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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
]]]] 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
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