HOUSE BILL NO. 724

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Bill Status



H0724...............................................by REVENUE AND TAXATION
INSURANCE - PREMIUM TAX - Amends and repeals existing law to revise the
rate of the premium tax; and to revise the percentage of assets required
for reduced premium taxes.
                                                                        
02/18    House intro - 1st rdg - to printing
02/19    Rpt prt - to Rev/Tax
02/24    Rpt out - rec d/p - to 2nd rdg
02/25    2nd rdg - to 3rd rdg
03/01    3rd rdg - PASSED - 63-4-3
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Bedke, Bell,
      Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
      Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth,
      Eskridge, Field(18), Field(23), Gagner, Garrett, Harwood, Henbest,
      Jaquet, Jones, Kellogg, Lake, Langhorst, Martinez, McGeachin,
      McKague, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen,
      Pasley-Stuart, Raybould, Ridinger, Ringo, Roberts, Rydalch, Sayler,
      Schaefer, Shepherd, Skippen, Smith(30), Smith(24), Smylie, Snodgrass,
      Stevenson, Trail(Bennett), Wood, Mr. Speaker
      NAYS -- Kulczyk, Langford, Robison, Sali
      Absent and excused -- Ring, Shirley, Wills
    Floor Sponsor - Deal
    Title apvd - to Senate
03/02    Senate intro - 1st rdg - to Loc Gov
03/09    Rpt out - rec d/p - to 2nd rdg
03/10    2nd rdg - to 3rd rdg
03/17    3rd rdg - PASSED - 32-1-2
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
      Calabretta, Compton, Davis, Gannon, Geddes, Hill, Ingram, Kennedy,
      Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams, Noble,
      Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett,
      Sweet, Werk, Williams
      NAYS -- Goedde
      Absent and excused -- Cameron, Darrington
    Floor Sponsor - Stegner
    Title apvd - to House
03/18    To enrol - Rpt enrol - Sp signed
03/19    Pres signed - To Governor
03/31    Governor signed
         Session Law Chapter 356
         Effective: 07/01/04 Sections 1 and 2;
         01/01/10 Section 3

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 724
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO PREMIUM TAXES; AMENDING SECTION 41-402, IDAHO CODE, TO REVISE  THE
  3        RATE  OF  PREMIUM  TAX; AMENDING SECTION 41-403, IDAHO CODE, TO REVISE THE
  4        PERCENTAGE OF ASSETS REQUIRED FOR REDUCED PREMIUM  TAXES  AND  TO  PROVIDE
  5        CODE REFERENCES; REPEALING SECTION 41-403, IDAHO CODE, RELATING TO REDUCED
  6        TAXES BASED ON IDAHO INVESTMENTS; AND PROVIDING EFFECTIVE DATES.
                                                                        
  7    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  8        SECTION  1.  That  Section  41-402, Idaho Code, be, and the same is hereby
  9    amended to read as follows:
                                                                        
 10        41-402.  PREMIUM TAX. (1)  Each  authorized  insurer,  and  each  formerly
 11    authorized  insurer  with  respect to insurance transacted while an authorized
 12    insurer, shall file with the director on or before the dates in each year  set
 13    forth  in  subsections  (3)  and (4) of this section, a statement (on forms as
 14    prescribed and furnished by the director) under oath for the period set  forth
 15    in  subsections (3) and (4) of this section, and pay the director a tax at the
 16    rate set forth in subsection (2) of this section, on the following amounts:
 17        (a)  As to life insurers, the amount of all gross premiums received by the
 18        insurer on direct risks resident in this state, and also,  if  a  domestic
 19        insurer,  on  direct risks resident in any other jurisdiction or jurisdic-
 20        tions in which the insurer is not licensed and upon which no  premium  tax
 21        is  otherwise paid or payable, less returned coupons and dividends paid to
 22        or credited to policyholders.
 23        (b)  As to all insurers other than life  insurers,  the  amount  of  gross
 24        direct  premiums  written on policies covering subjects of insurance resi-
 25        dent, located or performed in this state, and also, if a domestic insurer,
 26        on such premiums in any other jurisdiction or jurisdictions in  which  the
 27        insurer is not licensed and upon which no premium tax is otherwise paid or
 28        payable,  less returned premiums, premiums on policies not taken and divi-
 29        dends paid or credited to policyholders. As to title insurance "gross pre-
 30        mium" means the insurance risk portion of the  amount  charged  for  title
 31        insurance.
 32        (2)  Subject  to  section  41-403,  Idaho  Code,  as  that section applies
 33    through calendar year 2009, the rate of tax shall be as follows:
 34        (a)  As to title insurance, the rate of tax shall be one  and  five-tenths
 35        percent (1.5%).
 36        (b)  As to all other kinds of insurance, the rate of tax shall be:
 37             (i)   For  calendar  year  2004 and before, two and seventy-five hun-
 38             dredths percent (2.75%);
 39             (ii)  For calendar year 2005, two and five-tenths percent (2.5%);
 40             (iii) For calendar year 2006, two and three-tenths percent (2.3%);
 41             (iv)  For calendar year 2007, two and one-tenth percent (2.1%);
 42             (v)   For calendar year 2008, one and nine-tenths percent (1.9%);
 43             (vi)  For calendar year 2009, one and  seven-tenths  percent  (1.7%);
                                                                        
