Provides for an additional franchise tax on life insurance policies obtained by companies on its employees and/or retirees.
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 l82-b. Imposes a fifty-percent (50%) tax on every company that has a corporate franchise, or does business, or has employees or 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: While the worst of the Great Recession seems to be over, New York State continues to face budget deficits. Drastic spending cuts 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 serious financial 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 from 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: 2012: S.262-A - Amend and recommit to investigations and Government Operations/A.1111-A Amend and Recommit to Ways and Means 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, 2016.
STATE OF NEW YORK ________________________________________________________________________ 388 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________Introduced by Sen. DIAZ -- 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 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 SIXTEEN, 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, 2016.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00444-01-3