How to record premium tax collected from client
Accounting for the collection of state-mandated premium taxes or surplus lines taxes from the insured at the point of invoicing.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable - Insured | Asset | 1,050.00 | - |
| Premium Payable to Carrier | Liability | - | 900.00 |
| Commission Income | Revenue | - | 100.00 |
| Premium Tax Payable | Liability | - | 50.00 |
💡 Accountant's Note
When an MGA or broker invoices a client, they must recognize the liability for premium taxes collected on behalf of the state, separate from the premium due to the carrier and their own commission.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure the tax engine in the brokerage management system is mapped to the correct liability GL account.
⚠️ Audit Flags
Discrepancies between state stamping office reports and the Premium Tax Payable ledger balance.
📄 Required Documentation
Invoice copy, state tax rate schedule, and policy declarations page.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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Discussion & Community Questions
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