OLR Bill Analysis

HB 5156

AN ACT ALLOWING THE TRANSFERS OF TAX CREDITS TO INSURANCE COMPANY AFFILIATES.

SUMMARY:

This bill permits an insurance company or HMO to transfer an allowed premium tax credit to its affiliate, who may use it toward its own premium tax liability. Under current law, the entity that earns a tax credit must be the one to use it.

It prohibits the revenue services commissioner from allowing the affiliate to claim the transferred credit unless the insurer or HMO and affiliate file any related information the commissioner requires by the due date of the tax return on which the insurer or HMO would have taken the credit if it had not transferred it to the affiliate.

EFFECTIVE DATE: July 1, 2008 and applicable to income tax years beginning on and after January 1, 2008.

BACKGROUND

Insurance Company for Premium Tax Purposes

Under the premium tax law, "insurance company" means any corporation, limited liability company, association, partnership or combination of persons doing any kind or form of insurance business other than a fraternal benefit society (CGS § 12-201(4)).

Affiliate

By law, an "affiliate" is a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another person (CGS § 38a-1(1)).

Tax Credits

State law includes various tax credits that businesses may use against certain tax liabilities. Insurers are permitted to use several of those credits to reduce their premium tax liabilities.

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable