1999 Minnesota Statutes

     60A.15 Taxation of insurance companies. 

    Subdivision 1.    Domestic and foreign companies.  (a) 
 On or before April 1, June 1, and December 1 of each year, every 
 domestic and foreign company, including town and farmers' mutual 
 insurance companies, domestic mutual insurance companies, marine 
 insurance companies, health maintenance organizations, community 
 integrated service networks, and nonprofit health service plan 
 corporations, shall pay to the commissioner of revenue 
 installments equal to one-third of the insurer's total estimated 
 tax for the current year.  Except as provided in paragraphs (d), 
 (e), (h), and (i), installments must be based on a sum equal to 
 two percent of the premiums described in paragraph (b). 

    (b) Installments under paragraph (a), (d), or (e) are 
 percentages of gross premiums less return premiums on all direct 
 business received by the insurer in this state, or by its agents 
 for it, in cash or otherwise, during such year. 

    (c) Failure of a company to make payments of at least 
 one-third of either (1) the total tax paid during the previous 
 calendar year or (2) 80 percent of the actual tax for the 
 current calendar year shall subject the company to the penalty 
 and interest provided in this section, unless the total tax for 
 the current tax year is $500 or less. 

    (d) For health maintenance organizations, nonprofit health 
 service plan corporations, and community integrated service 
 networks, the installments must be based on an amount determined 
 under paragraph (h) or (i). 

    (e) For purposes of computing installments for town and 
 farmers' mutual insurance companies and for mutual property 
 casualty companies with total assets on December 31, 1989, of 
 $1,600,000,000 or less, the following rates apply: 

    (1) for all life insurance, two percent; 

    (2) for town and farmers' mutual insurance companies and 
 for mutual property and casualty companies with total assets of 
 $5,000,000 or less, on all other coverages, one percent; and 

    (3) for mutual property and casualty companies with total 
 assets on December 31, 1989, of $1,600,000,000 or less, on all 
 other coverages, 1.26 percent. 

    (f) If the aggregate amount of premium tax payments under 
 this section and the fire marshal tax payments under section 
 299F.21 made during a calendar year is equal to or exceeds 
 $120,000, all tax payments in the subsequent calendar year must 
 be paid by means of a funds transfer as defined in section 
 336.4A-104, paragraph (a).  The funds transfer payment date, as 
 defined in section 336.4A-401, must be on or before the date the 
 payment is due.  If the date the payment is due is not a funds 
 transfer business day, as defined in section 336.4A-105, 
 paragraph (a), clause (4), the payment date must be on or before 
 the funds transfer business day next following the date the 
 payment is due.  

    (g) Premiums under medical assistance, general assistance 
 medical care, the MinnesotaCare program, and the Minnesota 
 comprehensive health insurance plan and all payments, revenues, 
 and reimbursements received from the federal government for 
 Medicare-related coverage as defined in section 62A.31, 
 subdivision 3, paragraph (e), are not subject to tax under this 
 section. 

    (h) For calendar years 1997, 1998, and 1999, the 
 installments for health maintenance organizations, community 
 integrated service networks, and nonprofit health service plan 
 corporations must be based on an amount equal to one percent of 
 premiums described under paragraph (b).  Health maintenance 
 organizations, community integrated service networks, and 
 nonprofit health service plan corporations that have met the 
 cost containment goals established under section 62J.04 in the 
 individual and small employer market for calendar year 1996 are 
 exempt from payment of the tax imposed under this section for 
 premiums paid after March 30, 1997, and before April 1, 1998.  
 Health maintenance organizations, community integrated service 
 networks, and nonprofit health service plan corporations that 
 have met the cost containment goals established under section 
 62J.04 in the individual and small employer market for calendar 
 year 1997 are exempt from payment of the tax imposed under this 
 section for premiums paid after March 30, 1998, and before April 
 1, 1999.  Health maintenance organizations, community integrated 
 service networks, and nonprofit health service plan corporations 
 that have met the cost containment goals established under 
 section 62J.04 in the individual and small employer market for 
 calendar year 1998 are exempt from payment of the tax imposed 
 under this section for premiums paid after March 30, 1999, and 
 before January 1, 2000.  

