senate Bill S7561

2011-2012 Legislative Session

Relates to obligations for certain taxes by captive insurance companies

download bill text pdf

Sponsored By

Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

do you support this bill?

Actions

view actions (4)
Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 21, 2012 recommitted to rules
Jun 20, 2012 ordered to third reading cal.1393
committee discharged and committed to rules
Jun 04, 2012 referred to insurance

Votes

view votes

Jun 20, 2012 - Rules committee Vote

S7561
23
0
committee
23
Aye
0
Nay
2
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Rules committee vote details

S7561 - Bill Details

See Assembly Version of this Bill:
A10531
Current Committee:
Senate Rules
Law Section:
Insurance Law
Laws Affected:
Add ยง7013, Ins L

S7561 - Bill Texts

view summary

Relates to obligations for certain taxes by captive insurance companies.

view sponsor memo
BILL NUMBER:S7561

TITLE OF BILL:
An act
to amend the insurance law, in relation to obligations for certain
taxes

PURPOSE OR GENERAL IDEA OF BILL:
The bill provides that certain
captive insurance companies no longer in the business of insurance as
of December 31, 2011 shall be treated as admitted insurance carriers
for the purpose of taxation, as long as they are not considered to be
overcapitalized captive insurance companies as defined in subdivision
11 of section 2 of the tax law.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 adds a new section 7013 to
the insurance law to provide that certain captive insurance companies
created pursuant to the insurance law and no longer in the business
of insurance as of December 31, 2011, shall be treated as admitted
insurance carriers for the purpose of taxation, as long as they are
not considered to be overcapitalized captive insurance companies as
that term is defined in subdivision 11 of section 2 of the tax law.
Section 2 provides for an immediate effective date.

JUSTIFICATION:
Since its enactment in 1997, the captive insurance
article in the insurance law has fostered the development of numerous
captive insurance companies in New York. Some of these carriers were
found to be overcapitalized (more assets within these companies than
were necessary to pay claims). This issue was address in 2009 tax law
amendments by limiting the tax benefits provided to these entities.
Many of the other captive insurance companies licensed in New York
since 1997, however, were not overcapitalized and operated as
legitimate insurance companies accepting risk, establishing
appropriate premiums and paying claims out of the proceeds of these
companies. For a variety of reasons, these companies are now being
considered to either not be legitimate risk transfer vehicles
(notwithstanding the licensing by the former Insurance Department and
the payment of premium taxes and section 332 assessments to support
the operation of the department) or otherwise not to be entitled to
the same tax treatment of other admitted insurance carriers. This new
section would clarify that these captives (which are now no longer in
operation in the state) would not be subject to new and different
interpretations of the tax and insurance
laws as well as retroactive taxation by the state.

PRIOR LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
The objective of this legislation is that such
tax liabilities were not due and owing by the affected captive
insurance companies, assuming they are not overcapitalized captives
and therefore subject to the aforementioned provision of tax law, with
no revenue to the state expected.


Therefore, there is no negative fiscal impact to the state. The
application of the legislation to discontinued captives assures that
this is a closed group and no captive still operating will be covered
by this legislation.

EFFECTIVE DATE:
Immediately.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 7561                                                 A. 10531

                      S E N A T E - A S S E M B L Y

                              June 4, 2012
                               ___________

IN  SENATE  --  Introduced  by  Sen.  McDONALD -- read twice and ordered
  printed, and when printed to be committed to the Committee  on  Insur-
  ance

IN  ASSEMBLY -- Introduced by COMMITTEE ON RULES -- (at request of M. of
  A. Canestrari) -- read once and referred to the Committee on Insurance

AN ACT to amend the  insurance  law,  in  relation  to  obligations  for
  certain taxes

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The insurance law is amended by adding a new  section  7013
to read as follows:
  S  7013.  OBLIGATIONS  FOR CERTAIN TAXES. CAPTIVE INSURANCE COMPANIES,
NOT INCLUDING OVERCAPITALIZED CAPTIVE INSURANCE COMPANIES AS DEFINED  IN
SUBDIVISION  ELEVEN  OF SECTION TWO OF THE TAX LAW, LICENSED PURSUANT TO
THE PROVISIONS OF THIS ARTICLE AND OPERATING UNDER THIS ARTICLE  OR  THE
APPLICABLE  PROVISIONS OF THIS CHAPTER ON OR AFTER THE EFFECTIVE DATE OF
THIS ARTICLE AND CEASING TO OPERATE UNDER SUCH LICENSE  AS  OF  DECEMBER
THIRTY-FIRST,  TWO  THOUSAND  ELEVEN SHALL BE CONSIDERED AND TREATED FOR
TAX PURPOSES AS AN ADMITTED LICENSED INSURER AND ALL  PREMIUMS  PAID  TO
SUCH  CAPTIVE  INSURANCE COMPANIES SHALL BE DEDUCTIBLE IN FULL BY AFFIL-
IATED ENTITIES SUBJECT TO TAX UNDER ARTICLE NINE-A OF THE TAX LAW.   THE
SUPERINTENDENT SHALL CERTIFY TO THE COMMISSIONER OF TAXATION AND FINANCE
THAT  EACH  CAPTIVE  INSURER  WHICH  HAS  BEEN SO LICENSED AND UNDER THE
JURISDICTION OF THE DEPARTMENT OF FINANCIAL SERVICES WAS OPERATING AS  A
DULY  LICENSED  INSURER  DURING  THIS  PERIOD, INCLUDING HAVING PAID ALL
ASSESSMENTS AND EXAMINATION FEES, AND ALL PREMIUM AND FRANCHISE TAXES.
  S 2. This act shall take effect immediately.



 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16083-02-2

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.