S Sub. for HB 2082--Am. by SCW
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[As Amended by Senate Committee of the
Whole]
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Session of 1997
Senate Substitute for HOUSE BILL No. 2082
By Committee on Assessment and Taxation
3-27
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10 AN ACT concerning insurance; insurance department service regulation
11 fund; disposition of fees and certain taxes; assessments for mainte-
12 nance and expenses of department; exemptions; penalties and interest;
13 transfers from state general fund, temporary insufficiencies; schedule
14 of fees and taxes for insurance companies and fraternal benefit soci-
15 eties; credit; deductions; returns; time for payment; repealing privilege
16 tax; amending K.S.A. 40-112, 40-252, 40-252b, 40-252c, 40-253 and
17 40-2801 and K.S.A. 1996 Supp. 40-246 and repealing the existing
18 sections.
19
20 Be it enacted by the Legislature of the State of Kansas:
21 Section 1. K.S.A. 40-112 is hereby amended to read as follows: 40-
22 112. (a) For the purpose of maintaining the insurance department and
23 the payment of expenses incident thereto, there is hereby established the
24 insurance department service regulation fund in the state treasury which
25 shall be administered by the commissioner of insurance. All expenditures
26 from the insurance department service regulation fund shall be made in
27 accordance with appropriation acts upon warrants of the director of ac-
28 counts and reports issued pursuant to vouchers approved by the com-
29 missioner of insurance or by a person or persons designated by the com-
30 missioner.
31 (b) On and after the effective date of this act, all fees received by the
32 commissioner of insurance pursuant to any statute and the portion of taxes
33 received pursuant to K.S.A. 40-252 and amendments thereto, which is
34 certified by the commissioner of insurance to be necessary for the pur-
35 poses of the insurance department service regulation fund and which,
36 together with the total amount of fees deposited to the credit of the
37 insurance department service regulation fund pursuant to this subsection,
38 does not total more than $4,800,000 for any fiscal year, shall be remitted
39 to the state treasurer for deposit in the state treasury and credited to the
40 insurance department service regulation fund. The total amount credited
41 to the insurance department service regulation fund pursuant to this sub-
42 section for any fiscal year shall not exceed $4,800,000.
43 (c) Except as otherwise provided by this section, the commissioner
S Sub. for HB 2082--Am. by SCW
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1 of insurance shall make an annual assessment for the fiscal year ending
2 June 30, 1993, and for each fiscal year thereafter, on each group of affil-
3 iated insurers whose certificates of authority to do business in this state
4 are in good standing at the time of the assessment. The total amount of
5 all such assessments for a fiscal year shall be equal to the amount sufficient
6 which, when combined with the total amount to be credited to the in-
7 surance department service regulation fund pursuant to subsection (b) is
8 equal to the amount approved by the legislature to fund the insurance
9 company regulation program. With respect to each group of affiliated
10 insurers, such assessment shall be in proportion to the amount of total
11 assets of the group of affiliated insurers as reported to the commissioner
12 of insurance pursuant to K.S.A. 40-225 and amendments thereto for the
13 immediately preceding calendar year, shall not be less than $500 and shall
14 not be more than the amount equal to .0000015 of the amount of total
15 assets of the group of affiliated insurers or $25,000, whichever is less. The
16 total assessment for any fiscal year after the fiscal year ending June 30,
17 1993, shall not increase by any amount greater than 15% of the total
18 budget approved by the legislature to fund the insurance company reg-
19 ulation program for the fiscal year immediately preceding the fiscal year
20 for which the assessment is made. In the event the total amount of the
21 assessment would be less than the aggregate amount resulting by assess-
22 ing the $500 minimum on each insurer, the commissioner may establish
23 a lower minimum to be assessed equally on each insurer.
24 (d) If, by the laws of any state other than Kansas or by the retaliatory
25 laws of any state other than Kansas, any insurer domiciled in Kansas shall
26 be required to pay any fee or tax in such other state of licensure, and the
27 fee or tax is due and payable either because the insurance department
28 service regulation fee imposed by this section on insurers licensed in Kan-
29 sas and organized or domiciled in such other state is greater than the
30 comparable fee or tax assessed in such other state, or such other state has
31 no comparable fee or tax but requires payment on a retaliatory basis, then
32 to the extent such fee or tax amounts are legally due and are paid in such
33 other state, any insurer domiciled in Kansas may claim a dollar-for-dollar
34 credit for such fees paid against its annual premium taxes due the state
35 of Kansas under K.S.A. 40-252 and amendments thereto, but such credit
36 shall only be calculated on the amount which would not have been re-
37 quired to be paid in such other state of licensure in the absence of the
38 existence of the insurance department service regulation fee imposed by
39 this section, and in no event shall the credit permitted by this section
40 exceed 90% of the insurer's annual premium tax due the state of Kansas.
41 The insurance commissioner shall prescribe the forms for reporting such
42 credits.
43 (d) (e) Assessments payable under this section shall be past due if not
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1 paid to the insurance department within 45 days of the billing date of
2 such assessment. A penalty equal to 10% of the amount assessed shall be
3 imposed upon any past due payment and the total amount of the assess-
4 ment and penalty shall bear interest at the rate of 1.5% per month or any
5 portion thereof.
6 (e) (f) On or after July 1, 1992, when there exists in the insurance
7 department service regulation fund a deficiency which would render such
8 fund temporarily insufficient during any fiscal year to meet the insurance
9 department's funding requirements, the commissioner of insurance shall
10 certify the amount of the insufficiency. Upon receipt of any such certi-
11 fication, the director of accounts and reports shall transfer an amount of
12 moneys equal to the amount so certified from the state general fund to
13 the insurance department service regulation fund. On June 30 of any fiscal
14 year during which an amount or amounts are certified and transferred
15 under this subsection, the director of accounts and reports shall provide
16 for the repayment of the amounts so transferred and shall transfer the
17 amount equal to the total of all such amounts transferred during the fiscal
18 year from the insurance department service regulation fund to the state
19 general fund.
20 (f) (g) Any unexpended balance in the insurance department service
21 regulation fund at the close of a fiscal year shall remain credited to the
22 insurance department service regulation fund for use in the succeeding
23 fiscal year and shall be used to reduce future assessments or to accom-
24 modate cash flow demands on the fund.
