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     ASSACHUSETT
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                                                   Commonwealth of MassachusettsDepartment of Revenue

                                                   2009

                                                   Massachusetts

                                                   Premium Excise

                                                   Return for

                                                   Life Insurance

                                                   Companies

                                                   Form 63-20P

                                                   Schedules and Instructions

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Form 63-20P Instructions
Who Must File Form 63-20P? Failure to meet any of the requirements detailed in this section may
All domestic life insurance companies, as defined by Massachusetts result in a penalty for filing an insufficient return. Such a penalty may
General Laws (M.G.L.) Chapter 175, sec. 118 and 47, which are sub- be assessed at double the amount of the excise due.
ject to M.G.L., Ch. 63, sec. 20, and which do any or all of their busi-
When are Estimated Tax Payments Required?
ness in Massachusetts, must complete and file Form 63-20P.
Any insurance company which reasonably estimates its excise to be
A domestic life insurance company is a company incorporated or in excess of $1,000 for the taxable year is required to make estimated
formed in the Commonwealth. tax payments to the Commonwealth. Estimated payments must be
All classes of foreign life insurance companies on accident and health made in quarterly installments of 40%, 25%, 25% and 10% of the es-
business subject to M.G.L., Ch. 63, secs. 23, 24 and 24A must file timated annual tax liability.
Form 63-20P. Note: New corporations in their first full taxable year with less than
10 employees have different estimated payment percentages —
All foreign life insurance companies subject to M.G.L. Ch. 63, secs.
30%, 25%, 25% and 20% respectively.
20, 21 and 24A must file Form 63-20P.
Insurance companies that underpay, or fail to pay, their estimated
A foreign company is any company organized or formed in any state taxes may incur an additional penalty on the amount of the under-
or country other than Massachusetts. payment for the period of the underpayment. Form M-2220, Under-
When Must Form 63-20P Be Filed? payment of Massachusetts Estimated Tax by Corporations, is used to
Form 63-20P must be filed on or before the 15th day of the third month compute the additional charge.
after the close of the company’s taxable year. Any corporation having $1 million or more of federal taxable income
Can an Insurance Company Obtain an Extension in any of its three preceding taxable years (as defined in Section
6655 (g) of the IRC) may only use its prior year’s tax liability to calcu-
of Time to File?
late its first quarterly estimated tax payment. Any reduction in the first
Form 63-20P filers may request a six-month extension of time to file
installment payment that results from using this method must be
Form 63-20P by submitting Massachusetts Form 355-7004 Misc. on
added to the second installment payment.
or before the original due date of the return. Any tax due at the time
of filing Form 355-7004 Misc. must be paid in full. A company that claims the exception to the underpayment penalty of
equaling the prior year’s tax liability must provide federal tax re-
Note: An extension of time to file is not valid if the company fails to
turns(front page only) for the three preceding taxable years to verify
pay at least 50% of the total tax liability through estimated payments
that federal taxable income is less than $1 million.
or with Form 355-7004 Misc.
Note: Any insurance company required to file more than one type of
What Are the Penalties for Late Returns?
excise return must also file separate estimated tax payments since
Insurance excise returns which are not filed on or before the due
each type of tax is governed by a different section of the Massachu-
date are subject to interest and penalty charges. The penalty for fail-
setts General Laws.
ure to pay the total payment due with this form is 1% of the balance
due per month (or fraction thereof), up to a maximum of 25% of the For more information on corporate estimated taxes, refer to M.G.L.,
tax reported as due on the return. A late payment penalty does not Chapter 63B.
apply to amended returns when the amount shown on the original re- How Is the Excise Determined?
turn was paid. Domestic life insurance companies are taxed both on life and acci-
The penalty for failure to file a return by the due date is 1% of the bal-dent and health premiums written in Massachusetts and on premi-
ance due per month (or fraction thereof), up to a maximum of 25%. ums written in other jurisdictions where no tax is paid. Form 63-20P
filers must also add in dividends applied to purchase paid-up additions
Any tax not paid on or before the due date — without regard to the ex-
and/or to shorten the premium paying period. The tax rate is 2%,
tension — is subject to interest.
after claiming allowable deductions.
What is a Valid Return?
Form 63-20P filers are allowed deductions for dividends to policyhold-
A valid return is one upon which all required amounts have been en-
ers, including those:
tered for all of the appropriate items on the form. Data sheets, account
• paid in cash;
forms, or other documents may be attached to explain these amounts. • applied in reduction of renewal premiums;
Referencing items to attachments instead of properly entering all • left to accumulate at interest;
amounts onto the return is notsufficient. The return must be signed • applied to purchase paid-up additions; or
by either the treasurer or the assistant treasurer of the company. • applied to shorten the premium paying period.
To be valid, a return must also include the following: Deductions are also allowed to Form 63-20P filers for returned premi-
• Schedule T, Exhibit of Premiums Written from the NAIC Annual ums (not including cash surrender values) and/or premiums for Com-
Statement; pany Employees’ Group Life and Accident & Health plans, only if
previously included in line 1 of Part I.
• Certificate of the Massachusetts Capital Resource Company (if ap-
plicable); and A deduction for preferred provider arrangement premiums is allowed to
those companies who have been approved by the Commissioner of
• DL-1A, Part II — Excise on Net Value of Policies (if applicable).
Insurance as preferred provider organizations, if those premiums were
Reproduction of returns must be approved by DOR prior to filing and previously included in line 1 of Part I and reported on Form 63-23P,
meet the criteria provided in Technical Information Release 95-8. Premium Excise Return.

