NY Ins L § 9111-B (2021)
2021 New York Laws ISC - Insurance Article 91 - Taxes and Fees 9111-B - Temporary Franchise Tax on Certain Insurance Companies.

§  9111-b. Temporary franchise tax on certain insurance companies. (a) Imposition. (1) For the privilege of conducting business in  this  state and  in  addition  to  any  other requirements therefor, every insurance company subject to the franchise  tax  imposed  by  subdivision  (a)  of section  fifteen  hundred  ten  of  the  tax  law,  other than insurance companies whose  premiums  are  received  solely  as  consideration  for accident and health insurance policies, shall pay a franchise tax of one percent  of  all  gross  direct  premiums, less return premiums thereon, written during the  "event  year",  as  such  term  is  defined  in  the following  sentence, on risks located or residing in this state. For the purposes of this section, "event year" shall mean (A) the calendar  year preceding  the  February  fifth  on  which  the  superintendent fails to provide a certification  to  the  state  commissioner  of  taxation  and finance  that  the  return  of  premium  amounts  to the hospital excess liability pool that has been authorized by  subsection  (a)  of  section five  thousand five hundred seventeen-a of this chapter has been made or (B) the calendar year preceding the  year  in  which  a  final  judicial determination invalidating some or all of the provisions of such section five  thousand  five  hundred  seventeen-a  requires  a  return from the hospital excess liability pool of any or  all  of  the  premium  amounts returned  to  such  pool  pursuant  to  such  section five thousand five hundred seventeen-a or (C) calendar year nineteen hundred ninety-nine if the superintendent  directs  and  the  association  fails  to  make  the transfer  and  deposit to the hospital excess liability pool pursuant to subsection (d) of section  five  thousand  five  hundred  nine  of  this chapter  or  (D)  the  calendar year preceding the year in which a final judicial determination invalidating some or all  of  the  provisions  of such  section five thousand five hundred nine requires a return from the hospital excess liability pool of any or all of the amounts  transferred and  deposited  to  such pool pursuant to subsection (d) of section five thousand five hundred nine.  (2) Determination of direct premiums-general provisions. (A) The  term "premium"  includes  all amounts received as consideration for insurance contracts or reinsurance contracts, other than  for  annuity  contracts, and shall include premium deposits, assessments, policy fees, membership fees,  and  every  other compensation for such contract. In ascertaining the amount of direct premiums upon which a tax  is  payable  under  this section  there  shall  be  first  determined  the  amount of total gross premiums or deposit premiums or assessments, less return thereon, on all policies,  certificates,  renewals,  policies  subsequently   cancelled, insurance  and  reinsurance executed, issued or delivered on property or risks  located  or  resident  in  this  state,  including  premiums  for reinsurance  assumed,  and  also including premiums written, procured or received  in  this  state  on  business  which  cannot  specifically  be allocated  or apportioned and reported as taxable premiums or which have been used as a measure of a tax  on  business  of  any  other  state  or states.  Provided, however, in the case of special risk premiums, direct premiums shall include only those premiums written, procured or received in this state on property or risks located or resident  in  this  state. The  reporting  of  premiums  for the purpose of the tax imposed by this section shall be on a written basis or on a  paid-for  basis  consistent with  the  basis  required  by  the  annual  statement  filed  with  the superintendent of financial services pursuant to section  three  hundred seven of this chapter.  (B)  The  term "gross direct premiums," as used in this section, shall not include premiums  for  policies  issued  pursuant  to  section  four thousand  two  hundred  thirty-six  of  this  chapter  and  premiums for insurance upon hulls, freights, or disbursements, or upon goods,  wares,  merchandise  and  all  other personal property and interests therein, in the  course  of  exportation  from,  importation  into  any  county,  or transportation coastwide, including transportation by land or water from point  of origin to final destination in respect to, appertaining to, or in connection with, any and all risks or perils of  navigation,  transit or  transportation,  and  while  being  prepared for, and while awaiting shipment and during any delays,  storage,  transshipment  or  reshipment incident thereto, including war risks and marine builder's risks.  (C) After determining the amount of total gross premiums, less returns thereon, as hereinbefore provided, there shall be deducted the following items:  (i)  Such  premiums,  less  return  premiums  thereon, which have been received by way of  reinsurance  from  corporations  or  other  insurers authorized to transact business in this state;  (ii) Dividends on such direct business, including unused or unabsorbed portions  of premium deposits paid or credited to policyholders, but not including deferred dividends paid in cash to policyholders  on  maturing policies, nor cash surrender values.  (D)  In  determining  the  amount  of  direct premiums taxable in this state, all such premiums written, procured or  received  in  this  state shall be deemed written on property or risks located or resident in this state  except such premiums as are properly allocated or apportioned and reported as taxable premiums or which have been used as a measure  of  a tax  of  any  other  state  or states, provided, however, in the case of special risk premiums, direct premiums shall include only those premiums written, procured or received in this state on property or risks located or resident in this state.  (b) Payment. Taxes due  under  this  section  shall  be  paid  to  the superintendent in such manner as the superintendent shall prescribe. The tax  shall  be  paid in two installments. The first installment shall be due  within  thirty  days  of  the  time  at  which  the  superintendent determines  such  tax  is  to  be  paid and shall be no less than ninety percent of the tax ultimately determined to be due under  this  section. The  balance  of  any tax due shall be paid on the next succeeding March twenty-fifth. The superintendent is hereby authorized  and  directed  to deposit payments made under this section, and any interest and penalties thereon,  into  the  hospital  excess liability pool created pursuant to subdivision five of section eighteen of chapter two hundred sixty-six of the laws of nineteen hundred eighty-six, as amended.  (c) Returns and reports.  A  return,  in  a  form  prescribed  by  the superintendent,  shall accompany the tax payment due March twenty-fifth. In addition, the superintendent may prescribe a return to accompany  the first installment.  (d)  Interest and penalties. (1) Interest. If any amount of tax is not paid on or before the date prescribed for payment thereof  in  paragraph two  of  this  subsection,  interest  on  such  amount  of  tax  at  the underpayment rate set  by  the  commissioner  of  taxation  and  finance pursuant  to  section  one  thousand ninety-six of the tax law, plus one percentage point, shall be paid to the  superintendent  for  the  period from the date prescribed for payment until the date paid.  (2)  Underpayment  penalty.  If  the  amount  of  tax  paid  by  March twenty-fifth is less than ninety-five  percent  of  the  tax  ultimately determined  to  be  due  pursuant  to  this section, a penalty is hereby imposed equal to one hundred  percent  of  the  difference  between  the amount  of  tax  actually  paid  and  ninety-five  percent  of  the  tax ultimately determined to be due. In addition, this  penalty  shall  bear interest  at  the rate set forth in paragraph one of this subsection for the period from the due date until the date the penalty is paid.  (e) Coordination with other laws. Notwithstanding  the  provisions  of section  one  thousand  one  hundred  twelve of this chapter, taxes paid pursuant to this section shall not be considered in the  calculation  of reciprocal  taxes  due  this  state pursuant to section one thousand one hundred  twelve  of  this  chapter.  Notwithstanding  the  provisions of subdivision (c) of section fifteen hundred eleven of the tax law,  taxes paid  to other states on account of the imposition of the tax imposed by this section shall not be included in the calculation of the tax  credit provided for by subdivision (c) of section fifteen hundred eleven of the tax law.  (f)  Return of excess collections. In the event that total collections from the assessment levied pursuant to this  section  shall  exceed  the amount  required  to  purchase  policies  of excess or equivalent excess coverage for eligible participating  physicians  and  dentists  for  the policy year July first, nineteen hundred ninety-seven to June thirtieth, nineteen  hundred  ninety-eight  or  for  the  policy  year  July first, nineteen  hundred  ninety-eight  to  June  thirtieth,  nineteen  hundred ninety-nine  or  for  the  policy  year  July  first,  nineteen  hundred ninety-nine to June thirtieth, two thousand or for the policy year  July first,  two thousand to June thirtieth, two thousand one and the cost of administering the hospital excess liability  pool  for  such  applicable policy  year,  amounts in excess of such amount shall be returned to the companies that paid such assessment  on  a  pro  rata  basis.  