25 (g) (h) The commissioner of insurance shall exempt the assessment
26 of any insurer which, as of December 31 of the calendar year preceding
27 the assessment, has a surplus of less than two times the minimum amount
28 of surplus required for a certificate of authority on and after May 1, 1994,
29 and which is subject to the premium tax liability imposed on insurers
30 organized under the laws of this state. The commissioner of insurance
31 may also exempt or defer, in whole or in part, the assessment of any other
32 insurer if, in the opinion of the commissioner of insurance, immediate
33 payment of the total assessment would be detrimental to the solvency of
34 the insurer.
35 (h) (i) As used in this section:
36 (1) ``Affiliates'' or ``affiliated'' has the meaning ascribed by K.S.A. 40-
37 3302 and amendments thereto;
38 (2) ``group'' or ``group of affiliated insurers'' means the affiliated in-
39 surers of a group and also includes an individual, unaffiliated insurer; and
40 (3) ``insurer'' means any insurance company, as defined by K.S.A. 40-
41 201 and amendments thereto, any fraternal benefit society, as defined by
42 K.S.A. 40-738 and amendments thereto, any reciprocal or interinsurance
43 exchange under K.S.A. 40-1601 through 40-1614 and amendments
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1 thereto, any mutual insurance company organized to provide health care
2 provider liability insurance under K.S.A. 40-12a01 through 40-12a09 and
3 amendments thereto, any mutual nonprofit hospital service corporation
4 under K.S.A. 40-1801 through 40-1816 and amendments thereto, any
5 nonprofit medical service corporation under K.S.A. 40-1901 through 40-
6 1915 and amendments thereto, any nonprofit dental service corporation
7 under K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any
8 nonprofit optometric service corporation under K.S.A. 40-19b01 through
9 40-19b14 and amendments thereto, any nonprofit medical and hospital
10 service corporation under K.S.A. 40-19c01 through 40-19c11 and amend-
11 ments thereto, any health maintenance organization, as defined by K.S.A.
12 40-3202 and amendments thereto, or any captive insurance company, as
13 defined by K.S.A. 40-4301 and amendments thereto, which is authorized
14 to do business in Kansas.
15 Sec. 2. K.S.A. 1996 Supp. 40-246 is hereby amended to read as fol-
16 lows: 40-246. The commissioner of insurance is prohibited from issuing
17 any license or authority to write policies of insurance, or to solicit and
18 obtain such policies, to any person, agent or corporation, unless such
19 person, agent or corporation is a legal resident of this state at the time
20 such license or authority is issued. Under such regulations and restrictions
21 deemed necessary by the commissioner of insurance, licenses may be
22 issued to nonresident agents, who are licensed by the state in which they
23 reside, upon the payment of an annual fee of $10. Whenever any other
24 state imposes on Kansas companies or agents additional or greater fees,
25 obligations or prohibitions, the same shall be imposed on similar com-
26 panies and agents of such other state. Whenever any person, agent or
27 corporation so authorized to issue policies of insurance and solicit and
28 transact insurance business shall remove from this state the authority
29 issued to such person, agent or corporation shall be revoked, and the
30 same shall be null and void $25.
31 Sec. 3. K.S.A. 40-252 is hereby amended to read as follows: 40-252.
32 Every insurance company or fraternal benefit society organized under the
33 laws of this state or doing business in this state shall pay to the commis-
34 sioner of insurance fees and taxes specified in the following schedule:
35 A
36 Insurance companies organized under
37 the laws of this state:
38 1. Capital stock insurance companies and mutual legal reserve life insurance companies:
39 Filing application for sale of stock or certificates of indebtedness$25
40 Admission fees:
41 Examination of charter and other documents[nt500
42 Filing annual statement[nt100
43 Certificate of authority[nt10
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1 Annual fees:
2 Filing annual statement100
3 Continuation of certificate of authority[nt10
4 2. Mutual life, accident and health associations:
5 Admission fees:
6 Examination of charter and other documents$500
7 Filing annual statement[nt100
8 Certificate of authority[nt10
9 Annual fees:
10 Filing annual statement100
11 Continuation of certificate of authority[nt10
12 3. Mutual fire, hail, casualty and multiple line insurers and reciprocal or interinsurance
13 exchanges:
14 Admission fees:
15 Examination of charter and other documents$500
16 Filing annual statement[nt100
17 Certificate of authority[nt10
18 Annual fees:
19 Filing annual statement100
20 Continuation of certificate of authority[nt10
21 In addition to the above fees and as a condition precedent to the con-
22 tinuation of the certificate of authority provided in this code, all such
23 companies shall pay a fee of $2 for each agent certified by the company
24 and shall also pay a tax annually upon all premiums received on risk lo-
25 cated in this state at the rate of 1% for tax year 1997, and 2% for all tax
26 years thereafter per annum less (1) for tax years prior to 1984, any taxes
27 paid on business in this state pursuant to the provisions of K.S.A. 40-1701
28 to 40-1707, inclusive, and 75-1508 and amendments thereto and (2) for
29 tax years 1984 and thereafter, any taxes paid on business in this state
30 pursuant to the provisions of K.S.A. 75-1508 and amendments thereto
31 and the amount of the firefighters relief tax credit determined by the
32 commissioner of insurance. The amount of the firefighters relief tax credit
33 for a company for the current tax year shall be determined by the com-
34 missioner of insurance by dividing (A) the total amount of credits against
35 the 1% tax imposed by this section for taxes paid by all such companies
36 on business in this state under K.S.A. 40-1701 to 40-1707, inclusive, and
37 amendments thereto for tax year 1983, by (B) the total amount of taxes
38 paid by all such companies on business in this state under K.S.A. 40-1703
39 and amendments thereto for the tax year immediately preceding the cur-
40 rent tax year, and by multiplying the result so obtained by (C) the amount
41 of taxes paid by the company on business in this state under K.S.A. 40-
42 1703 and amendments thereto for the current tax year.
43 Funds accepted by a life insurer under an agreement which provides
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1 for an accumulation of funds to purchase taxable annuities at later dates
2 shall be taxable premiums either when received or when actually applied
3 to the purchase of annuities, at the option of the insurer. If the funds are
4 declared upon receipt, any interest or other gain that accrues thereon
5 shall not be taxable as premium income, but if the funds are declared
6 when applied to the purchase of annuities, the premium tax shall be paid
7 on the entire amount so applied. Any such funds declared upon receipt
8 which are thereafter withdrawn before application to the purchase of
9 annuities may be deducted from tax base as ``premiums'' returned on
10 account of cancellations.
