HOUSE BILL No. 2065
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 40-252d is hereby amended to read as follows: 40-
252d. (a) For tax year 1998, each company required to pay a tax on pre-
miums under subsections A, C, D or F of K.S.A. 40-252 and amendments
thereto shall be allowed as a credit against such tax 25% of the salaries
paid to Kansas employees, and for tax years 1999 2001 and thereafter,
each company required to pay a tax on premiums under subsections A,
C, D or F of K.S.A. 40-252 and amendments thereto shall be allowed as
a credit against such tax 30% 15% of the salaries paid to Kansas employ-
ees. Before taking into account any other credit or offset against the tax
on premiums imposed under K.S.A. 40-252 and amendments thereto, the
credit allowed under this section may not reduce such tax by more than
1% of premiums taxable thereunder for tax year 1998 or by more than
1.25% 1.125% of premiums taxable thereunder for tax years 1999 2001
and thereafter, or 1% of premiums taxable thereunder for tax years 2001
and thereafter if such credit is calculated in accordance with the provi-
sions of subsection (c).
(b) As used in this section, unless the context otherwise requires:
(1) ``Affiliate'' means an insurance company which, directly or indi-
rectly, through one or more intermediaries, controls, is controlled by or
is under common control with another insurance company. ``Affiliate'' also
includes any company or business entity other than an insurance company
which, directly or indirectly, through one or more intermediaries, con-
trols, is controlled by or is under common control with an insurance com-
pany and which performs insurance company operations for an insurance
company. For purposes of this definition, control exists if any company
or business entity, directly or indirectly, owns, holds with the power to
vote or holds proxies representing all the voting stock or other voting
securities of any other company or business entity.
(2) ``Insurance company'' or ``company'' means any entity subject to
a tax on premiums under subsections A, C, D or F of K.S.A. 40-252 and
amendments thereto, including the attorney-in-fact authorized by and
acting for the subscribers of a reciprocal insurer or inter-insurance
exchange under powers of attorney. For the purpose of this section, a
reciprocal and its attorney-in-fact will be considered a single entity.
(3) ``Insurance company operations'' means one or more or any com-
bination of the following functions or services performed in connection
with the development, sale and administration of products giving rise to
receipts subject to a tax on premiums under subsection A, C, D or F of
K.S.A. 40-252 and amendments thereto: Actuarial, medical, legal, invest-
ments, accounting, auditing, underwriting, policy issuance, information,
policyholder services, premium collection, claims, advertising and
publications, public relations, human resources, marketing, sales office
staff, training of sales and service personnel, and clerical, managerial and
other support for any such functions or services.
(4) ``Kansas employees'' means persons who are employed in Kansas
and who are common law employees of an insurance company or its
affiliate. ``Kansas employees'' does not include independent contractors
or any person to the extent such person's compensation is based on com-
(5) ``Salaries'' means gross compensation paid to Kansas employees
as reported to the State of Kansas for income tax purposes for the calendar
year for which a tax on premiums is imposed under K.S.A. 40-252 and
amendments thereto, but only to the extent compensation is paid for
insurance company operations performed in Kansas for an insurance
company or its insurance company affiliates subject to the tax on premi-
ums under subsection A, C, D or F of K.S.A. 40-252 and amendments
thereto. ``Salaries'' does not include compensation based on commissions.
(c) For an insurance company having affiliates:
(1) Salaries paid by a noninsurance company affiliate shall be allo-
cated among insurance company affiliates pursuant to the agreement be-
tween or among the insurance company and its affiliates.
(2) The gross amount of all premiums of an insurance company sub-
ject to tax under subsection A, C, D or F of K.S.A. 40-252 and amend-
ments thereto and those of its insurance company affiliates subject to
such tax may be aggregated. In addition, all salaries paid to Kansas em-
ployees may be aggregated. Subject to the limitation on the salary credit
set forth in subsection (a) of this section, the total allowable salary credit
may be determined as if all the aggregated premiums were received and
all the aggregated salaries were paid by one insurance company. Once
the total allowable salary credit is determined for all insurance company
affiliates, the total credit may be allocated among the insurance company
and its insurance company affiliates at the discretion of the insurance
company on a per insurance company basis, subject to the limitation on
the salary credit as set forth in subsection (a) of this section.
(d) The computation of salaries, the allowable salary credit and the
allocation of the credit among insurance company affiliates shall be made
on forms supplied by the commissioner of insurance.
(e) For purposes of calculating any tax due under K.S.A. 40-253 and
amendments thereto from a taxpayer not organized under the laws of this
state, the credit allowed by this section shall be treated as a tax paid under
K.S.A. 40-252 and amendments thereto.
Sec. 2. K.S.A. 40-252d is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
Approved May 22, 2000.
Date Composed: 09/25/2001 Date Modified: 09/25/2001