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Foreign Accident & Health insurance companies are taxed on net di- Line 16. Enter 11⁄2% (.015) of the company’s proportionate share of
rect premiums for insurance of property or interest in Massachusetts. the cost of certain investments in the Massachusetts Capital Re-
source Company.
Foreign life insurance companies are taxed on all new and renewal
policies issued during the preceding calendar year if the insured is a Line 17: Credit for member insurers of the Massachusetts Life
resident of Massachusetts at the time the premium was paid. and Health Insurance Guaranty Association.Enter 10% of the as-
sessment for each of the five years following the year in which the
Federal Audit assessment was paid. If the sum of offsets exceeds $3,000,000, the
If your corporation has undergone a federal audit for some prior year, excess may be carried forward and may be used in a year in which
you must report any changes to Massachusetts on Form CA-6, Appli- the $3,000,000 is notexceeded. If the total offsets exceed $3,000,000
cation for Abatement/Amended Return. You must report any federal in a year, the Department of Revenue will assess each member with
audit changes within three months after the final determination by the an additional tax equal to the amount of the offset which exceeds
IRS of the correct taxable income. Otherwise, you will be subject to a $3,000,000 of such members pro rata share. If the total offsets do not
penalty. If the federal change results in less tax due to Massachusetts exceed $3,000,000 in a year, the Department of Revenue will calcu-
than was assessed or paid, you may apply for abatement under the late each members’ pro rata share to determine the amount of refund
federal change rules within one year of the final federal determination. due each member and issue a refund to each member.
Answering “yes” to this question does not release the corporation from
this filing obligation. Line 18: Economic Opportunity Area Credit. Enter the amount of
Economic Opportunity Area credit claimed this year from Schedule
Should the Whole Dollar Method be Used? EOAC. Enclose Schedule EOAC with this return. For more informa-
Yes. All amounts entered on Form 63-20P must be rounded off to the tion, contact the Massachusetts Office of Business Development at
nearest dollar. One Ashburton Place, Room 2101, Boston, MA 02108.
Line Instructions Line 19: Full Employment Program Credit. A qualified employer
Line 1. Enter the amount of premiums subject to tax in Massachusetts participarting in the Full Employment Program may claim a credit of
(from Part 1, Domestic Life Premium Excise Calculation, line 10). If $100 per month of eligible employment per employee. The maximum
amount is negative, enter "0." amount of credit that may be applied in all taxable years with respect
Line 2. Enter the amount from Form DL-1A, Part II, Excise of Net to each employee is $1,200. Enclose Schedule FEC with this return.
value of Policies, if applicable. For more information, contact the Department of Transitional Assist-
ance, 600 Washington Street, Boston, MA 02111.
Line 4. Enter the amount of accident and health premiums subject to
tax in Massachusetts from Part 1, Domestic Life Premium Excise Cal- Line 20: Low-Income Housing Credit. To claim the Low-Income
culation, line 11. Housing credit, documentation must be enclosed with the return. For
further information on this credit, contact the DHCD, Division of Pri-
Lines 5 and 13: Credit Recapture.If the corporation is required to re- vate Housing, at (617) 727-7824.
capture any amount of previously claimed Economic Opportunity Area
Credit, Low-Income Housing Credit and Historic Rehabilitation Credit, Line 21: Historic Rehabilitation Credit.Effective for tax years begin-
complete Schedule H-2 and enter the result in line 5 or 13 of the re- ning on January 1, 2005 and ending on or before December 31, 2011,
turn. Current year credits can then be used to offset the total excise taxpayers may be eligible for the Historic Rehabilitation Credit (HRC).
due which will include the recapture amount. To claim this credit, a historic rehabilitation project must be complete
and have been certified by the Massachusetts Historical Commission.
Line 7. Enter the amount of life premiums subject to tax in Mass- Unused portions of the credit may be carried forward for a maximum
achusetts from Part 2, Foreign Premium Excise Calculation, line 7. If of 5 years. This credit may be transferred or sold to another taxpayer.
amount is negative, enter “0.” The HRC is not subject to the 50% limitation rule for corporate tax-
Lines 8 and 11. Use the back of Form 63-20P to calculate your excise payers. If the taxpayer disposes of the property generating the HRC,
using the same method and rate used by the state in which you are in- a portion of the credit may be subject to recapture. For further infor-
corporated and would be imposed on a like Massachusetts insurance mation, see Regulation 830 CMR63.38.1, Massachusetts Historic Re-
company, or its agents, if doing business to the same extent. If the habilitation Tax Credit.
computation in the state of your incorporation is in every respect the Line 22: Film Incentive Credit.For tax years beginning on or after
same as your Massachusetts computation, a statement to that effect January 1, 2006 and before January 1, 2013, motion picture compa-
should be made. Retaliatory tax provisions are provided under M.G.L. nies may claim a credit equal to 20% of the total qualifying aggregate
Chapter 63, Section 24A. payroll for employing persons within the Commonwealth in connection
with the filming and production of a motion picture, and a credit equal
Line 10. Enter the amount of total net direct accident and health pre-
to 25% of their Massachusetts productions expenses. The credits are
miums subject to tax in Massachusetts from Part 2, Foreign Premium
transferable. For further information, see TIR 06-1.
Excise Calculation, line 12. If the amount is negative, enter “0.”
Line 23: Medical Device Credit.For tax years beginning on or after
Line 15: Initiative Credit. A company shall be allowed a credit against
January 1, 2006, medical device companies that develop or manufac-
the premium tax equal to 11⁄2% (.015) of such company’s total capital
ture medical devices in Massachusetts can claim a credit equal to
contribution in excess of their full proportionate share which shall mean
100% of the user fees paid to the U. S. Food and Drug Administration.
an investment in the Massachusetts Life Insurance Company Commu-
The credit is transferable. For more information, see TIR 06-22.
nity Investment Initiative.
This credit is effective for tax years in which the aggregate cumula-
tive investment in the Massachusetts Life Insurance Company Com-
munity Investment Initiative reaches 100 million or the tax year 2005,
whichever is later.

