Session Law

Identifying Information:L. 2001 ch. 205
Other Identifying Information:2001 House Bill 2065
Tax Type:Other
Brief Description:An Act relating to the taxation of insurance companies; amending K.S.A. 40-252d and repealing the existing section.
Keywords:


Body:

CHAPTER 205

HOUSE BILL No. 2065


An Act relating to the taxation of insurance companies; amending K.S.A. 40-252d and repealing the existing section.

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-

missions.

(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.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001