Comptroller of the Treasury v. Leadville Ins. Co., No. 2184, 2019 Md. App. LEXIS 264 (Md. App. Mar. 26, 2019).

This case is for all you insurance tax buffs. A captive insurer claimed that it qualified for exemption for certain corporate taxes because it engaged in reinsurance transactions even though it did not have a certificate of authority as an insurance company in Maryland. The appeals court reversed a Tax Court determination that ruled the initial tax assessment was in error.

In reversing, the appeals court held that just because the captive is authorized to engage in reinsurance transactions and did not need to possess a certificate of authority to do so was irrelevant to the court’s determination that the captive was an unauthorized insurer and, therefore, was subject to the tax assessment. In other words, the exemption did not apply to an unauthorized insurer and acting as a reinsurer did not save the situation.