s. 626.081, 626.091, and
626.101. (emphasis supplied)

Rule 12B-8.001(3)(b), F.A.C., states in part:...

2. Employees are those covered under Chapter 443, F.S.,
   Unemployment Compensation, by the insurer taking the
   credit, a service representative as defined in s. 626.081,
   F.S., a supervising or managing general agent as defined in
   s. 626.091, F.S., and an adjuster or claims investigator as
   defined in s. 626.101, F.S.

3. Salary credit shall be allowed only to the extent that:

c. The insurer claiming the credit is the employer, as
defined in s. 443.036(17), F.S., of the claimed employees,

and said insurer satisfies the Chapter 38B-2, F.A.C.,
filing requirements. (emphasis supplied)

According to the facts provided and the statute and rule quoted
above, in order to claim the salary tax credit on an appraiser,
the appraiser must be an employee of the company claiming the
credit. Service representatives as defined in s. 626.081, F.S.,
supervising or managing general agents as defined in s. 626.091,
F.S., and adjusters or claims investigators as defined in s.
626.101, F.S., are statutorily considered employees. However
the appraisers in question are not licensed by the state
pursuant to s. 626.112, F.S., and are therefore not,
statutorily, employees of the taxpayer. They are also,
admittedly, not employees of the taxpayer under the common law
rules applicable in determining the employer-employee
relationship. Therefore, the appraisers in question cannot meet
the statutory requirement of being an employee, and payments to
them are not eligible for the salary tax credit.

CONCLUSION

The appraisers in question appear to be independent contractors,
performing work for several companies, and not employees per
statute or under the common law rules applicable in determining
the employer-employee relationship. As independent contractors,
they are specifically excluded by s. 624.509(5)(b), F.S.
Therefore, payments to them cannot be included in the salary tax
credit computation.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
based on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and

related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Robert DuCasse
Technical Assistance and Dispute Resolution

RCD/
Control No.: 39198