    (i) For calendar years after 1999, the commissioner of 
 finance shall determine the balance of the health care access 
 fund on September 1 of each year beginning September 1, 1999.  
 If the commissioner determines that there is no structural 
 deficit for the next fiscal year, no tax shall be imposed under 
 paragraph (d) for the following calendar year.  If the 
 commissioner determines that there will be a structural deficit 
 in the fund for the following fiscal year, then the 
 commissioner, in consultation with the commissioner of revenue, 
 shall determine the amount needed to eliminate the structural 
 deficit and a tax shall be imposed under paragraph (d) for the 
 following calendar year.  The commissioner shall determine the 
 rate of the tax as either one-quarter of one percent, one-half 
 of one percent, three-quarters of one percent, or one percent of 
 premiums described in paragraph (b), whichever is the lowest of 
 those rates that the commissioner determines will produce 
 sufficient revenue to eliminate the projected structural 
 deficit.  The commissioner of finance shall publish in the State 
 Register by October 1 of each year the amount of tax to be 
 imposed for the following calendar year.  In determining the 
 structural balance of the health care access fund for fiscal 
 years 2000 and 2001, the commissioner shall disregard the 
 transfer amount from the health care access fund to the general 
 fund for expenditures associated with the services provided to 
 pregnant women and children under the age of two enrolled in the 
 MinnesotaCare program.  

    (j) In approving the premium rates as required in sections 
 62L.08, subdivision 8, and 62A.65, subdivision 3, the 
 commissioners of health and commerce shall ensure that any 
 exemption from the tax as described in paragraphs (h) and (i) is 
 reflected in the premium rate. 

    Subd. 1a.    Addition to the tax.  In case of any 
 underpayment of installments by an insurer, there shall be added 
 to the tax for the taxable year an amount determined at the rate 
 specified in section 270.75 upon the amount of underpayment.  

    Subd. 1b.    Amount of underpayment.  For purposes of 
 subdivision 1a, the amount of the underpayment shall be the 
 excess of:  (1) the amount of the installment; over (2) the 
 amount, if any, of the installment paid on or before the last 
 date prescribed for payment.  

    Subd. 1c.    Period of underpayment.  The period of the 
 underpayment shall run from the date the installment was 
 required to be paid to whichever of the following dates is the 
 earlier:  

    (1) on March 1 following the close of the taxable year; 

    (2) with respect to any portion of the underpayment, the 
 date on which that portion is paid.  For purposes of this 
 clause, a payment of estimated tax on any installment date shall 
 be considered a payment of any previous underpayment only to the 
 extent the payment exceeds the amount of the installment 
 determined under subdivision 1c, clause (1) for the installment 
 date.  

    Subd. 1d.    Definition of tax.  The term "tax" means 
 the tax imposed by this chapter.  

    Subd. 1e.    Failure to file an estimate.  In the case 
 of an insurer which fails to file an estimated tax for a taxable 
 year when one is required, the period of the underpayment shall 
 run from the installment dates as set forth in subdivision 1 or 
 2 to whichever of the periods set forth in subdivision 1c is the 
 earlier.  

    Subd. 2. Repealed, 1987 c 268 art 2 s 38 

    Subd. 2a.    Procedure for filing and adjustment of 
 statements and taxes.  (a) Every insurer required to pay a 
 premium tax in this state shall make and file a statement of 
 estimated premium taxes for the period covered by the 
 installment tax payment.  Such statement shall be in the form 
 prescribed by the commissioner of revenue. 

    (b) On or before March 1, annually every insurer subject to 
 taxation under this section shall make an annual return for the 
 preceding calendar year setting forth such information as the 
 commissioner of revenue may reasonably require on forms 
 prescribed by the commissioner of revenue. 

    (c) On March 1, the insurer shall pay any additional amount 
 due for the preceding calendar year; if there has been an 
 overpayment, such overpayment may be credited without interest 
 on the estimated tax due April 1. 

    (d) If unpaid by this date, penalties as provided in 
 section 289A.60, subdivision 1, as it relates to withholding and 
 sales or use taxes, shall be imposed.  

