Bill Text: MI SB0985 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Insurance; insurers; Michigan insurance premium tax prepayment act; create. Creates new act. TIE BAR WITH: SB 0986'12, SB 0987'12
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2012-02-29 - Referred To Committee On Finance [SB0985 Detail]
Download: Michigan-2011-SB0985-Introduced.html
SENATE BILL No. 985
February 29, 2012, Introduced by Senators KOWALL, BIEDA and BRANDENBURG and referred to the Committee on Finance.
A bill to meet deficiencies in state funds by providing for
the acceptance of the prepayment of certain future tax liabilities
due to this state; to authorize the issuance and sale of certain
tax certificates by the department; to provide for the disposition
of the proceeds from the sale of the certificates; to provide for
the obtaining and transferring of a prepayment tax certificate and
to prescribe the contents of that certificate; to prescribe the
powers and duties of the department of treasury; to prescribe
certain powers and duties of certain state officers and agencies;
and to make appropriations.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) This act shall be known and may be cited as the
"Michigan insurance premium tax prepayment act".
(2) This act is intended to create a source of funds for
appropriation by the legislature.
Sec. 3. As used in this act:
(a) "Department" means the department of treasury.
(b) "Full offset amount" means the aggregate face amount of a
PTP certificate issued by the department to the purchaser
evidencing the prepayment of the purchaser's premium tax liability.
(c) "Fund allocation date" means the date on which the
department or the manager receives a prepayment from a purchaser in
return for the issuance of the PTP certificate that entitles the
purchaser to receive an allocation of the full offset amount
authorized by this act.
(d) "Insurance company" means an authorized insurer as defined
in section 108 of the insurance code of 1956, 1956 PA 218, MCL
500.108.
(e) "Manager" means a person or subcontractor selected by the
department pursuant to this act to arrange for the sale of the PTP
certificates.
(f) "Person" means an individual, firm, bank, financial
institution, insurance company, limited partnership, limited
liability partnership, partnership, joint venture, association,
corporation, subchapter S corporation, limited liability company,
receiver, estate, trust, or any other group or combination of
groups acting as a unit.
(g) "Premium taxes" means the taxes imposed pursuant to
section 476a of the insurance code of 1956, 1956 PA 218, MCL
500.476a, and part 2 of the income tax act of 1967, 1967 PA 281,
MCL 206.601 to 206.699.
(h) "Premium tax return date" means the date or dates in each
calendar year on which an insurance company is required by law to
file an estimated or annual return regarding its premium tax
liability for the premium tax year under the insurance code of
1956, 1956 PA 218, MCL 500.100 to 500.8302, or under part 2 of the
income tax act of 1967, 1967 PA 281, MCL 206.601 to 206.699.
(i) "Premium Tax Year" means the 12-month period used in
accordance with the insurance code of 1956, 1956 PA 218, MCL
500.100 to 500.8302, or under part 2 of the income tax act of 1967,
1967 PA 281, MCL 206.601 to 206.699, whichever is applicable, to
measure a purchaser's premium tax liability.
(j) "PTP certificate" means an instrument issued by the
department or the manager that is issued in exchange for the
prepayment of premium taxes by the purchaser, which certificate
expires, except as otherwise provided in section 9, 1 business day
after the tenth annual premium tax return date following the fund
allocation date and provides a tax offset equal to 10% per year of
the face amount of the certificate.
(k) "Purchaser" means any insurance company subject to a
premium tax that elects to prepay its premium taxes by the purchase
of a PTP certificate.
(l) "Tax offsets" means offsets against premium tax liability
under section 476a of the insurance code of 1956, 1956 PA 218, MCL
500.476a, or part 2 of the income tax act of 1967, 1967 PA 281, MCL
206.601 to 206.699, arising from the prepayment of a purchaser's
premium taxes.
Sec. 5. The department shall administer the program authorized
in this act and shall have the powers and duties necessary or
proper to carry out the provisions of this act, including, but not
limited to, the power and duty to do all of the following:
(a) Make and execute contracts and other necessary
instruments.
(b) Authorize the issuance of PTP certificates to purchasers
to evidence the right to offset the tax liability under section
476a of the insurance code of 1956, 1956 PA 218, MCL 500.476a, or
part 2 of the income tax act of 1967 PA 281, MCL 206.601 to
206.699.
(c) Arrange for the issuance of the PTP certificates and the
tax offsets evidenced thereby in an amount not to exceed 10% of the
amount stated in each PTP certificate per premium tax year for 10
consecutive premium tax years beginning with the premium tax year
associated with the first annual premium tax return date following
the fund allocation date. The funds derived from the sale of the
PTP certificates shall be deposited in the general fund.
(d) Solicit proposals and select a manager in accordance with
section 7 and contract for such other services as deemed necessary
or useful by the department for the sale of PTP certificates, and
pay the manager costs incurred from the proceeds of the sale of the
PTP certificates.
(e) Review and approve or disapprove the proposals from
prospective purchasers negotiated and presented by the manager,
agree or disagree with the recommendation of the manager to sell
the PTP certificates to the purchasers in a public or private sale,
approve or disapprove the negotiated price to be paid by the
purchasers for the PTP certificates, determine the form and
denominations of the PTP certificates, and determine such other
administrative details regarding the PTP certificates as deemed
useful by the department.
