Senate Bill S141A

                                 BILL NUMBER:  S141A

 TITLE OF BILL :  An act to amend the tax law, in relation to
providing an additional franchise tax on certain life insurance
policies

 PURPOSE :

Provides for an additional 50% tax on certain life insurance policies.

 SUMMARY OF PROVISIONS :

Section 1 Amends the Tax Law by adding a new Section 182-b. Imposes a
fifty-percent (50%) tax on every company that has a corporate
franchise, or does business, or has employees or owns or leases
property, or maintains an office in this state and that receives
benefits from life insurance policies obtained on its employees and/or
retirees. Requires records to be kept in a form as the Commissioner of
Taxation and Finance may require. Provides that the Commissioner of
Taxation and Finance may consent to the destruction of such records
within three years or require that such records be kept longer than
three years.

Section 2. Effective Date

 EXISTING LAW :
              

None.

 JUSTIFICATION :

While the worst of the Great Recession seems to be over, New York
State continues to face budget deficits. Spending cuts to many worthy
programs in the State Office for the Aging, the Department of Health,
SUNY and CUNY are likely. Unfortunately, little has been done to find
sources of revenue to mitigate New York State's serious financial
circumstances.

Despite this bleak economic picture, corporations are reaping huge
financial benefits from life insurance policies they take out on their
employees and or retirees. Corporate owned life insurance, better
known as "dead peasants" or "janitors" insurance, is a life insurance
policy that is taken out on low-level employees, often without the
knowledge or consent of the employee, and whose families are not named
as beneficiaries when the employee or retiree dies.  When the employee
or retiree dies, these tax free benefits are collected by the
employer. Furthermore, companies frequently use these policies to pay
for retirement benefits and other perks for their top executives.
Companies that supposedly engage in the practice of purchasing these
policies include Wal-Mart, Dow Chemical, Proctor & Gamble and Walt
Disney.

One tragic example of this practice is that of a 48 year old assistant
manager at Wal-Mart who died of a massive heart attack. The man's
widow became the lead plaintiff in a class action suit after she
learned that Wal-Mart collected $300,000 from a life insurance policy
it owned on him.

This bill would impose a 50% tax on all benefits received by companies
in New York State who take out life insurance policies on their
employees or retirees.

 LEGISLATIVE HISTORY :

2014: S.388A - Amend and Recommit to Investigations and Government
Operations/A.3896A - Held for consideration in Ways and Means
2013: S.388 - Referred to Investigations and Government Operations/A.
3896 - Referred to Ways and Means
2012: S.262-A - Amend and recommit to Investigations and Government
Operations/A.1111-A Amend and recommit to Ways and Means
2011: S.262 - Defeated in Investigations and Government
Operations/A.1111 - Referred to Ways and Means
2010: S.6236A - Amend and Recommit to Investigations and Government
Operations/A.9439Amend and Recommit to Ways and Means
2009: S.6236 - Referred to Rules

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2018.