The National Association of Mutual Insurance Companies and the Mutual Insurance Companies Association of Indiana are working together to address a mistake in Indiana’s 2002 tax code revision which erroneously raised taxes paid by farm mutual insurers from 1.2 percent to 8.5 percent.
“We are getting closer to fixing a 2002 legislative error and providing tax relief to Indiana’s farm mutual insurance companies,” said Central Region State Affairs Manager Tami Stanton. “Fairness in how farm mutual insurance companies are taxed is important and NAMIC is pleased to support the Mutual Insurance Companies Association of Indiana in addressing this error.”
Stanton testified before the House Insurance Committee Jan. 19.
The committee unanimously passed HB 1391 on Jan. 19. The bill’s language was successfully amended into HB 1266 and unanimously passed out of the Ways and Means Committee Thursday. Due to a $115,000 fiscal impact to the state’s budget, the language in HB 1391 had been referred to Ways and Means.
The revision repeals the gross income tax and supplemental net income tax and increases the corporate adjusted gross income tax from 3.4 percent to 8.5 percent. Until the change, farm mutuals were subject only to the gross income tax at 1.2 percent and were not subject to the adjusted gross income tax of 3.4 percent and the supplemental income tax.
The section of the law giving insurance companies the choice of paying state taxes according to gross premium income rather than adjusted gross income does not specifically apply to farm mutuals; therefore the change raised taxes paid by farm mutuals from 1.2 percent to 8.5 percent.
“NAMIC thanks Rep. Mike Ripley for introducing HB 1391 and for facilitating its expedited hearing and passage in the critical Ways and Means committee by amending its provisions into HB 1266. This bill gives farm mutuals the choice provided to other insurance companies of paying taxes based on their gross premium income or corporate adjusted income by simply adding the farm mutual code cite to that section of the statute,” explained Stanton.
HB 1266 is slated to move to the House floor next week for second and third reading and Stanton anticipates it will pass without further amendment.
The text of HB 1266 can be read at: http://www.in.gov/legislative/bills/2006/PDF/HB/HB1266.2.pdf
Source: National Association of Mutual Insurance Companies
Topics Carriers Profit Loss Agribusiness
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