11 In the computation of the gross premiums all such companies shall be
12 entitled to deduct any premiums returned on account of cancellations,
13 including funds accepted before January 1, 1997, and declared and taxed
14 as annuity premiums which, on or after January 1, 1997, are withdrawn
15 before application to the purchase of annuities, all premiums received for
16 reinsurance from any other company authorized to do business in this
17 state, dividends returned to policyholders and premiums received in con-
18 nection with the funding of a pension, deferred compensation, annuity
19 or profit-sharing plan qualified or exempt under sections 401, 403, 404,
20 408, 457 or 501 of the United States internal revenue code of 1986.
21 Should any such company remove or maintain, or both, either their home,
22 principal or executive office or offices from this state, every such company
23 shall be subject to the provisions of subsection D of this section. Funds
24 received by life insurers for the purchase of annuity contracts and funds
25 applied by life insurers to the purchase of annuities shall not be deemed
26 taxable premiums or be subject to tax under this section for tax years
27 commencing on or after January 1, 1997.
28 B
29 Fraternal benefit societies organized
30 under the laws of this state:
31 Admission fees:
32 Examination of charter and other documents$500
33 Filing annual statement[nt100
34 Certificate of authority[nt10
35 Annual fees:
36 Filing annual statement100
37 Continuation of certificate of authority[nt10
38 C
39 Mutual nonprofit hospital service corporations, nonprofit medical service corporations, non-
40 profit dental service corporations, nonprofit optometric service corporations and non-
41 profit pharmacy service corporations organized under the laws of this state:
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1 1. Mutual nonprofit hospital service corporations:
2 Admission fees:
3 Examination of charter and other documents$500
4 Filing annual statement[nt100
5 Certificate of authority[nt10
6 Annual fees:
7 Filing annual statement100
8 Continuation of certificate of authority[nt10
9 2. Nonprofit medical service corporations:
10 Admission fees:
11 Examination of charter and other documents$500
12 Filing annual statement[nt100
13 Certificate of authority[nt10
14 Annual fees:
15 Filing annual statement100
16 Continuation of certificate of authority[nt10
17 3. Nonprofit dental service corporations:
18 Admission fees:
19 Examination of charter and other documents$500
20 Filing annual statement[nt100
21 Certificate of authority[nt10
22 Annual fees:
23 Filing annual statement100
24 Continuation of certificate of authority[nt10
25 4. Nonprofit optometric service corporations:
26 Admission fees:
27 Examination of charter and other documents$500
28 Filing annual statement[nt100
29 Certificate of authority[nt10
30 Annual fees:
31 Filing annual statement100
32 Continuation of certificate of authority[nt10
33 5. Nonprofit pharmacy service corporations:
34 Admission fees:
35 Examination of charter and other documents$500
36 Filing annual statement[nt100
37 Certificate of authority[nt10
38 Annual fees:
39 Filing annual statement100
40 Continuation of certificate of authority[nt10
41 In addition to the above fees and as a condition precedent to the con-
42 tinuation of the certificate of authority, provided in this code, every cor-
43 poration or association shall pay annually to the commissioner of insur-
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1 ance a privilege fee tax in an amount equal to 1% 2% per annum of the
2 total of all premiums, subscription charges, or any other term which may
3 be used to describe the charges made by such corporation or association
4 to subscribers for hospital, medical or other health services or indemnity
5 received during the preceding year. In such computations all such cor-
6 porations or associations shall be entitled to deduct any premiums or
7 subscription charges returned on account of cancellations and dividends
8 returned to members or subscribers.
9 D
10 Insurance companies organized under the
11 laws of any other state, territory or country:
12 1. Capital stock insurance companies and mutual legal reserve life insurance companies:
13 Filing application for sale of stock or certificates of indebtedness$25
14 Admission fees:
15 Examination of charter and other documents[nt500
16 Filing annual statement[nt100
17 Certificate of authority[nt10
18 Annual fees:
19 Filing annual statement100
20 Continuation of certificate of authority[nt10
21 In addition to the above fees all such companies shall pay $5 for each
22 agent certified by the company, except as otherwise provided by law.
23 As a condition precedent to the continuation of the certificate of au-
24 thority, provided in this code, every company organized under the laws
25 of any other state of the United States or of any foreign country shall pay
26 a tax upon all premiums received during the preceding year at the rate
27 of 2% per annum.
28 Funds accepted by a life insurer under an agreement which provides
29 for an accumulation of funds to purchase taxable annuities at later dates
30 shall be taxable premiums either when received or when actually applied
31 to the purchase of annuities, at the option of the insurer. If the funds are
32 declared upon receipt, any interest or other gain that accrues thereon
33 shall not be taxable as premium income, but if the funds are declared
34 when applied to the purchase of annuities, the premium tax shall be paid
35 on the entire amount so applied. Any such funds declared upon receipt
36 which are thereafter withdrawn before application to the purchase of
37 annuities may be deducted from tax base as ``premiums'' returned on
38 account of cancellations.
39 In the computation of the gross premiums all such companies shall be
40 entitled to deduct any premiums returned on account of cancellations,
41 including funds accepted before January 1, 1997, and declared and taxed
42 as annuity premiums which, on or after January 1, 1997, are withdrawn
43 before application to the purchase of annuities, dividends returned to
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1 policyholders and all premiums received for reinsurance from any other
2 company authorized to do business in this state and premiums received
3 in connection with the funding of a pension, deferred compensation, an-
4 nuity or profit-sharing plan qualified or exempt under sections 401, 403,
5 404, 408, 457 or 501 of the United States internal revenue code of 1986.
6 Funds received by life insurers for the purchase of annuity contracts and
7 funds applied by life insurers to the purchase of annuities shall not be
8 deemed taxable premiums or be subject to tax under this section for tax
9 years commencing on or after January 1, 1997.