Provided, further,  that  the  amount  required  to purchase policies of excess or equivalent excess coverage for  eligible  participating  physicians  and dentists  for  the policy year July first, nineteen hundred ninety-seven to June thirtieth, nineteen hundred ninety-eight, or for the policy year July first, nineteen hundred ninety-eight to  June  thirtieth,  nineteen hundred ninety-nine, or for the policy year July first, nineteen hundred ninety-nine to June thirtieth, two thousand, or for the policy year July first,  two  thousand  to  June thirtieth, two thousand one, used in the preceding sentence shall be reduced by the "retained amount", if any, as such term is defined in the following sentence. For the purposes of this section, the term "retained amount" shall mean any amount paid into  the hospital  excess  liability  pool  in  accordance with the provisions of section five thousand five hundred seventeen-a of this chapter which has not been returned to the medical malpractice insurance  association  and which  is  not the subject of any state or federal judicial challenge at the time the calculation of amounts to be returned to insurers  pursuant to this subsection is to be made.  (g)  Conditional application of tax. The provisions of subsections (a) through (e) of this section shall apply to all premiums  written  during the  "event year" as such term is defined in paragraph one of subsection (a) of this section. Provided, however, that if the portion  of  premium amounts  refunded  to and received by the hospital excess liability pool from the medical  malpractice  insurance  association  pursuant  to  the requirements  of  subsection  (a)  of section five thousand five hundred seventeen-a of this chapter is not less than the estimated cost  of  all premiums  necessary  for  the  purchase  of  excess or equivalent excess coverage for eligible participating  physicians  and  dentists  for  the policy year July first, nineteen hundred ninety-seven to June thirtieth, nineteen  hundred  ninety-eight  or  for  the  policy  year  July first, nineteen  hundred  ninety-eight  to  June  thirtieth,  nineteen  hundred ninety-nine  or  for  the  policy  year  July  first,  nineteen  hundred ninety-nine to June thirtieth, two thousand or for the policy year  July first,  two thousand to June thirtieth, two thousand one and the cost of administering the hospital excess liability  pool  for  such  applicable policy  year,  as  certified  by the superintendent and submitted by the  superintendent to the medical malpractice  insurance  association,  then the  superintendent  shall certify to the state commissioner of taxation and finance no later than February fifth following the calendar year  in which  such  return  of  premiums  is required to be made by the medical malpractice insurance association that the required  minimum  return  of premium  amounts  has  been made to and received by the pool and in such event the tax otherwise imposed by subsections (a) through (e)  of  this section  shall not be imposed and the provisions of such subsections (a) through (e) shall in  such  event  not  be  applied.  Provided  further, however,  that  if  there is a final judicial determination invalidating some or all of the provisions of  section  five  thousand  five  hundred seventeen-a  of  this  chapter  and requiring a return from the hospital excess liability pool of any or all of the  amounts  transferred  to  it pursuant  to  such  section five thousand five hundred seventeen-a, then the tax imposed pursuant to the provisions of  subsections  (a)  through (e)  of  this  section  shall  be  reinstated and the provisions of such subsections (a) through (e) shall in such  event  be  applied.  In  such event,  the  superintendent  shall  notify  the  state  commissioner  of taxation and finance that such  amounts  have  been  returned  from  the hospital  excess  liability  pool  and  the  taxes  imposed  pursuant to subsections (a) through (e) of this section as  modified  by  subsection (f)  of this section shall be due and payable within thirty days of such notification.  (h) Judicial review. Notwithstanding any other law:  (1) Application for  judicial  review  of  final  determination;  time limitation;  deposit; undertaking. Any final determination of the amount of any tax payable under subsections (a) through  (e)  of  this  section shall  be reviewable for error, illegality or unconstitutionality or any other reason whatsoever by a proceeding under article  seventy-eight  of the  civil practice law and rules if application therefor is made to the supreme court within four months after the giving of the notice of  such final  determination,  provided, however, that any such proceeding under article seventy-eight of the civil practice law and rules shall  not  be instituted  unless (A) the amount of any tax sought to be reviewed, with such interest and penalties thereon as may be provided for by such  law, shall  be  first deposited with the superintendent and there is filed an undertaking, issued by a surety company authorized to transact  business in  this  state  and  approved  by the superintendent as to solvency and responsibility, in such amount as a justice of the supreme  court  shall approve  to  the  effect that if such proceeding be dismissed or the tax confirmed the petitioner will pay all costs and charges which may accrue in the prosecution of such proceeding  or  (B)  at  the  option  of  the petitioner,  such  undertaking  may  be  in  sum sufficient to cover the taxes, interest and penalties stated in  such  determination,  plus  the costs  and charges which may accrue against it in the prosecution of the proceeding, in which event the  petitioner  shall  not  be  required  to deposit  such  taxes,  interest or penalties as a condition precedent to the application.  (2) Judicial review of superintendent's denial of  timely  application for  refund  or  revision;  time  limitation; undertaking. Where any tax imposed under such subsections  (a)  through  (e)  of  this  section  is asserted  to  have  been  erroneously,  illegally  or unconstitutionally assessed or collected and application for the refund or revision thereof timely made to the superintendent, and  the  superintendent  shall  have made a determination denying such refund or revision, such determination shall  be  reviewable by a proceeding under article seventy-eight of the civil practice law and rules,  provided  (A)  that  such  proceeding  is instituted within four months after giving of the notice of such denial,  (B)  that  a final determination of tax due was not previously made, and (C) that an undertaking is filed with the superintendent in such  amount and  with  such sureties as a justice of the supreme court shall approve to the effect that if such proceeding be dismissed or the tax confirmed, the  petitioner  will  pay  all costs and charges that may accrue in the prosecution of such proceeding.  (3) Exception;  action  for  declaratory  judgment;  time  limitation; deposit;  undertaking.  Except  as provided in paragraphs one and two of this subsection, no  determination  or  proposed  determination  of  tax imposed  under  subsections  (a)  through  (e)  of this section shall be enjoined or reviewed by an action for declaratory  judgment,  an  action for  money had and received or by any action or proceeding under article seventy-eight of the civil practice law and  rules,  provided,  however, that  a  taxpayer  may  proceed  by  declaratory  judgment,  if  suit is instituted within thirty days after issuance of a notice of tax due  and the  amount  of the tax in controversy, with such interest and penalties thereon as may be provided for by such law, shall be deposited with  the superintendent  and  there  is  filed an undertaking, issued by a surety company authorized to transact business in this state  and  approved  by the  superintendent as to solvency and responsibility, in such amount as a justice of the supreme court shall approve to the effect that if  such proceeding be dismissed or the tax confirmed the petitioner will pay all costs and charges which may accrue in the prosecution of such proceeding or  at  the  option  of the petitioner, such undertaking may be in a sum sufficient to cover the taxes, interest and  penalties  stated  in  such notice,  plus  the  costs and charges which may accrue against it in the prosecution of the proceeding, in which event the petitioner  shall  not be  required to deposit such taxes, interest or penalties as a condition precedent to the application.  (4) Venue for any action or  proceeding.  Venue  for  any  declaratory judgment action, article seventy-eight proceeding or any other action or proceeding  in  relation  to this section shall be in the supreme court, Albany county, and any such action or proceeding shall be entitled to  a preference both at trial and in any appeal.