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Line 24: Brownfields Credit.Recent legislation extends the Browns- obtain a research credit for certain expenditures not qualifying for the
field credit to nonprofit organizations, extends the time frame for eligibil-existing research credit under c. 63, § 38M. St. 2008, c. 130, §§ 30 and
ity for the credit, and permits the credit to be bought, sold or assigned. 53, codified at G.L. c. 63, § 38W. Under this new provision, the credit is
Under prior law, net response and removal costs incurred by a tax- generally calculated in the same manner as the research credit under
payer between August 1, 1998 and August 5, 2005, were eligible for section 38M. However, the qualified research expenditures which form
the credit provided that the taxpayer commenced and diligently pur- the basis for the calculation in new section 38W differ from those of
sued an environmental response action before August 5, 2005. As a section 38M in that they can qualify when the activities are performed
result of the recent legislation, the environmental response action com- both inside and outside of the Commonwealth, to the extent they relate
mencement cut-off date is changed from August 5, 2005 to August 5, to legally mandated clinical trial activities. The new life sciences re-
2011, and the time for incurring eligible costs that qualify for the credit search credit is not refundable. For further information, see TIR 08-23.
is extended to January 1, 2012. For further information, see TIR 06-16. Line 30: Voluntary contribution to the Nongame Wildlife Fund.
Line 25: Life Science Company Investment Tax Credit.For taxable Any corporation that wishes to contribute any amount to the Natural
years beginning on or after January 1, 2009, a new Investment Tax Heritage and Endangered Species Fund may do so on this form. This
Credit (ITC) may be available to taxpayers. amount is added to the excise due. It increases the amount of the cor-
poration’s payment or reduces the amount of its refund.
This credit, which is available to certified life sciences companies only
to the extent authorized pursuant to the Life Sciences Tax Incentive The Natural Heritage and Endangered Species Fund is administered
Program, is equal to 10% of the cost of qualifying property acquired, by the Department of Fisheries, Wildlife and Environmental Law En-
constructed or erected during the taxable year and used exclusively forcement to provide for conservation programs for rare, endangered
in the Commonwealth. and nongame wildlife and plants in the Commonwealth.
The refundable ITC can apply to purchases made on or after January Line 35: Pass-through Entity Withholding.Enter the amount of any
1, 2009 even if a construction project started before that date. The withholding tax from pass-through entities.
scope of qualifying property for purposes of the new credit is the same
Line 36: Refundable Film Credit. Schedule RFC, Refundable Film
as that provided by the existing ITC under M.G.L. Ch. 63, sec. 31A.
Credit, is used by motion picture production companies to elect to claim
Life sciences companies or persons also qualifying for the Economic a refundable film credit if they have not transferred or carried forward a
Opportunity Area Credit (EOAC) for the same property may only take portion of the film credit for the production. Transferees of the film credit
such EOAC to the extent of an additional 2% of the cost of the qualify- do not qualify for the refundable film credit. If an election to refund the
ing property. Corporations taking these credits are not allowed to take film credit for a production is made, the entire film credit remaining after
the ITC under M.G.L. Ch. 63, sec. 31A or the Low-Income Housing reducing the current year tax liability will be refunded at 90%. The pro-
