What's happening
This bill imposes a 50% franchise tax on companies' gross receipts from life insurance policy benefits received for employees and retirees.
Why it matters
Significantly increases tax liability for companies. By imposing a 50% franchise tax on gross receipts from life insurance policy benefits received for employees and retirees, this bill would dramatically reduce the financial incentive for companies to purchase and benefit from these policies.
Targets “janitor’s insurance” and similar practices. The legislation addresses the controversial practice where companies take out life insurance policies on employees and retirees—sometimes without their knowledge—and collect the benefits when those individuals pass away, effectively discouraging this practice through steep taxation.
Could impact employee benefit structures and costs. Companies may reconsider offering or maintaining certain life insurance-related benefits, potentially affecting how they structure compensation and post-employment benefits for their workforce and retirees.
Adds compliance and recordkeeping burdens. Companies subject to this new tax must keep detailed records for at least three years, increasing administrative responsibilities and potential audit exposure.
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Who cares
Companies holding life insurance on employees or retirees
They would face an annual tax equal to 50% of gross receipts from those policies’ proceeds for taxable years beginning on or after January 1, 2020.
Corporate tax and records-management staff
Covered companies would have to keep business records in the form required by the tax commissioner, generally for three years unless the commissioner allows earlier destruction or requires longer retention.
New York State tax administrators
The bill would give the tax commissioner authority to prescribe recordkeeping requirements for companies subject to the new tax.
Headline styles
Tax Life Insurance Benefits
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to ways and means
- Referred to ways and means
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
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 Assembly, do enact as follows:
Section 1. The tax law is amended by adding a new section 182-b to read as follows:
§ 182-b. Additional franchise tax on certain life insurance policies. 1. Notwithstanding any other provision of this chapter, or of any other law, for taxable years beginning on or after January first, two thousand twenty, an annual tax is hereby imposed upon every company receiving benefits from life insurance policies it has obtained on its employees and/or retirees equal to fifty per centum of its gross receipts from all proceeds from such life insurance policies, for the privilege of exercising its corporate franchise, or of doing business, or of employing capital, or of owning or leasing property in this state in a corporate or organized capacity, or of maintaining an office in this state, for all or any part of each of its taxable years.
2. Every company subject to tax under this section shall keep such records of its business in such form as the commissioner may require, and such records shall be preserved for a period of three years, except that the commissioner may consent to their destruction within that period or may require that they be kept longer.
§ 2. This act shall take effect immediately and shall apply to taxable 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
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.