Ch. 175 1997 Session Laws of Kansas 1267
An Act concerning insurance; insurance department service
regulation fund; disposition of
fees and certain taxes; assessments for maintenance and expenses of
department; ex-
emptions; penalties and interest; transfers from state general
fund, temporary insuffi-
ciencies; schedule of fees and taxes for insurance companies and
fraternal benefit soci-
eties; credit; deductions; returns; time for payment; repealing
privilege tax; amending
K.S.A. 40-112, 40-252, 40-252b, 40-252c, 40-253 and 40-2801 and
K.S.A. 1996 Supp.
40-246 and repealing the existing sections.
Be it enacted by the Legislature of the State of
Kansas:
Section 1. K.S.A. 40-112 is hereby amended to read as follows:
40-
112. (a) For the purpose of maintaining the insurance department
and
the payment of expenses incident thereto, there is hereby
established the
insurance department service regulation fund in the state treasury
which
1268 1997 Session Laws of Kansas Ch. 175
shall be administered by the commissioner of insurance. All
expenditures
from the insurance department service regulation fund shall be made
in
accordance with appropriation acts upon warrants of the director of
ac-
counts and reports issued pursuant to vouchers approved by the
com-
missioner of insurance or by a person or persons designated by the
com-
missioner.
(b) On and after the effective date of this act, all fees
received by the
commissioner of insurance pursuant to any statute and the portion
of taxes
received pursuant to K.S.A. 40-252 and amendments thereto, which
is
certified by the commissioner of insurance to be necessary for the
pur-
poses of the insurance department service regulation fund and
which,
together with the total amount of fees deposited to the credit of
the
insurance department service regulation fund pursuant to this
subsection,
does not total more than $4,800,000 for any fiscal year, shall be
remitted
to the state treasurer for deposit in the state treasury and
credited to the
insurance department service regulation fund. The total amount
credited
to the insurance department service regulation fund pursuant to
this sub-
section for any fiscal year shall not exceed $4,800,000.
(c) Except as otherwise provided by this section, the
commissioner
of insurance shall make an annual assessment for the fiscal year
ending
June 30, 1993, and for each fiscal year thereafter, on each group
of affil-
iated insurers whose certificates of authority to do business in
this state
are in good standing at the time of the assessment. The total
amount of
all such assessments for a fiscal year shall be equal to the amount
sufficient
which, when combined with the total amount to be credited to the
in-
surance department service regulation fund pursuant to subsection
(b) is
equal to the amount approved by the legislature to fund the
insurance
company regulation program. With respect to each group of
affiliated
insurers, such assessment shall be in proportion to the amount of
total
assets of the group of affiliated insurers as reported to the
commissioner
of insurance pursuant to K.S.A. 40-225 and amendments thereto for
the
immediately preceding calendar year, shall not be less than $500
and shall
not be more than the amount equal to .0000015 of the amount of
total
assets of the group of affiliated insurers or $25,000, whichever is
less. The
total assessment for any fiscal year after the fiscal year ending
June 30,
1993, shall not increase by any amount greater than 15% of the
total
budget approved by the legislature to fund the insurance company
reg-
ulation program for the fiscal year immediately preceding the
fiscal year
for which the assessment is made. In the event the total amount of
the
assessment would be less than the aggregate amount resulting by
assess-
ing the $500 minimum on each insurer, the commissioner may
establish
a lower minimum to be assessed equally on each insurer.
(d) If, by the laws of any state other than Kansas or by the
retaliatory
laws of any state other than Kansas, any insurer domiciled in
Kansas shall
be required to pay any fee or tax in such other state of licensure,
and the
Ch. 175 1997 Session Laws of Kansas 1269
fee or tax is due and payable either because the insurance
department
service regulation fee imposed by this section on insurers licensed
in Kan-
sas and organized or domiciled in such other state is greater than
the
comparable fee or tax assessed in such other state, or such other
state has
no comparable fee or tax but requires payment on a retaliatory
basis, then
to the extent such fee or tax amounts are legally due and are paid
in such
other state, any insurer domiciled in Kansas may claim a
dollar-for-dollar
credit for such fees paid against its annual premium taxes due the
state
of Kansas under K.S.A. 40-252 and amendments thereto, but such
credit
shall only be calculated on the amount which would not have been
re-
quired to be paid in such other state of licensure in the absence
of the
existence of the insurance department service regulation fee
imposed by
this section, and in no event shall the credit permitted by this
section
exceed 90% of the insurer's annual premium tax due the state of
Kansas.
