An Act To Exempt Annuity Considerations from Tax
Maine Legislature, Session 127, LD 0644
Committee: Taxation
Sponsors: WHITTEMORE, O'CONNOR, BAKER, BURNS, COLLINS, CYRWAY, DAVIS, THIBODEAU, PICCHIOTTI, WALLACE
Amends: 36 MRSA §2513

Legislative Document 
No. 644 
S.P. 237 
In Senate, March 3, 2015 
An Act To Exempt Annuity Considerations from Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Secretary of the Senate 
Presented by Senator WHITTEMORE of Somerset. 
Cosponsored by Representative O'CONNOR of Berwick and 
Senators: BAKER of Sagadahoc, BURNS of Washington, COLLINS of York, CYRWAY of 
Kennebec, DAVIS of Piscataquis, President THIBODEAU of Waldo, Representatives: 
PICCHIOTTI of Fairfield, WALLACE of Dexter. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §2513, as amended by PL 2011, c. 331, §12 and affected by 
§§16 and 17, is further amended to read: 
§2513.  Tax on premiums and annuity considerations 
Every insurance company or association that does business or collects premiums or 
assessments including annuity considerations in the State, including surety companies 
and companies engaged in the business of credit insurance or title insurance, shall, for the 
privilege of doing business in this State and in addition to any other taxes imposed for 
that privilege, pay a tax upon all gross direct premiums including annuity considerations, 
whether in cash or otherwise, on contracts written on risks located or resident in the State 
for insurance of life, annuity, fire, casualty and other risks at the rate of 2% a year.  Every 
nonadmitted insurer that does business or collects premiums in the State shall, for the 
privilege of doing business in this State and in addition to any other taxes imposed for 
that privilege, pay a tax upon all gross direct premiums, whether in cash or otherwise, as 
provided in section 2531.  For purposes of this section, the term "annuity considerations" 
includes amounts paid to an insurance company for the purchase of a contract that may 
result in an annuity, even if the annuitization never occurs or does not occur until some 
time in the future and the amounts are in the meantime applied to an investment vehicle 
other than an annuity.  This section does not apply to mutual fire insurance companies 
subject to tax under section 2517 or to captive insurance companies formed or licensed 
under Title 24-A, chapter 83 or under the laws of another state. 
Notwithstanding this section, annuity considerations received in tax years ending 
prior to January 1, 1999 upon which no tax was paid in the year received must be taxed in 
the year in which an annuity is actually purchased. 
Notwithstanding this section, for income tax years commencing on or after January 1, 
1989, the tax imposed by this section upon all gross direct premiums collected or 
contracted for on long-term care policies, as certified by the superintendent pursuant to 
Title 24-A, section 5054, must be at the rate of 1% a year. 
Notwithstanding this section, for tax years commencing on or after January 1, 1997, 
the tax imposed by this section with respect to premiums on qualified group disability 
policies written by every insurer, except a large domestic insurer, must be at the rate of 
1% and must be at the rate of 2.55% with respect to those premiums written by every 
large domestic insurer.  For the purposes of this section, the term "qualified group 
disability policies" is limited to group health insurance policies properly reported as such 
in the insurer's annual statement and whose sole coverage is the full or partial 
replacement of an individual's income in the event of disability.  Policies that contain 
coverages in addition to replacement of income coverage are considered to solely provide 
that coverage as long as the premium related to the additional coverages is not more than 
10% of the total premium charged.  The term "qualified group disability policies" does 
not include workers' compensation insurance policies, policies that include coverages that 
are collectively renewable, policies that provide for credit disability insurance or policies 
that pay benefits only upon the occurrence of hospitalization.  For purposes of this 
section, a "large domestic insurer" is any insurer domiciled in this State with assets in 
excess of $5,000,000,000 as reported on its annual statement. 
Notwithstanding this section, for income tax years commencing in 2016 the tax 
imposed by this section upon annuity considerations must be at a rate of 1.5%. 
Notwithstanding this section, for income tax years commencing in 2017 the tax 
imposed by this section upon annuity considerations must be at a rate of 1%. 
Notwithstanding this section, for income tax years commencing in 2018 the tax 
imposed by this section upon annuity considerations must be at a rate of 0.5%. 
Notwithstanding this section, for income tax years commencing on or after January 1, 
2019 annuity considerations are exempt from the tax imposed by this section. 
SUMMARY 
This bill phases out the tax imposed upon annuity considerations.  The current tax of 
2% is decreased by 0.5% each year beginning in 2016 until it is eliminated beginning 
January 1, 2019.