Exempts insurance companies from tax credit deferrals implemented in the 2010 budget.
TITLE OF BILL: An act to amend the tax law, in relation to exempting insurance companies from the temporary deferral of tax credits and to repeal certain provisions of such law relating thereto
PURPOSE: To exempt the QEZE tax reduction credit for insurance companies (Article 33 taxpayers) from the temporary deferral of tax credits found in the 2010-2011 Revenue Bill, S.6610C/A.9710D.
SUMMARY OF PROVISIONS:
§ 1-Removes the QEZE tax reduction credit from the list of tax credits subject to deferral pursuant to part Y of S.6610c/A.9710D as applied to Article 33 taxpayers.
§ 2-Removes the reference to Article 33 taxpayers and the applicable section of the tax law
§ 3-Removes the provisions dealing with the calculation of the deferral of the tax credits which no longer apply to Article 33 taxpayers.
§ 4-Sets forth the effective date.
JUSTIFICATION: This bill ensures that insurance companies (Article 33 taxpayers) won't be severely harmed by the impact of the deferral of these credits by exempting them from the deferral provision. Insurance companies are required to follow the accounting principles prescribed by the NARC (National Association of Insurance Companies) which is known as Statutory Accounting. Insurance companies are required to utilize this basis of accounting in preparing their financial statements. This basis of accounting differs from the standard GAAP (Generally Accepted Accounting Principles) practice of accounting which all non insurance companies utilize to prepare their financial statements. Under statutory accounting the deferral period for the tax credits is too long for the asset to be considered an admitted asset and therefore the amount deferred will be a direct reduction to surplus no matter how the deferral is recorded on the income statement. This direct reduction to surplus is a unique set of circumstances experienced only by insurance companies.
LEGISLATIVE HISTORY: A.11723/S.8511 of 2010
FISCAL IMPLICATIONS: To be determined.
This act shall take effect immediately and shall be deemed to have been in full force and effect on and after August 11, 2011.
STATE OF NEW YORK ________________________________________________________________________ 3243 2011-2012 Regular Sessions IN SENATE February 14, 2011 ___________Introduced by Sen. GALLIVAN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to exempting insurance compa- nies from the temporary deferral of tax credits and to repeal certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The opening paragraph of paragraph (a) of subdivision 3 of section 33 of the tax law, as added by section 1 of part Y of chapter 57 of the laws of 2010, is amended to read as follows: This section shall apply to the credits allowed under the following provisions in article nine-a of this chapter and any applicable counter- part provisions in articles nine, twenty-two
[,]AND thirty-two [and thirty-three]of this chapter: S 2. Subparagraph 5 of paragraph (a) and subparagraph 5 of paragraph (b) of subdivision 3 of section 34 of the tax law, as added by section 2 of part Y of chapter 57 of the laws of 2010, are REPEALED. S 3. Subdivisions (y) and (z) of section 1511 of the tax law, subdivi- sion (y) as added by section 7 of part Y of chapter 57 of the laws of 2010, are REPEALED. S 4. This act shall take effect immediately; except that if this act shall have become a law on or after August 11, 2011 this act shall take effect immediately and shall be deemed to have been in full force and effect on and after August 11, 2011.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08831-01-1