Provides for an additional franchise tax on life insurance policies obtained by companies on its employees and/or retirees.

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S262A-2011 Actions

• Jan 5, 2012: PRINT NUMBER 262A
• Jan 5, 2012: AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
• Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
• Mar 22, 2011: DEFEATED IN INVESTIGATIONS AND GOVERNMENT OPERATIONS
• Feb 22, 2011: NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
• Jan 5, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S262A-2011 Votes

S262A-2011 Memo

BILL NUMBER:S262A

TITLE OF BILL:
An act
to amend the tax law, in relation to providing an additional franchise
tax on certain life insurance policies

PURPOSE:
Provides for an additional 50% tax on certain life insurance policies.

SUMMARY OF PROVISIONS:
Section 1. Amends the Tax Law by adding a new Section 182-b. Imposes a
fifty-percent (50%) tax on every company that has a corporate
franchise, or does business, or has employees Of owns or leases
property, or maintains an office in this state and that receives
benefits from life insurance policies obtained on its employees
and/or retirees. Requires records to be kept in a form as the
Commissioner of Taxation and Finance may require. Provides that the
Commissioner of Taxation and Finance may consent to the destruction
of such records within three years or require that such records be
kept longer than three years.

Section 2. Effective Date

EXISTING LAW:
None.

JUSTIFICATION:
New York State currently faces an unprecedented multi-billion dollar
deficit. Drastic spending cuts totaling several billion dollars to
many worthy programs in the State Office for the Aging, the
Department of Health, SUNY and CUNY, are likely. Unfortunately,
little has been done to find sources of revenue to mitigate New York
State's dire fiscal circumstances.

Despite this bleak economic picture, corporations are reaping huge
financial benefits from life insurance policies they take out on
their employees and or retirees. Corporate owned life insurance,
better known as "dead peasants" or "janitors" insurance, is a life
insurance policy that is taken out on low-level employees, often
without the knowledge or consent of the employee, and whose families
are not named as beneficiaries when the employee or retiree dies.
When the employee or retiree dies, these tax free benefits are
collected by the employer. Furthermore, companies frequently use
these policies to pay for retirement benefits and other perks for
their top executives. Companies that supposedly engage in the
practice of purchasing these policies include Wal-Mart, Dow Chemical,
Proctor & Gamble and Walt Disney.

One tragic example of this practice is that of a 48 year old assistant
manager at Wal-Mart who died of a massive heart attack. The man's

widow became the lead plaintiff in a class action suit after she
learned that Wal-Mart collected $300,000 fro111 a life insurance policy
it owned on him.

This bill would impose a 50% tax on all benefits received by companies
in New York State who take out life insurance policies on their
employees or retirees.

LEGISLATIVE HISTORY:
2011: S.262 - Defeated in Investigations and Government
       Operations/A.1111 - Referred to Ways and Means
2010: S.6236A - Amend and Recommit
      to Investigations and Government Operations/A.9439
      Amend and Recommit to Ways and Means
2009: S.6236 - Referred to Rules

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

S262A-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                   262--A

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 5, 2011
                                 ___________

  Introduced by Sens. DIAZ, KRUEGER -- read twice and ordered printed, and
    when  printed  to  be committed to the Committee on Investigations and
    Government Operations -- recommitted  to  the  Committee  on  Investi-
    gations  and  Government  Operations in accordance with Senate Rule 6,
    sec. 8 -- committee discharged, bill  amended,  ordered  reprinted  as
    amended and recommitted to said committee

  AN  ACT  to  amend  the  tax law, in relation to providing an additional
    franchise tax on certain life insurance policies

    THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section  1.  The  tax  law is amended by adding a new section 182-b to
  read as follows:

    S 182-B. ADDITIONAL FRANCHISE TAX ON CERTAIN LIFE INSURANCE  POLICIES.
  1.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, OR OF ANY OTHER
  LAW, FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND
  FOURTEEN, AN ANNUAL TAX IS HEREBY IMPOSED UPON EVERY  COMPANY  RECEIVING
  BENEFITS  FROM  LIFE INSURANCE POLICIES IT HAS OBTAINED ON ITS EMPLOYEES
  AND/OR RETIREES EQUAL TO FIFTY PER CENTUM OF ITS GROSS RECEIPTS FROM ALL
  PROCEEDS FROM SUCH LIFE INSURANCE POLICIES, FOR THE PRIVILEGE  OF  EXER-
  CISING  ITS  CORPORATE  FRANCHISE, OR OF DOING BUSINESS, OR OF EMPLOYING
  CAPITAL, OR OF OWNING OR LEASING PROPERTY IN THIS STATE IN  A  CORPORATE
  OR  ORGANIZED  CAPACITY,  OR OF MAINTAINING AN OFFICE IN THIS STATE, FOR
  ALL OR ANY PART OF EACH OF ITS TAXABLE YEARS.
    2. EVERY COMPANY SUBJECT TO TAX UNDER THIS  SECTION  SHALL  KEEP  SUCH
  RECORDS  OF  ITS  BUSINESS IN SUCH FORM AS THE COMMISSIONER MAY REQUIRE,
  AND SUCH RECORDS SHALL BE PRESERVED FOR A PERIOD OF THREE YEARS,  EXCEPT
  THAT THE COMMISSIONER MAY CONSENT TO THEIR DESTRUCTION WITHIN THAT PERI-
  OD OR MAY REQUIRE THAT THEY BE KEPT LONGER.
    S 2. This act shall take effect immediately and shall apply to taxable
  years beginning on or after January 1, 2014.

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD03251-02-1