Sec. 7. Within 30 days after the effective date of this act,
the department shall issue a request for proposals and select a
person to be the manager for all purposes under this act. The
request for proposals shall include a statement of the services
sought, the time and date for the receipt of the proposals and of
the public opening, and all of the terms and conditions applicable
to the designation of the manager, including, without limitation,
the requirement that the manager satisfy all of the following
criteria:
(a) The applicant, or a subcontractor of the applicant, shall
have experience in structuring, marketing, and preselling insurance
premium tax credit obligations and shall have previously marketed
and secured purchase commitment agreements in an amount not less
than $400,000,000.00 of premium tax credit or offset certificates
in at least 5 states. If a subcontractor is used to meet the
requirements of this section, the subcontractor shall have been
authorized to do business in this state on or before January 1,
2012.
(b) The applicant shall have experience during the previous
calendar year with underwriting and marketing state and local
securities.
(c) The applicant shall have over $5,000,000,000.00 in equity
capital.
(d) The applicant shall have experience during the previous
calendar year in managing a minimum of 50 financing transactions
nationwide each in excess of $50,000,000.00.
Sec. 9. (1) Each purchaser that prepays its premium taxes
pursuant to this act is entitled to tax offsets against future
premium taxes equal to the face amount of the PTP certificates
issued to the purchasers and evidencing their prepayment of premium
taxes as provided under section 476a of the insurance code of 1956,
1956 PA 218, MCL 500.476a, or section 645 of the income tax act of
1967, 1967 PA 281, MCL 206.645. The department or manager shall not
approve more than $900,000,000.00 in the form of permitted PTP
certificates. Tax offsets shall be vested on the fund allocation
date and shall be available to the purchaser annually as provided
in this act.
(2) Each purchaser purchasing a PTP certificate may do 1 or
more of the following:
(a) Take in respect of each premium tax year the tax offsets
evidenced by the PTP certificates against premium taxes due for
such premium tax year in accordance with the terms of the PTP
certificates as provided in section 476a of the insurance code act
of 1956, 1956 PA 281, MCL 500.476a, or under section 645 of the
income tax act of 1967, 1967 PA 281, MCL 206.645, whichever is
applicable.
(b) Reduce its estimated and annual payments of liability for
premium taxes for each year for which tax offsets are available to
offset liability for premium taxes by the same percentage as the
percentage payment due on each estimated payment date.
(c) Claim the tax offsets by attaching a copy of the PTP
certificate to the estimated or annual insurance premium tax return
to which the offset is to be applied.
(3) The tax offsets against premium taxes that are used by a
purchaser with respect to any year shall not exceed the full
liability of the purchaser for premium taxes for that year.
(4) A purchaser that has purchased a PTP certificate is not
required to reduce the amount of tax liability included by the
purchaser in connection with the ratemaking for any insurance
contract written because of a reduction in the purchaser's
assessment derived from the tax offsets granted under this act.
(5) If the premium taxes that a purchaser does not pay by
virtue of the tax offsets evidenced by a PTP certificate would
increase any other tax or constitute a credit against any other tax
or assessment if paid, the purchaser shall continue to earn any
such reduction in taxes or credit as though such insurance premium
taxes were paid by cash.
(6) A purchaser may assign the PTP certificates and the tax
offsets associated therewith to another insurance company in this
state with a liability for premium taxes provided that the assignor
delivers to the department within 30 days of the assignment a
written notice indicating the name of the asignee, the amount of
tax offsets being assigned, and the year or years to which such
offsets are allocable as provided in subsection (2). The assignee
shall not use the assigned tax offsets until after the written
notice is filed with the department. Thereafter, the assignee is
deemed a purchaser under this act.
(7) A purchaser claiming a tax offset against premium taxes as
evidenced by a PTP certificate is not required to pay any
additional insurance retaliatory tax levied by the state as a
result of claiming that tax offset.
(8) For statutory accounting purposes, a purchaser may treat
the assignable tax offsets or tax credits as an admitted asset in
accordance with the national association of insurance commissioners
accounting practices and procedures manual and pursuant to the
statement of statutory accounting principle no. 94 or any
substitute statement of accounting principle which replaces
accounting principle no. 94.
(9) If the premium taxes imposed by this state are eliminated
or reduced, a PTP certificate may be used to offset any other
replacement tax imposed on a purchaser that had premium tax
liability on the date of elimination or reduction.
Sec. 11. Within 30 days of the fund allocation date, the
manager shall report to the department the following:
(a) The name of each purchaser from whom prepayment of
insurance premium taxes was received, including the purchaser's tax
identification number.
(b) The amount of each purchaser's prepayment and the amount
stated in each PTP certificate delivered to that purchaser.
(c) The fund allocation date that applies to that prepayment.
Sec. 13. The department may promulgate rules to implement this
program.
Enacting section 1. This act does not take effect unless all
of the following bills of the 96th Legislature are enacted into
law:
(a) Senate Bill No._986 ____ (request no.
04158'11 a).
(b) Senate Bill No._987 ___ (request no.
04158'11 b).
