2023 New York Laws › ISC - Insurance › Article 91 - Taxes and Fees › 9111-C - Temporary Franchise Tax on Certain Insurance Companies.

§  9111-c. 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 two
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 risk located or residing in this state. For the purposes  of
this  section,  "event  year" shall mean (A) the calendar year preceding
any calendar year in which the association fails to make  transfers  and
deposits  to  the  miscellaneous  special  revenue  fund  that have been
authorized by subsections (a) and (b)  of  section  five  thousand  five
hundred sixteen-f of this chapter 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 sixteen-f
requires a return from the miscellaneous special revenue fund of any  or
all  of  the  amounts  transferred  and  deposited in such miscellaneous
special revenue fund pursuant to such section five thousand five hundred
sixteen-f.
(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 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 provided in this subsection, 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 in 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 miscellaneous special revenue fund.
(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  be  transferred  and  deposited  by  the  medical

malpractice insurance association into the miscellaneous special revenue
fund pursuant to section five thousand five hundred  sixteen-f  of  this
chapter,  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 be so transferred and deposited  as
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 miscellaneous special revenue fund in accordance
with the provisions of section five thousand five hundred  sixteen-f  of
this  chapter  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  amounts
received  by  the  miscellaneous  special  revenue fund from the medical
malpractice  insurance  association  pursuant  to  the  requirements  of
section five thousand five hundred sixteen-f of this chapter is not less
than  the  amount  required  to  be  transferred  and  deposited  to the
miscellaneous special revenue fund pursuant  to  section  five  thousand
five  hundred  sixteen-f  of  this chapter then the superintendent shall
certify to the commissioner  of  taxation  and  finance  no  later  than
February fifth following the calendar year in which transfer and deposit
is  required to be made by the medical malpractice insurance association
that the required transfer and deposit of such amounts has been made  to
and received by the miscellaneous special revenue fund 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 sixteen-f  of  this
chapter  and  requiring  a return from the miscellaneous special revenue
fund of any or all of  the  amounts  transferred  and  deposited  to  it
pursuant  to such section five thousand five hundred sixteen-f, 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 commissioner  of  taxation  and  finance
that  such  amounts  have  been  returned from the miscellaneous special
revenue fund 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  which  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  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.