Bill Text: MI SB1016 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Corporate income tax; insurance companies; rate; reduce for certain gross premiums. Amends sec. 635 of 1967 PA 281 (MCL 206.635).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-09-05 - Assigned Pa 0222'18 With Immediate Effect [SB1016 Detail]
Download: Michigan-2017-SB1016-Engrossed.html
SB-1016, As Passed House, June 7, 2018
SB-1016, As Passed Senate, May 23, 2018
SUBSTITUTE FOR
SENATE BILL NO. 1016
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 635 (MCL 206.635), as amended by 2018 PA 31.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 635. (1) Except as otherwise provided under subsection
(4) or (6), each insurance company shall pay a tax determined under
this chapter.
(2) The tax imposed by this chapter on each insurance company
shall be a tax equal to 1.25% of gross direct premiums written on
property or risk located or residing in this state. However,
beginning on January 1, 2019, for gross direct premiums
attributable to qualified health insurance policies the tax imposed
shall be a tax equal to 0.95% through December 31, 2019, and for
the 2020 tax year and each tax year after 2020, the tax rate for
those gross direct premiums attributable to qualified health
insurance policies shall be determined as provided under subsection
(7). Direct premiums do not include any of the following:
(a) Premiums on policies not taken.
(b) Returned premiums on canceled policies.
(c) Receipts from the sale of annuities.
(d) Receipts on reinsurance premiums if the tax has been paid
on the original premiums.
(e) The first $190,000,000.00 of disability insurance premiums
written in this state, other than credit insurance and disability
income insurance premiums, of each insurance company subject to tax
under this chapter. This exemption shall be reduced by $2.00 for
each $1.00 by which the insurance company's gross direct premiums
from insurance carrier services in this state and outside this
state exceed $280,000,000.00.
(3) The tax calculated under this chapter is in lieu of all
other privilege or franchise fees or taxes imposed by this part or
any other law of this state, except taxes on real and personal
property, taxes collected under the general sales tax act, 1933 PA
167, MCL 205.51 to 205.78, and taxes collected under the use tax
act, 1937 PA 94, MCL 205.91 to 205.111, and except as otherwise
provided in the insurance code of 1956, 1956 PA 218, MCL 500.100 to
500.8302.
(4) The tax imposed and levied under this chapter does not
apply to an insurance company authorized under chapter 46 or 47 of
the insurance code of 1956, 1956 PA 218, MCL 500.4601 to 500.4673
and 500.4701 to 500.4747.
(5) For a taxpayer subject to the tax imposed under chapter
11, that portion of the tax base attributable to the services
provided by an attorney-in-fact to a reciprocal insurer pursuant to
chapter 72 of the insurance code of 1956, 1956 PA 218, MCL 500.7200
to 500.7234, is exempt from the tax imposed by that chapter.
(6) The tax imposed and levied under this chapter does not
apply to a health maintenance organization authorized under chapter
35 of the insurance code of 1956, 1956 PA 218, MCL 500.3501 to
500.3573.
(7) By October 1, 2020 and each October 1 thereafter, the
department shall determine the tax rate to be imposed on gross
direct premiums attributable to qualified health insurance policies
for that calendar year as follows:
(a) Calculate the total liability for all taxpayers after all
credits for qualified health insurance policies under this chapter
and section 476a of the insurance code of 1956, 1956 PA 218, MCL
500.476a, for the prior calendar year.
(b) Calculate the total liability for all taxpayers after all
credits for qualified health insurance policies under this chapter
at a rate of 1.25% and section 476a of the insurance code of 1956,
1956 PA 218, MCL 500.476a, for the prior calendar year.
(c) Determine the actual amount of savings for the prior year
as a result of the rate reduction under subsection (2) by
subtracting the amount determined under subdivision (a) from the
amount determined under subdivision (b).
(d) Determine the amount of savings above the savings limit
for the prior calendar year, by subtracting $18,000,000.00 from the
amount determined under subdivision (c).
(e) Determine the current year savings limit by subtracting
the sum of the amounts determined under subdivision (d) for each
calendar year beginning on and after January 1, 2019 from
$18,000,000.00.
(f) Calculate the rate reduction for the current calendar year
by dividing the amount determined under subdivision (e) by the
amount of prior year gross direct premiums attributable to
qualified health insurance policies written by taxpayers with no
liability under section 476a of the insurance code of 1956, 1956 PA
218, MCL 500.476a, for the prior calendar year.
(g) Calculate the tax rate for the current calendar year by
subtracting the amount determined under subdivision (f) from
0.0125.
(8) The state treasurer shall develop a method to account for
changes in tax liability occurring after the calculation of the
immediately succeeding calendar year's rate.
(9) As used in this section, "qualified health insurance
policies" means policies written on risk located or residing in
this state that are 1 of the following types of policies:
(a) Comprehensive major medical, regardless of whether the
policy is eligible for a health savings account or purchased on the
health insurance marketplace.
(b) Student.
(c) Children's health insurance program.
(d) Medicaid.
(e) Employer comprehensive, regardless of whether the policy
is eligible for a health savings account or purchased on the health
insurance marketplace.
(f) Multiple employer associations or trusts and any other
employer associations and trusts.
