An Act To Phase Out the Insurance Premium Tax on Annuities
Maine Legislature, Session 129, LD 0625
Committee: Taxation
Sponsors: STANLEY, DOW, BICKFORD, CAMPBELL, MAREAN, NADEAU, VEROW
Amends: 36 MRSA §2513, 36 MRSA §2513-C, 36 MRSA §2515

Legislative Document
No. 625
H.P. 453
House of Representatives, February 5, 2019
An Act To Phase Out the Insurance Premium Tax on Annuities
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative STANLEY of Medway.
Cosponsored by Senator DOW of Lincoln and
Representatives: BICKFORD of Auburn, CAMPBELL of Orrington, MAREAN of Hollis, 
NADEAU of Winslow, VEROW of Brewer.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §2513, first ¶, as amended by PL 2011, c. 331, §12 and 
affected by §§16 and 17, is further amended to read:
Every Except as provided in section 2513-C, 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 chapter, 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.
Sec. 2.  36 MRSA §2513-C is enacted to read:
§2513-C.  Tax on annuity considerations
1.  Phase-out of tax.  Notwithstanding the other provisions of this chapter, the rate of 
tax under this chapter for annuity considerations is 1.5% in calendar year 2020, 1% in 
calendar year 2021 and 0.5% in calendar year 2022.  Beginning in calendar year 2023, 
annuity considerations are not subject to tax under this chapter, but taxes due for previous 
years may be collected.
2.  Application of reduced rate on annuities.  The reduced rates specified in 
subsection 1 for calendar years 2020, 2021 and 2022 apply to premiums on an annuity 
paid by annuity holders in this State only if the tax savings from the reduced rate are 
credited to the annuity holders.  Upon request of the bureau, an insurer shall submit 
evidence that establishes that the tax savings derived from the reduced rate under this 
section have been credited to the annuity holders.
Sec. 3.  36 MRSA §2515, as amended by PL 2013, c. 331, Pt. C, §11, is further 
amended to read:
§2515.  Amount of tax
In determining the amount of tax due under sections 2513 and 2531, each company 
shall deduct from the full amount of gross direct premiums the amount of all direct return 
premiums on the gross direct premiums and all dividends paid to policyholders on direct 
premiums, and the tax must be computed by those companies or their agents.  Except 
when direct return premiums are returned in the same tax year that the premium was paid, 
the deduction allowed in this section may be taken only if the tax under this Part has been 
paid.  For tax periods beginning on or after January 1, 2020, the deductions under this 
section related to annuity considerations may be deducted only from annuity 
considerations.
SUMMARY
This bill phases out the insurance premium tax on annuity considerations over 4 years 
beginning in 2020.  During the phase-out period, the prescribed rate applies only if the 
insurer credits the savings from the rate reductions to annuity holders.  The bill also 
specifies that certain deductions related to annuities may be deducted from annuity 
considerations for tax periods beginning on or after January 1, 2020.