2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 4 - FEES AND TAXES (§§ 56-4-101 — 56-4-406) › Part 2 - TAXES (§§ 56-4-201 — 56-4-221) › Section 56-4-210 - "Tennessee securities" defined - Reduction in tax for investments in state

(a)
As used in this chapter, "Tennessee securities" means real estate owned by an insurance company described in subdivision (b)(1) in this state; bonds of the state of Tennessee; bonds or interest- bearing warrants of any county, city, town, school district, municipality or subdivision thereof which is now or may hereafter be constituted and authorized to issue bonds or warrants under the constitution and laws of this state; notes or bonds secured by mortgage or trust deed on property in this state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau thereof; the cash deposits in regular established national or state banks or trust companies in this state, and other short-term investments, on the basis of average daily balances throughout the preceding calendar year; and any other property or security in Tennessee or issued by Tennessee corporations in which by law such insurance company may invest its funds.
(b)
(1)
Any insurance company writing the forms of insurance enumerated in §
56-4-201
, except life insurance companies, fraternal benefit associations, orders or societies, health and accident insurance companies, life and accident insurance companies and nonprofit group hospital service plans, meeting the conditions set forth in this section, shall be entitled to a reduction of or credit upon its gross premiums tax as provided under this part. Any company desiring to qualify for the credit or reduction shall report to the commissioner, on or before March 1 of each year, the amount that the company had invested on March 31, June 30, September 30, and December 31 of the year preceding in Tennessee securities, and the amount that it had invested on those dates in similar securities in the other state in which it had its highest percentage of admitted assets invested.
(2)
If the report of the insurance company shows that the company, as of March 31, June 30, September 30, and December 31 of the year preceding had invested in Tennessee securities, an amount that was not less than seventy percent (70%) nor more than eighty percent (80%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the insurance company's tax on its gross premiums shall be reduced by an amount equal to twenty-five percent (25%) of the tax.
(3)
If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of eighty percent (80%) but not more than ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to fifty percent (50%) of the tax.
(4)
If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to seventy-five percent (75%) of the tax.
(5)
Subdivisions (b)(1)-(4) shall only be applicable to a company having investments, as shown by the report, in Tennessee securities equal to at least twenty-five percent (25%) of its total admitted assets, extended at each quarterly statement value.
(c)
(1)
For the purposes of this section, the securities of such insurance company invested in another state in which it then had the highest percentage of its admitted assets invested, as shown in the report, includes:
(A)
Bonds of the other state;
(B)
Bonds or interest bearing warrants of any county, city, town, school district, municipality or subdivision of any county, city, town, school district or municipality, valued at amortized or market value; notes or bonds secured by mortgage or trust deed on property in the other state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau of the federal government, valued at unpaid principal;
(C)
The cash deposits in regular established national or state banks or trust companies, and other short-term investments, in such other state on the basis of average daily balances throughout the preceding calendar year; and
(D)
Any other property or security in such other state or issued by corporations domiciled in such other state in which by law such insurance company may invest its funds.
(2)
Values of the property or security listed in subdivision (c)(1) are to be valued at market value for purposes of determining the percentage of investment between investments in this state and investments in the other state with the highest percentage of admitted assets invested.
(d)
The reduction or credit provided by this section shall not be applicable with respect to the gross premium tax on premiums paid under policies of insurance directly or indirectly reinsured with any affiliate or affiliates of the company that is the direct writer of the policies, unless the affiliates that actually bear the risk of loss under the reinsurance arrangements would, if considered on a consolidated basis, qualify for the reduction or credit were the affiliates the direct writer.
(e)
(1)
If a workers' compensation self-insurance pool established in §
50-6-405(c)
invests in excess of eighty percent (80%) of its assets, as determined by generally accepted accounting principles, as of December 31 of the preceding year, in Tennessee securities, the workers' compensation self-insurance pools' taxes on its gross premiums shall be reduced by an amount equal to fifty percent (50%) for the current year.
(2)
A workers' compensation self-insurance pool desiring to qualify for the credit or reduction shall report to the commissioner on or before March 1 of each year, the amount the pool had invested as of December 31 of the year preceding with cash and short-term investments based on average daily balances.
(f)
As used in this section:
(1)
"Affiliate" means any insurance company that controls, is controlled by, or is under common control with the insurer writing the policies; and
(2)
"Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a company. "Control" is deemed to exist if any company, directly or indirectly, owns, controls, holds with power to vote, or holds proxies representing more than eighty percent (80%) of the voting securities of any other company.
Amended by 2015 Tenn. Acts, ch. 155,Secs.s6, s7, s8, s9, s10 eff. 1/1/2016.
Amended by 2015 Tenn. Acts, ch. 155,s 5, eff. 1/1/2016.
Acts 1953, ch. 49, § 1 (Williams, § 1248.169); impl. am. Acts 1971, ch. 137, § 2; 1974, ch. 568, §§ 1, 2; T.C.A. (orig. ed.), § 56-414; Acts 1980, ch. 507, § 1; 1998, ch. 1015, § 1.