HOUSE BILL No. 2065
An Act relating to the taxation of insurance companies; amending
K.S.A. 40-252d and
repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 40-252d is hereby
amended to read as follows: 40-
252d. (a) For
tax year 1998, each company required to pay a
tax on pre-
miums under subsections A, C, D or F of K.S.A. 40-252 and
thereto shall be allowed as a credit against such tax 25%
of the salaries
paid to Kansas employees, and for tax years
1999 2001 and thereafter,
each company required to pay a tax on premiums under subsections
C, D or F of K.S.A. 40-252 and amendments thereto shall be allowed
a credit against such tax
30% 15% of the
salaries paid to Kansas employ-
ees. Before taking into account any other credit or offset against
on premiums imposed under K.S.A. 40-252 and amendments thereto,
credit allowed under this section may not reduce such tax by more
1% of premiums taxable thereunder for tax year 1998 or by
1.25% 1.125% of premiums taxable thereunder
for tax years 1999 2001
and thereafter, or 1% of premiums taxable thereunder for tax
and thereafter if such credit is calculated in accordance with
sions of subsection (c).
(b) As used in this section, unless the
context otherwise requires:
(1) ``Affiliate'' means an insurance
company which, directly or indi-
rectly, through one or more intermediaries, controls, is controlled
is under common control with another insurance company.
includes any company or business entity other than an insurance
which, directly or indirectly, through one or more intermediaries,
trols, is controlled by or is under common control with an
pany and which performs insurance company operations for an
company. For purposes of this definition, control exists if any
or business entity, directly or indirectly, owns, holds with the
vote or holds proxies representing all the voting stock or other
securities of any other company or business entity.
(2) ``Insurance company'' or ``company''
means any entity subject to
a tax on premiums under subsections A, C, D or F of K.S.A. 40-252
amendments thereto, including the attorney-in-fact authorized by
acting for the subscribers of a reciprocal insurer or
exchange under powers of attorney. For the purpose of this section,
reciprocal and its attorney-in-fact will be considered a single
(3) ``Insurance company operations''
means one or more or any com-
bination of the following functions or services performed in
with the development, sale and administration of products giving
receipts subject to a tax on premiums under subsection A, C, D or F
K.S.A. 40-252 and amendments thereto: Actuarial, medical, legal,
ments, accounting, auditing, underwriting, policy issuance,
policyholder services, premium collection, claims, advertising
publications, public relations, human resources, marketing, sales
staff, training of sales and service personnel, and clerical,
other support for any such functions or services.
(4) ``Kansas employees'' means persons
who are employed in Kansas
and who are common law employees of an insurance company or its
affiliate. ``Kansas employees'' does not include independent
or any person to the extent such person's compensation is based on
(5) ``Salaries'' means gross compensation
paid to Kansas employees
as reported to the State of Kansas for income tax purposes for the
year for which a tax on premiums is imposed under K.S.A. 40-252
amendments thereto, but only to the extent compensation is paid
insurance company operations performed in Kansas for an
company or its insurance company affiliates subject to the tax on
ums under subsection A, C, D or F of K.S.A. 40-252 and
thereto. ``Salaries'' does not include compensation based on
(c) For an insurance company having
(1) Salaries paid by a noninsurance
company affiliate shall be allo-
cated among insurance company affiliates pursuant to the agreement
tween or among the insurance company and its affiliates.
(2) The gross amount of all premiums of
an insurance company sub-
ject to tax under subsection A, C, D or F of K.S.A. 40-252 and
ments thereto and those of its insurance company affiliates subject
such tax may be aggregated. In addition, all salaries paid to
ployees may be aggregated. Subject to the limitation on the salary
set forth in subsection (a) of this section, the total allowable
may be determined as if all the aggregated premiums were received
all the aggregated salaries were paid by one insurance company.
the total allowable salary credit is determined for all insurance
affiliates, the total credit may be allocated among the insurance
and its insurance company affiliates at the discretion of the
company on a per insurance company basis, subject to the limitation
the salary credit as set forth in subsection (a) of this
(d) The computation of salaries, the
allowable salary credit and the
allocation of the credit among insurance company affiliates shall
on forms supplied by the commissioner of insurance.
(e) For purposes of calculating any tax
due under K.S.A. 40-253 and
amendments thereto from a taxpayer not organized under the laws of
state, the credit allowed by this section shall be treated as a tax
K.S.A. 40-252 and amendments thereto.
Sec. 2. K.S.A. 40-252d is hereby repealed.
Sec. 3. This act shall take effect and be in force
from and after its
publication in the statute book.
Approved May 22, 2001.