Committee gives due-pass recommendation to insurer tax bill after rejecting retroactivity and exemption changes

The Ways and Means Committee on March 10 moved engrossed House Bill 2,487, concerning taxes imposed on insurers, to the rules committee with a due-pass recommendation subject to signatures.

Senator Wagner, who presented the bill summary, said the engrossed house version clarifies that the business-and-occupation (B&O) tax exemption for insurance businesses applies only to the insurer paying the premium tax and is limited to the revenue on which that premium tax was paid. Wagner said the house version also adds an interest-and-penalty waiver and alters the advanced computing surcharge (ACS) provisions, lowering the ACS cap in the bill text and exempting insurers who pay premium tax under the ACS. A preliminary fiscal note Wagner cited projects a $62,000,000 revenue increase over four years, about $11,000,000 lower than the original fiscal estimate; Wagner also said the Department of Revenue indicated the tax impact affects fewer than three taxpayers and therefore cannot be publicly disclosed.

Senator Gildan argued against retroactive liability, saying, “These businesses paid their taxes according to the law as it was at the time…and they should not have to pay them retroactively.” Senator Wagner questioned the fairness of changing requirements after a court ruling, calling it “a little…vindictive” to apply changes retroactively to taxpayers who had been ruled correct.

The committee considered several amendments. Amendment 2 (which would have lowered the annual ACS cap further for certain affiliated groups) was defeated by voice vote. Amendment 4 (which would have removed the proposed retroactivity provision) was debated and defeated by voice vote. A striking Amendment 5, which would have conformed the B&O exemption language to a court decision and removed the ACS provisions, was also defeated.

After disposing of the amendments, the committee voted by voice to give engrossed House Bill 2,487 a due-pass recommendation to the rules committee, subject to signatures. The committee recorded no roll-call tally in the transcript; outcomes were decided by voice vote.

The committee will forward the bill to the rules committee for further consideration.