                                           2
                                                                        
  1             and
  2             (vii) For calendar year 2010 and thereafter, one and five-tenths per-
  3             cent (1.5%).
  4        (3)  (a) Every insurer with a tax obligation under this section shall make
  5        prepayment  of  the  tax obligations for the current calendar year's busi-
  6        ness, if the sum of the tax obligations for the preceding calendar  year's
  7        business is four hundred dollars ($400) or more.
  8        (b)  The  director shall credit the prepayments toward the appropriate tax
  9        obligations of the insurer for the current calendar year.
 10        (c)  The minimum amounts of the prepayments shall be  percentages  of  the
 11        insurer's  tax  obligation based on the preceding calendar year's business
 12        and the current year's rate, and shall be paid to the director's office by
 13        the due dates and in the following amounts:
 14             (i)   On or before June 15, sixty percent (60%);
 15             (ii)  On or before September 15, twenty percent (20%); and
 16             (iii) On or before December 15, fifteen percent (15%).
 17        (4)  On or before March 1, any balance of tax due for the preceding calen-
 18    dar year shall be paid to the director.
 19        (5)  The effect of transferring policies of insurance from one insurer  to
 20    another  insurer  is to transfer the tax prepayment obligation with respect to
 21    the policies.
 22        (6)  This section shall not apply  as  to  any  reciprocal  insurer  doing
 23    exclusively a worker's compensation business and complying with the provisions
 24    of  the worker's compensation law of this state and writing worker's compensa-
 25    tion only for members under that law, if its representatives or agents or  the
 26    attorney  in fact executing such contracts are not compensated on a commission
 27    basis.
 28        (7)  This section shall not apply as to  life  insurance  policies  issued
 29    under  pension plans or profit-sharing plans exempt or qualified under section
 30    401(a), 403, 404, 408 or 501(a) of the United States Internal Revenue Code, as
 31    hereafter amended or renumbered from time to time, nor to annuity contracts in
 32    general.
 33        (8)  This section shall not apply to any reciprocal insurer  which  exclu-
 34    sively  insures  members  who are governmental entities, as defined by section
 35    6-902(1), (2) and (3), Idaho Code.
 36        (9)  The amount of tax due for the current year shall be paid in  full  in
 37    the  manner  and  at  the times required in this section without any credit or
 38    offset for refunds or other amounts due or claimed to be due by the insurer.
                                                                        
 39        SECTION 2.  That Section 41-403, Idaho Code, be, and the  same  is  hereby
 40    amended to read as follows:
                                                                        
 41        41-403.  REDUCED  TAX  BASED  ON  IDAHO  INVESTMENTS. (1) Provided that it
 42    shall comply with rules and standards duly  promulgated  by  the  director  of
 43    insurance  for  the  purposes of assuring the establishment and maintenance in
 44    this state of services and facilities consistent with the nature and extent of
 45    its operations, any insurer, other than a life insurance  company,  having  at
 46    all times throughout the year with respect to which the tax is payable twenty-
 47    five  percent (25%) or more the required percentage of its assets set forth in
 48    subsection (2) of this section invested in the investments  set  forth  below,
 49    shall,  with  respect to premiums on which taxes are to be computed under sec-
 50    tion 41-402, Idaho Code, compute and pay such tax at the rate of one and four-
 51    tenths percent (1.4%) set forth in subsection (3) of this section  instead  of
 52    at any higher rate provided for under section 41-402, Idaho Code; and provided
 53    further,  any  life  insurance  company, in order to qualify for a tax rate of
                                                                        
