USAA Insurance Co. won't be getting the $120 million tax refund it was seeking from the state of Texas since a judge ruled that the company was required to pay sales, motor vehicle, and fuel taxes in addition to gross premium taxes.
USAA had filed for a refund of a portion of the taxes it paid, claiming state law exempted insurance companies from paying taxes other than taxes on premiums. The company sought the return of $120 million plus interest for taxes it thought it had paid unnecessarily since 1994.
USAA says if it appeals and gets the refund, it will use the money to hold down any future increases in premiums.
District Court Judge Margaret Cooper ruled that the company was not exempt from the additional taxes. Texas Comptroller Carole Keetin Rylander says she's relieved that the state won the case because had USAA prevailed, it would have set a precedent for other insurers and could have cost the state as much as $2 billion.
USAA says it is considering filing an appeal, but whether it does nor not, policyholder rates will not be affected because the company has already factored taxes into premium costs.
"If we decide to appeal and prevail, any refund we ultimately receive in this case will be used to hold the line on the cost of insurance and other financial services for the military families who depend on us," says USAA Vice President Cyndi Taylor Krier.
USAA provides insurance products and financial services to American military members and their families around the world.