10 2. Mutual life, accident and health associations:
11 Admission fees:
12 Examination of charter and other documents$500
13 Filing annual statement[nt100
14 Certificate of authority[nt10
15 Annual fees:
16 Filing annual statement100
17 Continuation of certificate of authority[nt10
18 In addition to the above fees, every such company organized under the
19 laws of any other state of the United States shall pay $5 for each agent
20 certified by the company, and shall pay a tax annually upon all premiums
21 received at the rate of 2% per annum.
22 Funds accepted by a life insurer under an agreement which provides
23 for an accumulation of funds to purchase taxable annuities at later dates
24 shall be taxable premiums either when received or when actually applied
25 to the purchase of annuities, at the option of the insurer. If the funds are
26 declared upon receipt, any interest or other gain that accrues thereon
27 shall not be taxable as premium income, but if the funds are declared
28 when applied to the purchase of annuities, the premium tax shall be paid
29 on the entire amount so applied. Any such funds declared upon receipt
30 which are thereafter withdrawn before application to the purchase of
31 annuities may be deducted from tax base as ``premiums'' returned on
32 account of cancellations.
33 In the computation of the gross premiums all such companies shall be
34 entitled to deduct any premiums returned on account of cancellations,
35 including funds accepted before January 1, 1997, and declared and taxed
36 as annuity premiums which, on or after January 1, 1997, are withdrawn
37 before application to the purchase of annuities, dividends returned to
38 policyholders and all premiums received for reinsurance from any other
39 company authorized to do business in this state and premiums received
40 in connection with the funding of a pension, deferred compensation, an-
41 nuity or profit-sharing plan qualified or exempt under sections 401, 403,
42 404, 408, 457 or 501 of the United States internal revenue code of 1986.
43 Funds received by life insurers for the purchase of annuity contracts and
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1 funds applied by life insurers to the purchase of annuities shall not be
2 deemed taxable premiums or be subject to tax under this section for tax
3 years commencing on or after January 1, 1997.
4 3. Mutual fire, casualty and multiple line insurers and reciprocal or interinsurance ex-
5 changes:
6 Admission fees:
7 Examination of charter and other documents and issuance of certificate of authority$500
8 Filing annual statement[nt100
9 Certificate of authority[nt10
10 Annual fees:
11 Filing annual statement100
12 Continuation of certificate of authority[nt10
13 In addition to the above fees, every such company or association or-
14 ganized under the laws of any other state of the United States shall pay
15 a fee of $5 for each agent certified by the company and shall also pay a
16 tax annually upon all premiums received at the rate of 2% per annum.
17 [For tax years 1998 and thereafter, the annual tax shall be re-
18 duced for the ''applicable percentage`` of (1) any taxes paid on busi-
19 ness in this state pursuant to the provisions of K.S.A. 75-1508 and
20 amendments thereto and (2) the amount of the firefighters relief tax
21 credit determined by the commissioner of insurance. The amount
22 of the firefighters relief tax credit for a company taxable under this
23 subsection for the current tax year shall be determined by the com-
24 missioner of insurance by dividing (A) the total amount of taxes paid
25 by all such companies on business in this state under K.S.A. 40-
26 1701 to 40-1707 and amendments thereto for tax year 1983 as then
27 in effect, by (B) the total amount of taxes paid by all such companies
28 on business in this state under K.S.A. 40-1703 and amendments
29 thereto for the tax year immediately preceding the current tax year,
30 and by multiplying the result so obtained by (C) the amount of taxes
31 paid by the company on business in this state under K.S.A. 40-1703
32 and amendments thereto for the current tax year. The ``applicable
33 percentage'' shall be as follows:
34 [Tax Year Applicable Percentage
35 [1998 10%
36 [1999 20%
37 [2000 30%
38 [2001 40%
39 [2002 50%
40 [2003 60%
41 [2004 70%
42 [2005 80%
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1 [2006 90%
2 [2007 and thereafter 100%]
3 In the computation of the gross premiums all such companies shall be
4 entitled to deduct any premiums returned on account of cancellations, all
5 premiums received for reinsurance from any other company authorized
6 to do business in this state, and dividends returned to policyholders.
7 E
8 Fraternal benefit societies organized under the laws
9 of any other state, territory or country:
10 Admission fees:
11 Examination of charter and other documents$500
12 Filing annual statement[nt100
13 Certificate of authority[nt10
14 Annual fees:
15 Filing annual statement100
16 Continuation of certificate of authority[nt10
17 F
18 Mutual nonprofit hospital service corporations, nonprofit medical service corporations, non-
19 profit dental service corporations, nonprofit optometric service corporations and non-
20 profit pharmacy service corporations organized under the laws of any other state, ter-
21 ritory or country:
22 1. Mutual nonprofit hospital service corporations:
23 Admission fees:
24 Examination of charter and other documents$500
25 Filing annual statement[nt100
26 Certificate of authority[nt10
27 Annual fees:
28 Filing annual statement100
29 Continuation of certificate of authority[nt10
30 2. Nonprofit medical service corporations, nonprofit dental service corporations, nonprofit
31 optometric service corporations and nonprofit pharmacy service corporations:
32 Admission fees:
33 Examination of charter and other documents$500
34 Filing annual statement[nt100
35 Certificate of authority[nt10
36 Annual fees:
37 Filing annual statement100
38 Continuation of certificate of authority[nt10
39 In addition to the above fees and as a condition precedent to the con-
40 tinuation of the certificate of authority, provided in this code, every cor-
41 poration or association shall pay annually to the commissioner of insur-
42 ance a privilege fee in an amount equal to 2% per annum of the total of
43 all premiums, subscription charges, or any other term which may be used
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1 to describe the charges made by such corporation or association to sub-
2 scribers in this state for hospital, medical or other health services or in-
3 demnity received during the preceding year. In such computations all
4 such corporations or associations shall be entitled to deduct any premiums
5 or subscription charges returned on account of cancellations and divi-
6 dends returned to members or subscribers.