                                           3
                                                                        
  1    one and four-tenths percent (1.4%) set forth in subsection (3) of this section
  2    instead of any higher rate provided for  under  section  41-402,  Idaho  Code,
  3    shall  maintain  throughout  the  year with respect to which tax is payable at
  4    least twenty-five  percent  (25%)  the  required  percentage  of  the  reserve
  5    required  under section 41-706(4), Idaho  Code, set forth in subsection (2) of
  6    this section invested in the designated investments set forth below:
  7        (1a)  Bonds or warrants of this state, or of any county, city or  incorpo-
  8        rated  town  or district within this state authorized by law to be issued;
  9        or
 10        (2b)  Taxable real estate within this state; or
 11        (3c)  First mortgages upon improved,  unencumbered  real  estate  situated
 12        within this state; or
 13        (4d)  Stocks  or  bonds  of  corporations  organized under the laws of, or
 14        maintaining their home office and principal administrative records in this
 15        state if such stocks or bonds are lawful investments of the insurer  under
 16        chapter 7 (investments) of this code; or
 17        (5e)  Bonds  authorized  by  law to be issued against the revenues derived
 18        from the operation in this state of domestic water and sewage  systems  or
 19        off-street parking facilities; or
 20        (6f)  Time  deposits,  or  other deposits for interest income purposes, in
 21        any Idaho branch of any bank, or trust company, or savings and loan  asso-
 22        ciation, or any other legally organized and approved financial institution
 23        with  one (1) or more branches in this state and insured by any instrumen-
 24        tality of the United States government.
 25        (2)  For purposes of subsection (1) of this section, the required percent-
 26    age of assets invested shall be:
 27        (a)  For calendar years 2004 and 2005, twenty-five percent (25%) or more;
 28        (b)  For calendar year 2006, twenty percent (20%) or more;
 29        (c)  For calendar year 2007, fifteen percent (15%) or more;
 30        (d)  For calendar year 2008, ten percent (10%) or more; and
 31        (e)  For calendar year 2009, five percent (5%) or more.
 32        (3)  For purposes of this section, the  rate  of  tax  achievable  through
 33    investments designated in this section shall be:
 34        (a)  For calendar years 2004 and 2005, one and four-tenths percent (1.4%);
 35        (b)  For calendar year 2006, one and forty-two hundredths percent (1.42%);
 36        (c)  For  calendar  year  2007,  one  and  forty-four  hundredths  percent
 37        (1.44%);
 38        (d)  For calendar year 2008, one and forty-six hundredths percent (1.46%);
 39        and
 40        (e)  For  calendar  year  2009,  one  and  forty-eight  hundredths percent
 41        (1.48%).
                                                                        
 42        SECTION 3.  That Section 41-403, Idaho Code, be, and the  same  is  hereby
 43    repealed.
                                                                        
 44        SECTION 4.  Sections 1 and 2 of this act shall be in full force and effect
 45    on  and  after  July 1, 2004. Section 3 of this act shall be in full force and
 46    effect on and after January 1, 2010.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                            RS 14114C1

This bill simplifies the method used to compute payment of premium
taxes by insurance carriers doing business in the state of Idaho. The
current statutes impose different premium tax rates to insurance
carriers doing business in the state of Idaho, either at a rate of
1.4% or 2.75%. This bill modifies the present structure by adjusting
the premium tax, over a six year time frame, to a single premium tax
rate of 1.5%. A single premium tax rate of 1.5% will make Idaho more
competitive in its efforts to attract insurance carriers to locate in
Idaho as its "home" or "domiciliary" state. The change to a single
premium tax rate for all insurance carriers will also eliminate legal
and financial exposure to the State created by the dual rate system.

                          FISCAL IMPACT


The projections by the Idaho Department of Insurance assume an
estimated growth rate of 5.0 percent and the graduated adjustment of
all premium tax rates to 1.50 percent over six years. The fiscal
impact to the state general fund is estimated to be positive over the
six-year implementation period.

The projected net difference to the General Fund revenue:
  FY2005     FY2006     FY2007     FY2008     FY2009     FY2010
$1,008,190  $868,556   $729,204   $725,254   $969,273  $1,659,210


Contact
Name: Senator Joe Stegner 
Phone: (208) 332-1307 
Representative Bill Deal
Phone: (208) 332-1265 
Representative Gary Collins
Phone: (208) 332-1268


STATEMENT OF PURPOSE/FISCAL NOTE                            H 724