The insurance commissioner shall prescribe the forms for reporting
such
credits.
(d) (e) Assessments payable under this
section shall be past due if not
paid to the insurance department within 45 days of the billing date
of
such assessment. A penalty equal to 10% of the amount assessed
shall be
imposed upon any past due payment and the total amount of the
assess-
ment and penalty shall bear interest at the rate of 1.5% per month
or any
portion thereof.
(e) (f) On or after July 1, 1992, when
there exists in the insurance
department service regulation fund a deficiency which would render
such
fund temporarily insufficient during any fiscal year to meet the
insurance
department's funding requirements, the commissioner of insurance
shall
certify the amount of the insufficiency. Upon receipt of any such
certi-
fication, the director of accounts and reports shall transfer an
amount of
moneys equal to the amount so certified from the state general fund
to
the insurance department service regulation fund. On June 30 of any
fiscal
year during which an amount or amounts are certified and
transferred
under this subsection, the director of accounts and reports shall
provide
for the repayment of the amounts so transferred and shall transfer
the
amount equal to the total of all such amounts transferred during
the fiscal
year from the insurance department service regulation fund to the
state
general fund.
(f) (g) Any unexpended balance in the
insurance department service
regulation fund at the close of a fiscal year shall remain credited
to the
insurance department service regulation fund for use in the
succeeding
fiscal year and shall be used to reduce future assessments or to
accom-
modate cash flow demands on the fund.
(g) (h) The commissioner of insurance
shall exempt the assessment
of any insurer which, as of December 31 of the calendar year
preceding
the assessment, has a surplus of less than two times the minimum
amount
of surplus required for a certificate of authority on and after May
1, 1994,
1270 1997 Session Laws of Kansas Ch. 175
and which is subject to the premium tax liability imposed on
insurers
organized under the laws of this state. The commissioner of
insurance
may also exempt or defer, in whole or in part, the assessment of
any other
insurer if, in the opinion of the commissioner of insurance,
immediate
payment of the total assessment would be detrimental to the
solvency of
the insurer.
(h) (i) As used in this section:
(1) ``Affiliates'' or ``affiliated'' has the meaning ascribed by
K.S.A.
40-3302 and amendments thereto;
(2) ``group'' or ``group of affiliated insurers'' means the
affiliated in-
surers of a group and also includes an individual, unaffiliated
insurer; and
(3) ``insurer'' means any insurance company, as defined by
K.S.A. 40-
201 and amendments thereto, any fraternal benefit society, as
defined by
K.S.A. 40-738 and amendments thereto, any reciprocal or
interinsurance
exchange under K.S.A. 40-1601 through 40-1614 and amendments
thereto, any mutual insurance company organized to provide health
care
provider liability insurance under K.S.A. 40-12a01 through 40-12a09
and
amendments thereto, any mutual nonprofit hospital service
corporation
under K.S.A. 40-1801 through 40-1816 and amendments thereto,
any
nonprofit medical service corporation under K.S.A. 40-1901
through
40-1915 and amendments thereto, any nonprofit dental service
corpora-
tion under K.S.A. 40-19a01 through 40-19a14 and amendments
thereto,
any nonprofit optometric service corporation under K.S.A.
40-19b01
through 40-19b14 and amendments thereto, any nonprofit medical
and
hospital service corporation under K.S.A. 40-19c01 through 40-19c11
and
amendments thereto, any health maintenance organization, as defined
by
K.S.A. 40-3202 and amendments thereto, or any captive insurance
com-
pany, as defined by K.S.A. 40-4301 and amendments thereto, which
is
authorized to do business in Kansas.