    Subd. 3.  Repealed, 1969 c 1001 s 11 

    Subd. 4.    Return premiums defined.  "Return 
 premiums," as used in this section, means any dividend or any 
 unused or unabsorbed portion of premium deposit or assessment 
 that shall be applied toward the payment of any premium, premium 
 deposit, or assessment due from the policyholder or member upon 
 a continuance or renewal of the insurance on account of which 
 such dividend was earned or premium deposit or assessment paid 
 and any portion of premium returned by the company upon 
 cancellation or termination of a policy or membership, except 
 surrender values paid upon the cancellation and surrender of 
 policies or certificates of life insurance. 

    Subd. 5.    Municipality defined.  As used in this 
 section "municipality" means a city of any class, a town, or a 
 township. 

    Subd. 6. Repealed, 1992 c 511 art 6 s 20 

    Subd. 7. Repealed, 1995 c 264 art 17 s 10 

    Subd. 8.    Examination of returns; assessments; refunds. 
  The commissioner of revenue shall, as soon as practicable 
 after a return required by this section is filed, examine the 
 same and make any investigation or examination of the company's 
 records and accounts that the commissioner of revenue may deem 
 necessary for determining the correctness of the return.  The 
 tax computed by the commissioner of revenue on the basis of such 
 examination and investigation shall be the tax to be paid by 
 such company.  If the tax found due shall be greater than the 
 amount reported as due on the company's return, the commissioner 
 of revenue shall assess a tax in the amount of such excess and 
 the whole amount of such excess shall be paid to the 
 commissioner of revenue within 60 days after notice of the 
 amount and demand for its payment shall have been mailed to the 
 company by the commissioner of revenue.  If the understatement 
 of the tax on the return was false and fraudulent with intent to 
 evade the tax, the installments of the tax shown by the company 
 on its return which have not yet been paid shall be paid to the 
 state treasurer within 30 days after notice of the amount 
 thereof and demand for payment shall have been mailed to the 
 company by the commissioner of revenue.  If the amount of the 
 tax found due by the commissioner of revenue shall be less than 
 that reported as due on the company's return, the excess shall 
 be refunded to the company in the manner provided by subdivision 
 12, (except that no demand therefor shall be necessary), if they 
 have already paid the whole of such tax, or credited against any 
 unpaid installment thereof; provided, that no refundment shall 
 be made except as provided in subdivision 12, after the 
 expiration of 3-1/2 years after the filing of the return. 

    If the commissioner of revenue examines returns of a 
 company for more than one year, the commissioner of revenue may 
 issue one order covering the several years under consideration 
 reflecting the aggregate refund or additional tax due. 

    The notices and demands provided for by subdivisions 8 to 
 10, shall be in such form as the commissioner of revenue may 
 determine (including a statement) and shall contain a brief 
 explanation of the computation of the tax and shall be sent by 
 mail to the company at the address given in its return, if any, 
 and if no such address is given, then to the last known address. 

    Subd. 9.    Failure to file return, false or fraudulent 
 return filed.  If any company required by this section to file 
 any return shall fail to do so within the time prescribed or 
 shall make, willfully or otherwise, an incorrect, false, or 
 fraudulent return, it shall, on the written demand of the 
 commissioner of revenue, file such return, or corrected return, 
 within 60 days after the mailing of such written demand and at 
 the same time pay the whole tax, or additional tax, due on the 
 basis thereof.  If such company shall fail within that time to 
 file such return, or corrected return, the commissioner of 
 revenue shall make for it a return, or corrected return, from 
 personal knowledge and from such information as the commissioner 
 of revenue can obtain through testimony, or otherwise, and 
 assess a tax on the basis thereof, which tax (less any payments 
 theretofore made on account of the tax for the taxable year 
 covered by such return) shall be paid within 60 days after the 
 commissioner of revenue has mailed to such company a written 
 notice of the amount thereof and demand for its payment.  Any 
 such return or assessment made by the commissioner of revenue on 
 account of the failure of the company to make a return, or a 
 corrected return, shall be prima facie correct and valid, and 
 the company shall have the burden of establishing its 
 incorrectness or invalidity in any action or proceeding in 
 respect thereto. 