7 F
8 Mutual nonprofit hospital service corporations, nonprofit medical service corporations, non-
9 profit dental service corporations, nonprofit optometric service corporations and non-
10 profit pharmacy service corporations organized under the laws of any other state, ter-
11 ritory or country:
12 1. Mutual nonprofit hospital service corporations:
13 Admission fees:
14 Examination of charter and other documents$500
15 Filing annual statement[nt100
16 Certificate of authority[nt10
17 Annual fees:
18 Filing annual statement100
19 Continuation of certificate of authority[nt10
20 2. Nonprofit medical service corporations, nonprofit dental service corporations, nonprofit
21 optometric service corporations and nonprofit pharmacy service corporations:
22 Admission fees:
23 Examination of charter and other documents$500
24 Filing annual statement[nt100
25 Certificate of authority[nt10
26 Annual fees:
27 Filing annual statement100
28 Continuation of certificate of authority[nt10
29 In addition to the above fees and as a condition precedent to the con-
30 tinuation of the certificate of authority, provided in this code, every cor-
31 poration or association shall pay annually to the commissioner of insur-
32 ance a tax on the total of all premiums, subscription charges, or any other
33 term which may be used to describe the charges made by such corporation
34 or association to subscribers in this state for hospital, medical or other
35 health services or indemnity received during the preceding year. The rate
36 of the annual tax under this subsection shall be as follows:
37 Tax Year Rate
38 1997 and before 2.0%
39 1998 1.9%
40 1999 1.8%
41 2000 1.7%
42 2001 1.6%
43 2002 1.5%
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1 2003 1.4%
2 2004 1.3%
3 2005 1.2%
4 2006 1.1%
5 2007 and thereafter 1.0%
6 In such computations all such corporations or associations shall be entitled
7 to deduct any premiums or subscription charges returned on account of
8 cancellations and dividends returned to members or subscribers.
9 [F
10 [Mutual nonprofit hospital service corporations, nonprofit medical service corpo-
11 rations, nonprofit dental service corporations, nonprofit optometric service cor-
12 porations and nonprofit pharmacy service corporations organized under the laws
13 of any other state, territory or country:
14 [1. Mutual nonprofit hospital service corporations:
15 [Admission fees:
16 [Examination of charter and other documents$500
17 [Filing annual statement[nt100
18 [Certificate of authority[nt10
19 [Annual fees:
20 [Filing annual statement100
21 [Continuation of certificate of authority[nt10
22 [2. Nonprofit medical service corporations, nonprofit dental service corporations,
23 nonprofit optometric service corporations and nonprofit pharmacy service cor-
24 porations:
25 [Admission fees:
26 [Examination of charter and other documents$500
27 [Filing annual statement[nt100
28 [Certificate of authority[nt10
29 [Annual fees:
30 [Filing annual statement100
31 [Continuation of certificate of authority[nt10
32 [In addition to the above fees and as a condition precedent to the
33 continuation of the certificate of authority, provided in this code,
34 every corporation or association shall pay annually to the commis-
35 sioner of insurance a tax in an amount equal to 2% per annum of
36 the total on all premiums, subscription charges, or any other term
37 which may be used to describe the charges made by such corpora-
38 tion or association to subscribers in this state for hospital, medical
39 or other health services or indemnity received during the preceding
40 year. In such computations all such corporations or associations
41 shall be entitled to deduct any premiums or subscription charges
42 returned on account of cancellations and dividends returned to
43 members or subscribers.]
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1 G
2 All insurers shall pay a fee of $10 for
3 issuance of an amended certificate of authority. Payment of Taxes.
4 For the purpose of insuring the collection of the tax upon premiums,
5 assessments and charges as set out in subsection A, C, D or F, every
6 insurance company, corporation or association shall at the time it files its
7 annual statement, as required by the provisions of K.S.A. 40-225, and
8 amendments thereto, make a return, verified by affidavits of its president
9 and secretary or other chief officers, to the commissioner of insurance,
10 stating the amount of all premiums, assessments and charges received by
11 the companies or corporations in this state, whether in cash or notes,
12 during the year ending on the December 31 next preceding.
13 Commencing in 1985 and annually thereafter the estimated taxes shall
14 be paid as follows: On or before June 15 and December 15 of such year
15 an amount equal to 50% of the full amount of the prior year's taxes as
16 reported by the company shall be remitted to the commissioner of in-
17 surance. As used in this paragraph, ``prior year's taxes'' includes (1) taxes
18 assessed pursuant to this section for the prior calendar year, (2) fees and
19 taxes assessed pursuant to K.S.A. 40-253, and amendments thereto, for
20 the prior calendar year, and (3) taxes paid for maintenance of the de-
21 partment of the state fire marshal pursuant to K.S.A. 75-1508, and
22 amendments thereto, for the prior calendar year.
23 Upon the receipt of such returns the commissioner of insurance shall
24 verify the same and assess the taxes upon such companies, corporations
25 or associations on the basis and at the rate provided herein and the bal-
26 ance of such taxes shall thereupon become due and payable giving credit
27 for amounts paid pursuant to the preceding paragraph, or the commis-
28 sioner shall make a refund if the taxes paid in the prior June and Decem-
29 ber are in excess of the taxes assessed.
30 H
31 The fee prescribed for the examination of charters and other docu-
32 ments shall apply to each company's initial application for admission and
33 shall not be refundable for any reason.
34 I
35 (a) Each company required to pay a tax on premiums under subsec-
36 tions A, C, D and F shall be allowed, as a credit against that tax, an
37 amount equal to 25% of the salaries paid to Kansas employees. Before
38 taking into account any other credit or offset against the premium tax
39 imposed under this section, the credit allowed under this subsection may
40 not reduce such premium tax by more than 1/2 thereof.
41 (b) As used in this section:
42 (1) ``Employees'' means persons who are employed in Kansas and who
43 are common law employees of an insurance company or its affiliate. ``Em-
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15
1 ployees'' does not include independent contractors or any person to this
2 extent such employee's compensation is based on commissions.
3 (2) ``Insurance company'' or ``company'' means any entity subject to
4 a tax on premiums under K.S.A. 40-252.
5 (3) ``Salaries'' means the gross compensation paid to Kansas employ-
6 ees, as reported on federal or state income tax returns for the calendar
7 year for which a tax on premiums is imposed under this section and
8 amendments thereto, but only to the extent compensation is paid for in-
9 surance company operations performed in Kansas. ``Salaries'' does not
10 include compensation based on commissions.