Credit under M.G.L. Ch. 63, sec. 31H for the same qualifying property. duction company is not allowed to partially refund and partially trans-
If a life sciences ITC exceeds the tax otherwise due as applicable, fer or carryover over any portion of the credit to the next tax year.
90% of the balance of such credit may, at the option of the taxpayer Line 37: Refundable Dairy Credit.A taxpayer who holds a certificate
and to the extent authorized pursuant to the Life Sciences Tax Incen- of registration as a dairy farmer pursuant to M.G.L. Ch. 94, sec. 16A
tive Program, be refundable to the taxpayer for the tax year in which is allowed a refundable tax credit based on the amount of milk pro-
the qualified property giving rise to such credit is placed in service. If duced and sold. The dairy farmer tax credit as originally enacted was
such refund is elected by the taxpayer, then the carryover provisions 90% refundable. Under recent legislation, the dairy farmer tax credit
for this credit that would otherwise apply shall not be available. For fur- is now 100% refundable.
ther information, see TIR 08-23.
Line 38: Refundable Life Science Credit. There are two different
Line 26: Life Science Company FDA User Fees Credit.For taxable credits which the Massachusetts Life Sciences Center, with the ap-
years beginning on or after January 1, 2009, a new credit may be proval of the Secretary of Administration and Finance, may authorize
available to taxpayers for user fees paid on or after June 16, 2008 to a taxpayer to have refunded in lieu of carrying forward such credit to
the U.S. Food and Drug Administration (USFDA) upon submission of a future year.
an application to manufacture a human drug in the Commonwealth. A taxpayer may apply for a refund of 90% of the unused Investment
This credit, which is available to certified life sciences companies only Tax Credit granted under M.G.L. Ch. 63, sec. 38U or the additional
to the extent authorized pursuant to the Life Sciences Tax Incentive credit on the same property that may be granted under M.G.L. Ch.
Program, is equal to 100% of the user fees actually paid by the tax- 63, sec. 38N if property for which the 38U credit is granted is used in
payer, as specified in the certification, and may be claimed in the tax- a certified project.
able year in which the application for licensure of an establishment to
A taxpayer may apply for a refund of 90% of the unused FDA User
manufacture the drug is approved by the USFDA.
Fee Credit granted under M.G.L. Ch. 63, sec. 38M, including credits
To be eligible for the credit, more than 50% of the research and de- carried over from prior years. Schedule RLC, Refundable Life Science
velopment costs for the drug must have been incurred in Massachu- Credit, is used by taxpayers to claim the refund.
setts. Taxpayers may use the FDA user fees credit to reduce their tax Lines 40 through 42: Overpayments and refunds.If line 39 is larger
to zero. To the extent authorized pursuant to the Life Sciences Tax In- than line 31, enter the amount overpaid in line 40.
centive Program, 90% of the balance of credit remaining is refund-
able. The deduction otherwise allowable for user fees qualifying for The overpayment may be applied in part or in full to 2010 estimated
the credit is disallowed. For further information, see TIR 08-23. taxes by entering in line 41 the amount to be credited to 2010 esti-
mated tax payments. Enter in line 42 the amount to be refunded.
Line 27: Life Sciences Company Research Credit.For taxable years
beginning on or after January 1, 2009, a new credit may be available An overpayment of tax cannot be applied as a credit to the tax of an-
for certified life sciences companies pursuant to the Life Sciences Tax other account of this company or to the tax of another company.
Incentive Program, to provide qualifying companies with a means to