Sec. 2. K.S.A. 1996 Supp. 40-246 is hereby amended to read as
fol-
lows: 40-246. The commissioner of insurance is prohibited from
issuing
any license or authority to write policies of insurance, or to
solicit and
obtain such policies, to any person, agent or corporation, unless
such
person, agent or corporation is a legal resident of this state at
the time
such license or authority is issued. Under such regulations and
restrictions
deemed necessary by the commissioner of insurance, licenses may
be
issued to nonresident agents, who are licensed by the state in
which they
reside, upon the payment of an annual fee of $10. Whenever
any other
state imposes on Kansas companies or agents additional or greater
fees,
obligations or prohibitions, the same shall be imposed on similar
com-
panies and agents of such other state. Whenever any person, agent
or
corporation so authorized to issue policies of insurance and
solicit and
transact insurance business shall remove from this state the
authority
Ch. 175 1997 Session Laws of Kansas 1271
issued to such person, agent or corporation shall be revoked,
and the
same shall be null and void $25.
Sec. 3. K.S.A. 40-252 is hereby amended to read as follows:
40-252.
Every insurance company or fraternal benefit society organized
under the
laws of this state or doing business in this state shall pay to the
commis-
sioner of insurance fees and taxes specified in the following
schedule:
1272 1997 Session Laws of Kansas Ch. 175
the 1% tax imposed by this section for taxes
paid by all such companies
on business in this state under K.S.A. 40-1701 to 40-1707,
inclusive, and
amendments thereto for tax year 1983, by (B) the total amount of
taxes
paid by all such companies on business in this state under K.S.A.
40-1703
and amendments thereto for the tax year immediately preceding the
cur-
rent tax year, and by multiplying the result so obtained by (C) the
amount
of taxes paid by the company on business in this state under K.S.A.
40-
1703 and amendments thereto for the current tax year.
Funds accepted by a life insurer under an agreement
which provides
for an accumulation of funds to purchase taxable annuities at later
dates
shall be taxable premiums either when received or when actually
applied
to the purchase of annuities, at the option of the insurer. If the
funds are
declared upon receipt, any interest or other gain that accrues
thereon
shall not be taxable as premium income, but if the funds are
declared
when applied to the purchase of annuities, the premium tax shall be
paid
on the entire amount so applied. Any such funds declared upon
receipt
which are thereafter withdrawn before application to the purchase
of
annuities may be deducted from tax base as ``premiums'' returned
on
account of cancellations.
In the computation of the gross premiums all such companies
shall be
entitled to deduct any premiums returned on account of
cancellations,
including funds accepted before January 1, 1997, and declared
and taxed
as annuity premiums which, on or after January 1, 1997, are
withdrawn
before application to the purchase of annuities, all premiums
received for
reinsurance from any other company authorized to do business in
this
state, dividends returned to policyholders and premiums received in
con-
nection with the funding of a pension, deferred compensation,
annuity
or profit-sharing plan qualified or exempt under sections 401, 403,
404,
408, 457 or 501 of the United States internal revenue code of
1986.
Should any such company remove or maintain, or both, either
their home, Funds
principal or executive office or offices from this state, every
such company
shall be subject to the provisions of subsection D of this
section.
received by life insurers for the purchase of annuity contracts and
funds
applied by life insurers to the purchase of annuities shall not be
deemed
taxable premiums or be subject to tax under this section for tax
years
commencing on or after January 1, 1997.
Ch. 175 1997 Session Laws of Kansas 1273
In addition to the above fees and as a condition precedent to
the con-
tinuation of the certificate of authority, provided in this code,
every cor-
poration or association shall pay annually to the commissioner of
insur-
ance a privilege fee tax in an amount equal
to 1% 2% per annum of the
total of all premiums, subscription charges, or any other term
which may
be used to describe the charges made by such corporation or
association
to subscribers for hospital, medical or other health services or
indemnity
received during the preceding year. In such computations all such
cor-
1274 1997 Session Laws of Kansas Ch. 175
porations or associations shall be entitled to deduct any
premiums or
subscription charges returned on account of cancellations and
dividends
returned to members or subscribers.
In addition to the above fees all such companies shall pay $5
for each
agent certified by the company, except as otherwise provided by
law.
As a condition precedent to the continuation of the certificate
of au-
thority, provided in this code, every company organized under the
laws
of any other state of the United States or of any foreign country
shall pay
a tax upon all premiums received during the preceding year at the
rate
of 2% per annum.
