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A06112 Summary:

BILL NOA06112
 
SAME ASNo Same As
 
SPONSORCrespo
 
COSPNSR
 
MLTSPNSR
 
Add 182-b, Tax L
 
Provides for an additional franchise tax on life insurance policies obtained by companies on its employees and/or retirees.
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A06112 Actions:

BILL NOA06112
 
02/23/2017referred to ways and means
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A06112 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6112
 
SPONSOR: Crespo
  TITLE OF BILL: An act to amend the tax law, in relation to providing an additional franchise tax on certain life insurance policies   PURPOSE: Provides for an additional 50% tax on certain life insurance policies.   SUMMARY OF PROVISIONS: Section 1. Amends the Tax Law by adding a new Section 182-b. Imposes a fifty-percent (50%) tax on every company that has a corporate franchise, or does business, or has employees or owns or leases property, or main- tains an office in this state and that receives benefits from life insurance policies obtained on its employees and/or retirees. Requires records to be kept in a form as the Commissioner of Taxation and Finance may require. Provides that the Commissioner of Taxation and Finance may consent to the destruction of such records within three years or require that such records be kept longer than three years. Section 2. Effective Date   EXISTING LAW: None.   JUSTIFICATION: While the worst of the Great Recession seems to be over, New York State continues to face budget deficits. Drastic spending cuts to many worthy programs in the State Office for the Aging, the Department of Health, SUNY and CUNY are likely. Unfortunately, little has been done to find sources of revenue to mitigate New York State's serious financial circumstances. Despite this bleak economic picture, corporations are reaping huge financial benefits from life insurance policies they take out on their employees and or retirees. Corporate owned life insurance, better known as "dead peasants" or "janitors" insurance, is a life insurance policy that is taken out on low-level employees, often without the knowledge or consent of the employee, and whose families are not named as benefici- aries when the employee or retiree dies. When the employee or retiree dies, these tax free benefits are collected by the employer. Further- more, companies frequently use these policies to pay for retirement benefits and other perks for their top executives. Companies that supposedly engage in the practice of purchasing these policies include Wal-Mart, Dow Chemical, Proctor & Gamble and Walt Disney. One tragic example of this practice is that of a 48 year old assistant manager at Wal-Mart who died of a massive heart attack. The man's widow became the lead plaintiff in a class action suit after she learned that Wal-Mart collected $300,000 from a life insurance policy it owned on him. This bill would impose a 50% tax on all benefits received by companies in New York State who take out life insurance policies on their employ- ees or retirees.   LEGISLATIVE HISTORY: A632A of 2015 died in ways and means. 2013: S.388 - Referred to investigations and Government Operations/A. 3896 - Referred to Ways and Means 2012: S.262-A - Amend and recommit to Investigations and Government Operations/A.1111-A Amend and recommit to Ways and Means 2011: S.262 - Defeated in Investigations and Government Operations/A.1111 - Referred to Ways and Means 2010: S.6236A - Amend and Recommit to Investigations and Government Operations/A.9439 Amend and Recommit to Ways and Means 2009: S.6236 - Referred to Rules A3896A of 2013 died in ways and means.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2019.
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A06112 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6112
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 23, 2017
                                       ___________
 
        Introduced by M. of A. CRESPO -- read once and referred to the Committee
          on Ways and Means
 
        AN  ACT  to  amend  the  tax law, in relation to providing an additional
          franchise tax on certain life insurance policies
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  The  tax  law is amended by adding a new section 182-b to
     2  read as follows:
     3    § 182-b. Additional franchise tax on certain life insurance  policies.
     4  1.  Notwithstanding any other provision of this chapter, or of any other
     5  law, for taxable years beginning on or after January first, two thousand
     6  twenty, an annual tax is hereby imposed  upon  every  company  receiving
     7  benefits  from  life insurance policies it has obtained on its employees
     8  and/or retirees equal to fifty per centum of its gross receipts from all
     9  proceeds from such life insurance policies, for the privilege  of  exer-
    10  cising  its  corporate  franchise, or of doing business, or of employing
    11  capital, or of owning or leasing property in this state in  a  corporate
    12  or  organized  capacity,  or of maintaining an office in this state, for
    13  all or any part of each of its taxable years.
    14    2. Every company subject to tax under this  section  shall  keep  such
    15  records  of  its  business in such form as the commissioner may require,
    16  and such records shall be preserved for a period of three years,  except
    17  that the commissioner may consent to their destruction within that peri-
    18  od or may require that they be kept longer.
    19    § 2. This act shall take effect immediately and shall apply to taxable
    20  years beginning on or after January 1, 2020.
 
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07188-01-7
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