11 (c) For an insurance company having affiliates, the gross amount of
12 all premiums of an insurance company subject to premium tax under this
13 section and amendments thereto and those of its insurance company af-
14 filiates subject to premium tax under this section and amendments thereto
15 may be aggregated. In addition, all salaries paid to employees may be
16 aggregated. Subject to the limitation on the salary credit set forth in this
17 subsection, the total allowable salary credit may be determined as if all
18 the aggregated premiums were received and all the aggregated salaries
19 were paid by one insurance company. Once the total allowable salary
20 credit is determined for all insurance company affiliates, the total credit
21 may be allocated among the insurance company and its insurance com-
22 pany affiliates at the discretion of the insurance company on a per insur-
23 ance company basis, subject to the limitation on the salary credit as set
24 forth in this subsection.
25 (d) The computation of salaries, the allowable salary credit and the
26 allocation of the credit among insurance company affiliates shall be made
27 on forms supplied by the commissioner of insurance.
28 (e) For the purposes of calculating any tax due under K.S.A. 40-253
29 and amendments thereto from a taxpayer not organized under the laws
30 of this state, the credit allowed by this subsection shall be treated as a tax
31 paid under this section and amendments thereto.
32 (f) Premiums received by a life insurer for the purchase of any annuity
33 contract shall no longer be deemed taxable premiums and shall no longer
34 be subject to the tax imposed by this section.
35 (g) The provisions of subsections (a) through (f) of schedule I shall be
36 applicable to the 1998 tax year and all tax years thereafter.
37 Sec. 4. K.S.A. 40-252b is hereby amended to read as follows: 40-
38 252b. For taxable years commencing on and after January 1, 1998, the
39 fees, charges and taxes provided for by K.S.A. 40-252 and amendments
40 thereto shall be in lieu of all other license fees, premium or occupation
41 taxes, income taxes, intangible property taxes, or other fees levied or as-
42 sessed upon the basis of income, premiums, and gross receipts and in-
43 tangible property by this state and any municipality, county or other po-
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16
1 litical subdivision of this state, and no municipality, county or other
2 political subdivision of this state shall impose any license fee or privilege,
3 premium, income, intangible property or gross receipts tax or fee upon
4 any insurance company or corporation taxed under the provisions of
5 K.S.A. 40-252 and amendments thereto and organized under the laws of
6 this state or doing business in this state, or upon any of its agents or
7 representatives for the privilege of doing an insurance business therein:
8 Provided, however,. This section shall not be construed to prohibit the
9 levy and collection of (a) state, county or municipal taxes upon the real
10 and tangible personal property of such company, (b) tax for the purpose
11 of maintaining the office of the fire marshal of this state as provided in
12 K.S.A. 75-1508 and amendments thereto, (c) the firemen's relief fund tax
13 as provided for in K.S.A. 40-1701 through 40-1707 and amendments
14 thereto, and (d) the intangibles tax as provided for in article 31 of chapter
15 79 of the Kansas Statutes Annotated, and any amendments thereto, (e) a
16 tax by the state of Kansas upon the privilege of doing business within the
17 state measured by the income of the insurance company, and (f) munic-
18 ipal occupation taxes levied upon any basis other than income, intangible
19 property, premiums or gross receipts.
20 Sec. 5. K.S.A. 40-252c is hereby amended to read as follows: 40-
21 252c. (a) Every insurance company organized under the laws of this state
22 and required by this act to pay a premium tax or privilege fee pursuant
23 to K.S.A. 40-252 and amendments thereto shall be entitled to a credit, on
24 the premium taxes or privilege fees imposed by K.S.A. 40-252 and amend-
25 ments thereto, of twenty-five percent (25%) 25% of such taxes or fees if
26 at least thirty percent (30%) 30% of such insurance company's admitted
27 assets is invested in Kansas securities.
28 (b) For the purpose of this section: (1) The term ``insurance com-
29 pany'' shall mean any insurance company, mutual nonprofit hospital cor-
30 poration, nonprofit medical service corporation or any corporation, soci-
31 ety or association to which K.S.A. 40-252 and amendments thereto applies;
32 (2) The term ``admitted assets'' shall mean the assets treated as ad-
33 mitted assets in the annual statement required to be filed with the com-
34 missioner of insurance pursuant to this act and K.S.A. 40-225 and amend-
35 ments thereto; and
36 (3) The term ``Kansas securities'' shall mean real estate in this state,
37 bonds of the state of Kansas, bonds or interest bearing warrants of any
38 county, city, town, school district or municipality or subdivision of the
39 state of Kansas, notes or bonds secured by mortgages or other liens on
40 real estate located in the state of Kansas, cash deposits in regularly estab-
41 lished national or state banks in this state on the basis of the average
42 monthly deposits throughout the calendar year, policy loans secured by
43 the legal reserve on policies insuring residents of the state of Kansas, and
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1 any other Kansas property or securities in which, by the laws of the state
2 of Kansas, such insurance companies may invest their funds. The provi-
3 sions of this section shall not be applicable to any taxable year after tax
4 year 1998.
5 Sec. 6. K.S.A. 40-253 is hereby amended to read as follows: 40-253.
6 Whenever the existing or future laws of any other state or country shall
7 require from insurance companies or fraternal benefit societies organized
8 under the laws of this state, applying to do business in such other state
9 or country, any deposit of securities in such state or country for the pro-
10 tection of policyholders therein, or otherwise, or any payment for taxes,
11 fines, penalties, certificates of authority, licenses, fees, or compensation
12 for examination, including taxes or fees based on fire premiums, or oth-
13 erwise, greater than the amount required for such purpose from insur-
14 ance companies or agents of other states by the then existing laws of this
15 state, then, and in every case, all companies and agents of any such state
16 or country, doing business in this state shall make the same deposit, for
17 a like purpose, with the commissioner of insurance of this state, and pay
18 to the commissioner of insurance for taxes, fines, penalties, certificates of
19 authority, licenses, fees, or compensation for examination, including taxes
20 or fees based on fire premiums, or otherwise, an amount equal to the
21 amount of such charges and payments imposed by the laws of such other
22 state or country upon the companies of this state and the agents thereof.
23 The provisions of this section shall not apply to special purpose assess-
24 ments or guaranty association assessments both under the laws of this
25 state and under the laws of any other state or country, and any tax offset
26 or credit for any such assessment shall, for purposes of this section, be
27 treated as a tax paid both under the laws of this state and under the laws
28 of any other state or country.