Funds accepted by a life insurer under an agreement
which provides
for an accumulation of funds to purchase taxable annuities at later
dates
shall be taxable premiums either when received or when actually
applied
to the purchase of annuities, at the option of the insurer. If the
funds are
declared upon receipt, any interest or other gain that accrues
thereon
shall not be taxable as premium income, but if the funds are
declared
when applied to the purchase of annuities, the premium tax shall be
paid
on the entire amount so applied. Any such funds declared upon
receipt
which are thereafter withdrawn before application to the purchase
of
annuities may be deducted from tax base as ``premiums'' returned
on
account of cancellations.
In the computation of the gross premiums all such companies
shall be
entitled to deduct any premiums returned on account of
cancellations,
including funds accepted before January 1, 1997, and declared
and taxed
as annuity premiums which, on or after January 1, 1997, are
withdrawn
before application to the purchase of annuities, dividends
returned to
policyholders and all premiums received for reinsurance from any
other
company authorized to do business in this state and premiums
received
in connection with the funding of a pension, deferred compensation,
an-
nuity or profit-sharing plan qualified or exempt under sections
401, 403,
404, 408, 457 or 501 of the United States internal revenue code of
1986.
Funds received by life insurers for the purchase of annuity
contracts and
funds applied by life insurers to the purchase of annuities shall
not be
Ch. 175 1997 Session Laws of Kansas 1275
deemed taxable premiums or be subject to tax under this
section for tax
years commencing on or after January 1, 1997.
2. Mutual
life, accident and health associations:
Admission fees:
Examination of charter and other documents
...............................
$500œúÿY Filing annual statement
...................................................
100œúÿY Certificate of authority
...................................................
10œúÿY Annual fees:
Filing annual statement
...................................................
100œúÿY Continuation of certificate of
authority ...................................
10œúÿY
In addition to the above fees, every such company organized
under the
laws of any other state of the United States shall pay $5 for each
agent
certified by the company, and shall pay a tax annually upon all
premiums
received at the rate of 2% per annum.
Funds accepted by a life insurer under an agreement
which provides
for an accumulation of funds to purchase taxable annuities at later
dates
shall be taxable premiums either when received or when actually
applied
to the purchase of annuities, at the option of the insurer. If the
funds are
declared upon receipt, any interest or other gain that accrues
thereon
shall not be taxable as premium income, but if the funds are
declared
when applied to the purchase of annuities, the premium tax shall be
paid
on the entire amount so applied. Any such funds declared upon
receipt
which are thereafter withdrawn before application to the purchase
of
annuities may be deducted from tax base as ``premiums'' returned
on
account of cancellations.
In the computation of the gross premiums all such companies
shall be
entitled to deduct any premiums returned on account of
cancellations,
including funds accepted before January 1, 1997, and declared
and taxed
as annuity premiums which, on or after January 1, 1997, are
withdrawn
before application to the purchase of annuities, dividends
returned to
policyholders and all premiums received for reinsurance from any
other
company authorized to do business in this state and premiums
received
in connection with the funding of a pension, deferred compensation,
an-
nuity or profit-sharing plan qualified or exempt under sections
401, 403,
404, 408, 457 or 501 of the United States internal revenue code of
1986.
Funds received by life insurers for the purchase of annuity
contracts and
funds applied by life insurers to the purchase of annuities shall
not be
deemed taxable premiums or be subject to tax under this section for
tax
years commencing on or after January 1, 1997.
3. Mutual fire, casualty and multiple line insurers and reciprocal
or interinsurance
exchanges:
Admission fees:
Examination of charter and other documents and issuance of
certificate of authority
..............................................
$500œúÿY Filing annual statement
...................................................
100œúÿY Certificate of authority
...................................................
10œúÿY
1276 1997 Session Laws of Kansas Ch. 175
Annual fees:
Filing annual statement
...................................................
100œúÿY Continuation of certificate of
authority ...................................
10œúÿY
In addition to the above fees, every such company or association
or-
ganized under the laws of any other state of the United States
shall pay
a fee of $5 for each agent certified by the company and shall also
pay a
tax annually upon all premiums received at the rate of 2% per
annum.
For tax years 1998 and thereafter, the annual tax shall be
reduced by
the ``applicable percentage'' of (1) any taxes paid on business in
this state
pursuant to the provisions of K.S.A. 75-1508 and amendments
thereto
and (2) the amount of the firefighters relief tax credit determined
by the
commissioner of insurance. The amount of the firefighters relief
tax credit
for a company taxable under this subsection for the current tax
year shall
be determined by the commissioner of insurance by dividing (A) the
total
amount of taxes paid by all such companies on business in this
state under
K.S.A. 40-1701 to 40-1707 and amendments thereto for tax year 1983
as
then in effect, by (B) the total amount of taxes paid by all such
companies
on business in this state under K.S.A. 40-1703 and amendments
thereto
for the tax year immediately preceding the current tax year, and by
mul-
tiplying the result so obtained by (C) the amount of taxes paid by
the
company on business in this state under K.S.A. 40-1703 and
amendments
thereto for the current tax year. The ``applicable percentage''
shall be as
follows:
Tax Year Applicable Percentage
1998
10%
1999
20%
2000
30%
2001
40%
2002
50%
2003
60%
2004
70%
2005
80%
2006
90%
2007 and thereafter
100%
In the computation of the gross premiums all such companies
shall be
entitled to deduct any premiums returned on account of
cancellations, all
premiums received for reinsurance from any other company
authorized
to do business in this state, and dividends returned to
policyholders.
Ch. 175 1997 Session Laws of Kansas 1277
Annual fees:
Filing annual statement
...................................................
100œúÿY Continuation of certificate of
authority ...................................
10œúÿY
In addition to the above fees and as a condition
precedent to the con-
tinuation of the certificate of authority, provided in this code,
every cor-
poration or association shall pay annually to the commissioner of
insur-
ance a privilege fee in an amount equal to 2% per annum of the
total of
all premiums, subscription charges, or any other term which may be
used
to describe the charges made by such corporation or association to
sub-
scribers in this state for hospital, medical or other health
services or in-
demnity received during the preceding year. In such computations
all
such corporations or associations shall be entitled to deduct any
premiums
or subscription charges returned on account of cancellations and
divi-
dends returned to members or subscribers.
1278 1997 Session Laws of Kansas Ch. 175
2. Nonprofit medical service corporations, nonprofit dental
service cor-
porations, nonprofit optometric service corporations and
nonprofit
pharmacy service corporations:
Admission fees:
Examination of charter and other documents
...............................
$500œúÿY Filing annual statement
...................................................
100œúÿY Certificate of authority
...................................................
10œúÿY Annual fees:
Filing annual statement
...................................................
100œúÿY Continuation of certificate of
authority ...................................
10œúÿY
In addition to the above fees and as a condition precedent to
the con-
tinuation of the certificate of authority, provided in this code,
every cor-
poration or association shall pay annually to the commissioner of
insur-
ance a tax in an amount equal to 2% per annum of the total of
all
premiums, subscription charges, or any other term which may be used
to
describe the charges made by such corporation or association to
subscrib-
ers in this state for hospital, medical or other health services or
indemnity
received during the preceding year. In such computations all such
cor-
porations or associations shall be entitled to deduct any premiums
or
subscription charges returned on account of cancellations and
dividends
returned to members or subscribers.
For the purpose of insuring the collection of the tax upon
premiums,
assessments and charges as set out in subsection A, C, D or F,
every
insurance company, corporation or association shall at the time it
files its
annual statement, as required by the provisions of K.S.A. 40-225,
and
amendments thereto, make a return, verified by affidavits of its
president
and secretary or other chief officers, to the commissioner of
insurance,
stating the amount of all premiums, assessments and charges
received by
the companies or corporations in this state, whether in cash or
notes,
during the year ending on the December 31 next preceding.
