KY| Kentucky Department of Insurance Bulletin 2026-02 provides updated Local Government Premium Tax (LGPT) guidance for insurance companies and surplus lines brokers, outlining procedural changes, tax rate updates, and compliance requirements for the July 1, 2026, through June 30, 2027 tax period. The bulletin emphasizes that insurance companies and surplus lines brokers must adopt procedures to conform to the new LGPT schedule by July 1, 2026, and properly identify risk locations using physical addresses rather than ZIP codes, with those writing more than 2,000 policies annually required to use a Verified Risk Location system. Key exemptions include individual health insurance, workers’ compensation, annuities, federal flood insurance, and policies insuring state agencies or school districts, among others. The bulletin mandates electronic annual reconciliation filing through the eService Portal by March 31 each year with a $5 filing fee, while quarterly returns (Form LGT-141) must be submitted to local governments within 30 days after each quarter. Local governments that adopted or amended LGPT rates since Bulletin 2025-01 are marked with asterisks on the tax schedule, and Tax Code changes are noted in the accompanying Tax Code Descriptions document.
Key Points:
- Surplus lines brokers are subject to LGPT payment under KRS 304.10-180(3) and must submit separate quarterly returns (Form LGT-141) to applicable local governments listing the insurance companies providing coverage, though they are not required to file separate forms for each carrier; annual reconciliation reports must be filed with both the Department and local governments, including a breakdown of premium and LGPT by company and municipality
- Effective dates and compliance: The 2026-2027 LGPT Schedule applies only to premiums collected from July 1, 2026, through June 30, 2027, and companies must use LGPT rates effective on the first day of the policy term, with changes during the policy period assessed at the rate in effect on the policy change date
- Risk location requirements: ZIP codes cannot be used to determine LGPT liability; insurers must identify the specific county/city and physical address of the actual risk location, not the insured’s mailing address, and companies writing over 2,000 Kentucky policies annually must use a Verified Risk Location system to avoid penalties
- Quarterly and annual filing obligations: Quarterly LGPT payments are due within 30 days after each calendar quarter using Form LGT-141 (not filed with the Department but retained for five years), while annual reconciliation must be filed electronically with the Department by March 31 with a $5 fee and paper copies sent to local governments using Form LGT-140
- Collection fees and penalties: Insurance companies may charge policyholders a collection fee of up to 15% of LGPT collected or 2% of taxable premium (whichever is less), and late payments incur 9% annual interest plus potential 10% penalties if not paid within 30 days, though companies using Verified Risk Location systems with due diligence are protected from penalties for system location errors