29 New Sec. 7. (a) For tax year 1998 and all tax years thereafter, each
30 company required to pay a tax on premiums under subsection A, C, D
31 or F of K.S.A. 40-252 and amendments thereto shall be allowed as a credit
32 against such tax in an amount equal to 5% of the salaries paid to Kansas
33 employees. Before taking into account any other credit or offset against
34 the tax on premiums imposed under K.S.A. 40-252 and amendments
35 thereto, the credit allowed under this section may not reduce such tax by
36 more than 0.25% of premiums taxable thereunder.
37 (b) As used in this section, unless the context otherwise requires:
38 (1) ``Affiliate'' means an insurance company which, directly or indi-
39 rectly, through one or more intermediaries, controls, is controlled by or
40 is under common control with another insurance company. ``Affiliate'' also
41 includes any company or business entity other than an insurance company
42 which, directly or indirectly, through one or more intermediaries, con-
43 trols, is controlled by or is under common control with an insurance com-
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18
1 pany and which performs insurance company operations for an insurance
2 company. For purposes of this definition, control exists if any company
3 or business entity, directly or indirectly, owns, holds with the power to
4 vote or holds proxies representing all the voting stock or other voting
5 securities of any other company or business entity.
6 (2) ``Insurance company'' or ``company'' means any entity subject to
7 a tax on premiums under subsection A, C, D or F of K.S.A. 40-252 and
8 amendments thereto, including the attorney-in-fact authorized by and
9 acting for the subscribers of a reciprocal insurer or inter-insurance
10 exchange under powers of attorney. For the purposes of this section, a
11 reciprocal and its attorney-in-fact will be considered a single entity.
12 (3) ``Insurance company operations'' means one or more or any com-
13 bination of the following functions or services performed in connection
14 with the development, sale and administration of products giving rise to
15 receipts subject to a tax on premiums under subsection A, C, D or F of
16 K.S.A. 40-252 and amendments thereto: actuarial, medical, legal, invest-
17 ments, accounting, auditing, underwriting, policy issuance, information,
18 policyholder services, premium collection, claims, advertising and
19 publications, public relations, human resources, marketing, sales office
20 staff, training of sales and service personnel, and clerical, managerial and
21 other support for any such functions or services.
22 (4) ``Kansas employees'' means persons who are employed in Kansas
23 and who are common law employees of an insurance company or its
24 affiliate. ``Kansas employees'' does not include independent contractors
25 or any person to the extent such person's compensation is based on com-
26 missions.
27 (5) ``Salaries'' means gross compensation paid to Kansas employees
28 as reported to the State of Kansas for income tax purposes for the calendar
29 year for which a tax on premiums is imposed under K.S.A. 40-252 and
30 amendments thereto, but only to the extent compensation is paid for
31 insurance company operations performed in Kansas for an insurance
32 company or its insurance company affiliates subject to the tax on premi-
33 ums under subsection A, C, D or F of K.S.A. 40-252 and amendments
34 thereto. ``Salaries'' does not include compensation based on commissions.
35 (c) For an insurance company having affiliates:
36 (1) Salaries paid by a noninsurance company affiliate shall be allo-
37 cated among insurance company affiliates pursuant to the agreement be-
38 tween or among the insurance company and its affiliates.
39 (2) The gross amount of all premiums of an insurance company sub-
40 ject to tax under subsection A, C, D or F of K.S.A. 40-252 and amend-
41 ments thereto and those of its insurance company affiliates subject to
42 such tax may be aggregated. In addition, all salaries paid to Kansas em-
43 ployees may be aggregated. Subject to the limitation on the salary credit
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19
1 set forth in subsection (a) of this section, the total allowable salary credit
2 may be determined as if all the aggregated premiums were received and
3 all the aggregated salaries were paid by one insurance company. Once
4 the total allowable salary credit is determined for all insurance company
5 affiliates, the total credit may be allocated among the insurance company
6 and its insurance company affiliates at the discretion of the insurance
7 company on a per insurance company basis, subject to the limitation on
8 the salary credit as set forth in subsection (a) of this section.
9 (d) The computation of salaries, the allowable salary credit and the
10 allocation of the credit among insurance company affiliates shall be made
11 on forms supplied by the commissioner of insurance.
12 (e) For purposes of calculating any tax due under K.S.A. 40-253 and
13 amendments thereto from a taxpayer not organized under the laws of this
14 state, the credit allowed by this section shall be treated as a tax paid under
15 K.S.A. 40-252 and amendments thereto.
16 New Sec. 8. For tax year 1999, and all tax years thereafter, a foreign
17 or domestic insurance company required to pay a tax on premiums under
18 subsection A, C, D or F of K.S.A. 40-252 and amendments thereto and
19 writing less than $15,000,000 in premiums in all states shall be allowed
20 as a small company credit against such tax the amount computed as fol-
21 lows:
22 (a) Subtract the total dollar amount of all premiums written by the
23 company in all states from $15,000,000;
24 (b) Divide the result obtained in (a) by 15,000,000;
25 (c) Multiply the quotient obtained in (b) by 30,000.
26 Before taking into account any other credit or offset against the tax on
27 premiums imposed under K.S.A. 40-252 and amendments thereto, the
28 employment credit allowed under new section 7 and amendments thereto
29 and the small company credit allowed under this section, taken together,
30 may not reduce such tax by more that 0.25% of premiums taxable under
31 K.S.A. 40-252 and amendments thereto. For purposes of calculating any
32 tax due under K.S.A. 40-253 and amendments thereto from a taxpayer
33 not organized under the laws of this state, the credit allowed by this
34 section shall be treated as a tax paid under K.S.A. 40-252 and amend-
35 ments thereto.
36 [New Sec. 7. (a) For tax year 1998, each company required to
37 pay a tax on premiums under subsection A, C, D or F of K.S.A. 40-
38 252 and amendments thereto shall be allowed as a credit against
39 such tax 25% of the salaries paid to Kansas employees, and for tax
40 years 1999 and thereafter, each company required to pay a tax on
41 premiums under K.S.A. 40-252 and amendments thereto shall be
42 allowed as a credit against such tax 30% of the salaries paid to
43 Kansas employees. Before taking into account any other credit or
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1 offset against the tax on premiums imposed under K.S.A. 40-252 and
2 amendments thereto, the credit allowed under this section may not
3 reduce such tax by more than 1% of premiums taxable thereunder
4 for tax year 1998 or by more than 1.25% of premiums taxable there-
5 under for tax years 1999 and thereafter.