Commencing in 1985 and annually thereafter the estimated taxes
shall
be paid as follows: On or before June 15 and December 15 of such
year
an amount equal to 50% of the full amount of the prior year's taxes
as
reported by the company shall be remitted to the commissioner of
in-
surance. As used in this paragraph, ``prior year's taxes'' includes
(1) taxes
assessed pursuant to this section for the prior calendar year, (2)
fees and
taxes assessed pursuant to K.S.A. 40-253, and amendments thereto,
for
the prior calendar year, and (3) taxes paid for maintenance of the
de-
partment of the state fire marshal pursuant to K.S.A. 75-1508,
and
amendments thereto, for the prior calendar year.
Upon the receipt of such returns the commissioner of insurance
shall
verify the same and assess the taxes upon such companies,
corporations
or associations on the basis and at the rate provided herein and
the bal-
Ch. 175 1997 Session Laws of Kansas 1279
ance of such taxes shall thereupon become due and payable giving
credit
for amounts paid pursuant to the preceding paragraph, or the
commis-
sioner shall make a refund if the taxes paid in the prior June and
Decem-
ber are in excess of the taxes assessed.
The fee prescribed for the examination of charters and other
docu-
ments shall apply to each company's initial application for
admission and
shall not be refundable for any reason.
Sec. 4. K.S.A. 40-252b is hereby amended to read as follows:
40-
252b. For taxable years commencing on and after January 1,
1998, the
fees, charges and taxes provided for by K.S.A. 40-252 and
amendments
thereto shall be in lieu of all other license fees, premium or
occupation
taxes, income taxes, intangible property taxes, or other
fees levied or as-
sessed upon the basis of income, premiums, and
gross receipts and in-
tangible property by this state and any municipality, county or
other po-
litical subdivision of this state, and no municipality, county or
other
political subdivision of this state shall impose any license fee or
privilege,
premium, income, intangible property or gross receipts tax
or fee upon
any insurance company or corporation taxed under the provisions
of
K.S.A. 40-252 and amendments thereto and organized under the
laws of
this state or doing business in this state, or upon any of its
agents or
representatives for the privilege of doing an insurance business
therein:Provided,
however,. This section shall
not be construed to prohibit the
levy and collection of (a) state, county or municipal taxes upon
the real
and tangible personal property of such company, (b) tax for the
purpose
of maintaining the office of the fire marshal of this state as
provided in
K.S.A. 75-1508 and amendments thereto, (c) the firemen's
relief fund tax
as provided for in K.S.A. 40-1701 through 40-1707 and
amendments
thereto, and (d) the intangibles tax as provided
for in article 31 of chapter munic-
79 of the Kansas Statutes Annotated, and any amendments thereto,
(e) a
tax by the state of Kansas upon the privilege of doing business
within the
state measured by the income of the insurance company, and
(f)
ipal occupation taxes levied upon any basis other than income,
intangible
property, premiums or gross receipts.
Sec. 5. K.S.A. 40-252c is hereby amended to read as follows:
40-
252c. (a) Every insurance company organized under the laws of this
state
and required by this act to pay a premium tax or privilege fee
pursuant
to K.S.A. 40-252 and amendments thereto shall be entitled to
a credit, on
the premium taxes or privilege fees imposed by K.S.A. 40-252 and
amend-
ments thereto, of twenty-five percent (25%)
25% of such taxes or fees if
at least thirty percent (30%) 30% of such
insurance company's admitted
assets is invested in Kansas securities.
(b) For the purpose of this section: (1) The term ``insurance
com-
pany'' shall mean any insurance company, mutual nonprofit hospital
cor-
1280 1997 Session Laws of Kansas Ch. 175
poration, nonprofit medical service corporation or any
corporation, soci-
ety or association to which K.S.A. 40-252 and amendments
thereto applies;
(2) The term ``admitted assets'' shall mean the assets treated
as ad-
mitted assets in the annual statement required to be filed with the
com-
missioner of insurance pursuant to this act and K.S.A. 40-225
and amend-
ments thereto; and
(3) The term ``Kansas securities'' shall mean real estate in
this state,
bonds of the state of Kansas, bonds or interest bearing warrants of
any
county, city, town, school district or municipality or subdivision
of the
state of Kansas, notes or bonds secured by mortgages or other liens
on
real estate located in the state of Kansas, cash deposits in
regularly estab-
lished national or state banks in this state on the basis of the
average
monthly deposits throughout the calendar year, policy loans secured
by
the legal reserve on policies insuring residents of the state of
Kansas, and
any other Kansas property or securities in which, by the laws of
the state
of Kansas, such insurance companies may invest their funds. The
provi-
sions of this section shall not be applicable to any taxable year
after tax
year 1998.
