INDIANAPOLIS (March 6, 2006)—The farm mutual tax bill introduced by NAMIC and MICAI (Mutual Insurance Companies Association of Indiana) passed the Indiana General Assembly last Wednesday, March 1st. NAMIC and MICAI worked together to address a mistake made during a 2002 legislative tax code revision which erroneously raised taxes paid by farm mutual insurers from 1.2 percent to 8.5 percent.
The language addressing the error was previously amended into the omnibus property tax bill, HB 1001, during the Senate Tax and Fiscal Policy Committee meeting on Feb. 21st.
“Fairness in how farm mutual insurance companies are taxed is important for Indiana’s insurance environment and the omission of the farm mutuals from the 2002 bill language was truly inadvertent. This correction will save farm mutuals an estimate $115,000 annually,” testified Tami Stanton, NAMIC’s central region state affairs manager, during the Feb. 21 hearing.
The 2002 revision repealed the gross income tax and supplemental net income tax and increased the corporate adjusted gross income tax from 3.4 percent to 8.5 percent. Until the change, farm mutuals were subject only to the gross income tax at 1.2 percent and were not subject to the adjusted gross income tax of 3.4 percent and the supplemental income tax. The change raised taxes paid by the 40 farm mutual insurance companies operating in the state from 1.2 percent to 8.5 percent.
The original 2006 tax language was introduced as HB 1391 but to expedite its passage in the House, it was amended into HB 1266. The Senate, in turn, amended the bill into HB 1001 to keep it moving.
“The language now in HB 1001 gives farm mutuals the choice provided to other insurance companies of paying taxes based on their gross premium income or corporate adjusted income by simply adding the farm mutual code cite to that section of the statute," explained Stanton. "It’s been a winding road, but we’ve kept the language moving. NAMIC particularly thanks Rep. Mike Ripley and Sen. Luke Kenley for all their assistance this session.”
Due to the property taxation provisions in HB 1001, the bill is headed to conference committee during the final two weeks of the session, but the farm mutual language is not considered controversial and will likely survive, added Stanton.
NAMIC’s 173 members operating in Indiana write 45 percent of all the property/casualty insurance premiums in the state.
For further information, contact
Rick Nelson, APR, CAE
(317) 875-5250 Tel
(317) 879-8408 Fax
Posted: Monday, March 06, 2006 12:00:00 AM. Modified: Monday, March 06, 2006 3:28:31 PM.
317.875.5250 - Indianapolis | 202.628.1558 - Washington, D.C.