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Line 43: Balance due.If line 31 is larger than line 39, enter the bal- Signature
ance due in line 43. Payment in full is due on or before March 15, 2010. When the form is complete, it must be signed by the treasurer or as-
Lines 44 and 45: Penalties and interest. Any company that has sistant treasurer. If you are signing as an authorized delegate of the
an underpayment of estimated tax will incur a penalty on the under- appropriate corporate officer, check the box in the signature section
payment for the period of the underpayment. Enclose a copy of Form and attach a Massachusetts Form M-2848, Power of Attorney. Mail
M-2220. For more information, refer to the section, “When Are Esti- forms to: Massachusetts Department of Revenue, PO Box 7052,
mated Tax Payments Required?” Boston, MA 02204.
Any company that fails to file a timely return will be subject to a late fil-
ing penalty of 1% per month, (or fraction thereof), and a late payment
penalty of 1% per month, (or fraction thereof), on the amount required
to be shown as the tax due on the return. For more information, refer
to the section, “What Are the Penalties for Late Returns?”
Any company which fails to pay its tax when due will be subject to in-
terest on the unpaid balance.
Line 46: Payment due. Enter the total payment due. Checks for this
amount should be made payable to the Commonwealth of Mass-
achusetts. Checks should have the company’s Federal Identification
number written in the lower left corner.

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