Sec. 6. K.S.A. 40-253 is hereby amended to read as follows:
40-253.
Whenever the existing or future laws of any other state or country
shall
require from insurance companies or fraternal benefit societies
organized
under the laws of this state, applying to do business in such other
state
or country, any deposit of securities in such state or country for
the pro-
tection of policyholders therein, or otherwise, or
any payment for taxes,
fines, penalties, certificates of authority, licenses, fees,
or compensation
for examination, including taxes or fees based on fire
premiums, or oth- greater than the amount required for such purpose
from insur-
erwise,
ance companies or agents of other states by the then existing laws
of this
state, then, and in every case, all companies and agents of any
such state
or country, doing business in this state shall make the same
deposit, for
a like purpose, with the commissioner of insurance of this state,
and pay
to the commissioner of insurance for taxes, fines, penalties,
certificates of
authority, licenses, fees, or compensation for examination,
including taxes
or fees based on fire premiums, or otherwise,
an amount equal to the
amount of such charges and payments imposed by the laws of such
other
state or country upon the companies of this state and the agents
thereof.
The provisions of this section shall not apply to special
purpose assess-
ments or guaranty association assessments both under the laws of
this
state and under the laws of any other state or country, and any tax
offset
or credit for any such assessment shall, for purposes of this
section, be
treated as a tax paid both under the laws of this state and under
the laws
of any other state or country.
New Sec. 7. (a) For tax year 1998, each company required to pay
a
tax on premiums under subsections A, C, D or F of K.S.A. 40-252
and
Ch. 175 1997 Session Laws of Kansas 1281
amendments thereto shall be allowed as a credit against such tax
25% of
the salaries paid to Kansas employees, and for tax years 1999 and
there-
after, 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% of the salaries paid to Kansas
employees.
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% of premiums taxable thereunder for tax years 1999 and
thereafter.
(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
1282 1997 Session Laws of Kansas Ch. 175
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.
New Sec. 8. For tax years 1998 and thereafter, a foreign or
domestic
insurance company required to pay a tax on premiums under
subsection
A, C, D or F of K.S.A. 40-252 and amendments thereto and writing
less
than $15,000,000 in premiums in all states shall be allowed as a
small
company credit against such tax the amount computed as
follows:
(a) Subtract the total dollar amount of all premiums written by
the
company in all states from $15,000,000;
(b) Divide the result obtained in (a) by 15,000,000;
(c) Multiply the quotient obtained in (b) by 90,000 with the
resulting
credit not to exceed $30,000. No credit under this section shall be
allowed
unless the company has paid salaries for which a salary credit is
allowed
under new section 7.
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
employment credit allowed under new section 7 and amendments
thereto
Ch. 175 1997 Session Laws of Kansas 1283
and the small company credit allowed under this section, taken
together,
may not reduce such tax by more than 1% of premiums taxable
under
K.S.A. 40-252 and amendments thereto for tax year 1998 or by more
than
1.25% of premiums taxable under K.S.A. 40-252 and amendments
thereto
for tax years 1999 and thereafter. For purposes of calculating any
tax due
under K.S.A. 40-253 and amendments thereto from a taxpayer not
or-
ganized 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. 9. K.S.A. 40-2801 is hereby amended to read as follows:
40-
2801. Every life, fire and casualty, hail and county mutual fire
insurance
company organized under the laws of this state, shall annually pay
to the
state for the privilege of doing business within this state, a tax
according
to or measured by its net income for the next preceding calendar
year.
Such tax shall be an amount equal to five percent (5%) of such net
income.
The provisions of this section shall not apply to net income
earned in
calendar year 1998 or in any calendar year thereafter.
Sec. 10. K.S.A. 40-112, 40-252, 40-252b, 40-252c, 40-253,
40-2801
and K.S.A. 1996 Supp. 40-246 are hereby repealed.
Sec. 11. This act shall take effect and be in force from and
after its
publication in the statute book.
Approved May 15, 1997.