6 [(b) As used in this section, unless the context otherwise re-
7 quires:
8 [(1) ``Affiliate'' means an insurance company which, directly or
9 indirectly, through one or more intermediaries, controls, is con-
10 trolled by or is under common control with another insurance com-
11 pany. ``Affiliate'' also includes any company or business entity other
12 than an insurance company which, directly or indirectly, through
13 one or more intermediaries, controls, is controlled by or is under
14 common control with an insurance company and which performs
15 insurance company operations for an insurance company. For pur-
16 poses of this definition, control exists if any company or business
17 entity, directly or indirectly, owns, holds with the power to vote or
18 holds proxies representing all the voting stock or other voting se-
19 curities of any other company or business entity.
20 [(2) ``Insurance company'' or ``company'' means any entity sub-
21 ject to a tax on premiums under subsections A, C, D or F of K.S.A.
22 40-252 and amendments thereto, including the attorney-in-fact au-
23 thorized by and acting for the subscribers of a reciprocal insurer
24 or inter-insurance exchange under powers of attorney. For the pur-
25 pose of this section, a reciprocal and its attorney-in-fact will be
26 considered a single entity.
27 [(3) ``Insurance company operations'' means one or more or any
28 combination of the following functions or services performed in con-
29 nection with the development, sale and administration of products
30 giving rise to receipts subject to a tax on premiums under subsection
31 A, C, D or F of K.S.A. 40-252 and amendments thereto: Actuarial,
32 medical, legal, investments, accounting, auditing, underwriting,
33 policy issuance, information, policyholder services, premium col-
34 lection, claims, advertising and publications, public relations, hu-
35 man resources, marketing, sales office staff, training of sales and
36 service personnel, and clerical, managerial and other support for
37 any such functions or services.
38 [(4) ``Kansas employees'' means persons who are employed in
39 Kansas and who are common law employees of an insurance com-
40 pany or its affiliate. ``Kansas employees'' does not include inde-
41 pendent contractors or any person to the extent such person's com-
42 pensation is based on commissions.
43 [(5) ``Salaries'' means gross compensation paid to Kansas em-
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21
1 ployees as reported to the State of Kansas for income tax purposes
2 for the calendar year for which a tax on premiums is imposed under
3 K.S.A. 40-252 and amendments thereto, but only to the extent com-
4 pensation is paid for insurance company operations performed in
5 Kansas for an insurance company or its insurance company affili-
6 ates subject to the tax on premiums under subsection A, C, D or F
7 of K.S.A. 40-252 and amendments thereto. ``Salaries'' does not in-
8 clude compensation based on commissions.
9 [(c) For an insurance company having affiliates:
10 [(1) Salaries paid by a noninsurance company affiliate shall be
11 allocated among insurance company affiliates pursuant to the
12 agreement between or among the insurance company and its affil-
13 iates.
14 [(2) The gross amount of all premiums of an insurance company
15 subject to tax under subsection A, C, D or F of K.S.A. 40-252 and
16 amendments thereto and those of its insurance company affiliates
17 subject to such tax may be aggregated. In addition, all salaries paid
18 to Kansas employees may be aggregated. Subject to the limitation
19 on the salary credit set forth in subsection (a) of this section, the
20 total allowable salary credit may be determined as if all the aggre-
21 gated premiums were received and all the aggregated salaries were
22 paid by one insurance company. Once the total allowable salary
23 credit is determined for all insurance company affiliates, the total
24 credit may be allocated among the insurance company and its in-
25 surance company affiliates at the discretion of the insurance com-
26 pany on a per insurance company basis, subject to the limitation
27 on the salary credit as set forth in subsection (a) of this section.
28 [(d) The computation of salaries, the allowable salary credit
29 and the allocation of the credit among insurance company affiliates
30 shall be made on forms supplied by the commissioner of insurance.
31 [(e) For purposes of calculating any tax due under K.S.A. 40-
32 253 and amendments thereto from a taxpayer not organized under
33 the laws of this state, the credit allowed by this section shall be
34 treated as a tax paid under K.S.A. 40-252 and amendments thereto.
35 [New Sec. 8. For tax years 1999 and thereafter, a foreign or
36 domestic insurance company required to pay a tax on premiums
37 under subsection A, C, D or F of K.S.A. 40-252 and amendments
38 thereto and writing less than $15,000,000 in premiums in all states
39 shall be allowed as a small company credit against such tax the
40 amount computed as follows:
41 [(a) Subtract the total dollar amount of all premiums written
42 by the company in all states from $15,000,000;
43 [(b) Divide the result obtained in (a) by 15,000,000;
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1 [(c) Multiply the quotient obtained in (b) by 30,000.
2 Before taking into account any other credit or offset against the
3 tax on premiums imposed under K.S.A. 40-252 and amendments
4 thereto, the employment credit allowed under new section 7 and
5 amendments thereto and the small company credit allowed under
6 this section, taken together, may not reduce such tax by more than
7 1.25% of premiums taxable under K.S.A. 40-252 and amendments
8 thereto. For purposes of calculating any tax due under K.S.A. 40-
9 253 and amendments thereto from a taxpayer not organized under
10 the laws of this state, the credit allowed by this section shall be
11 treated as a tax paid under K.S.A. 40-252 and amendments thereto.
12 Sec. 9. K.S.A. 40-2801 is hereby amended to read as follows: 40-
13 2801. Every life, fire and casualty, hail and county mutual fire insurance
14 company organized under the laws of this state, shall annually pay to the
15 state for the privilege of doing business within this state, a tax according
16 to or measured by its net income for the next preceding calendar year.
17 Such tax shall be an amount equal to five percent (5%) of such net income.
18 The provisions of this section shall not apply to net income earned in
19 calendar year 1998 or in any calendar year thereafter.
20 Sec. 10. K.S.A. 40-112, 40-252, 40-252b, 40-252c, 40-253, 40-2801
21 and K.S.A. 1996 Supp. 40-246 are hereby repealed.
22 Sec. 11. This act shall take effect and be in force from and after its
23 publication in the statute book.