    Subd. 9a.    Failure to file; penalties and interest.  
 In case of any failure to make and file a return as required by 
 this chapter within the time prescribed by law or prescribed by 
 the commissioner of revenue in pursuance of law there shall be 
 added to the tax penalties as provided in section 289A.60, 
 subdivision 2, as it relates to withholding and sales or use 
 taxes.  

    Subd. 9b.    Intent to evade tax; penalty.  If any 
 company, with intent to evade the tax imposed by this chapter, 
 fails to file any return required by this chapter or with such 
 intent files a false or fraudulent return there shall also be 
 imposed on it a penalty as provided in section 289A.60, 
 subdivision 6.  

    Subd. 9c.    Negligence or intentional disregard; penalty. 
  If any part of any additional assessment is due to negligence 
 or intentional disregard of the statute or a rule (but without 
 intent to defraud), there shall be added to the tax a penalty as 
 provided in section 289A.60, subdivision 5. 

    Subd. 9d.    Criminal provisions.  In addition to the 
 penalties hereinbefore prescribed, the provisions of section 
 289A.63, subdivisions 1 and 3, shall apply to persons required 
 by chapter 60A to make a return.  

    Subd. 9e.    Penalty for repeated failures to file returns 
 or pay taxes.  If there is a pattern by a person of repeated 
 failures to timely file returns or timely pay taxes, and written 
 notice is given that a penalty will be imposed if such failures 
 continue, a penalty of 25 percent of the amount of tax not 
 timely paid as a result of each such subsequent failure is added 
 to the tax.  The penalty can be abated under the abatement 
 authority in section 270.07, subdivisions 1, paragraph (e), and 
 6.  

    Subd. 10.    Collection of tax.  The tax required to be 
 paid by this section may be collected in an ordinary action at 
 law by the commissioner of revenue against the company.  In any 
 action commenced pursuant to this section, upon the filing of an 
 affidavit of default, the court administrator of the district 
 court wherein the action was commenced shall enter judgment for 
 the state for the amount demanded in the complaint together with 
 costs and disbursements. 

    Subd. 11.    Appeals.  Either party to an action or a 
 judgment for the recovery of any taxes, interest, or penalties 
 under subdivision 10, may appeal as in other civil cases. 

    Subd. 12.    Overpayments, claims for refund.  (1)   
 Procedure, time limit, appropriation.  A company who has paid, 
 voluntarily or otherwise, or from whom there has been collected 
 an amount of tax for any year in excess of the amount legally 
 due for that year, may file with the commissioner of revenue a 
 claim for a refund of the excess.  Except as provided in 
 subdivision 11, no claim or refund shall be allowed or made 
 after the period prescribed in section 289A.40, subdivision 1. 
 For this purpose, a return or amended return claiming an 
 overpayment constitutes a claim for refund. 

    Upon the filing of a claim, the commissioner of revenue 
 shall examine it, shall make and file written findings denying 
 or allowing the claim in whole or in part, and shall mail a 
 notice thereof to the company at the address stated upon the 
 return.  If the claim is allowed in whole or in part, the 
 commissioner of revenue shall issue a certificate for the 
 refundment of the excess paid by the company, with interest at 
 the rate specified in section 270.76 computed from the date of 
 the payment of the tax until the date the refund is paid or the 
 credit is made to the company.  The commissioner of finance 
 shall pay the refund out of the proceeds of the taxes imposed by 
 this section, as other state moneys are expended.  As much of 
 the proceeds of the taxes as necessary are appropriated for that 
 purpose. 

    (2)    Denial of claim, court proceedings.  If the claim 
 is denied in whole or in part, the commissioner of revenue shall 
 mail an order of denial to the company in the manner prescribed 
 in subdivision 8.  An appeal from this order may be taken to the 
 Minnesota tax court in the manner prescribed in section 271.06, 
 or the company may commence an action against the commissioner 
 of revenue to recover the denied overpayment.  The action may be 
 brought in the district court of the district in the county of 
 its principal place of business, or in the district court for 
 Ramsey county.  The action in the district court must be 
 commenced within 18 months following the mailing of the order of 
 denial to the company.  If a claim for refund is filed by a 
 company and no order of denial is issued within six months of 
 the filing, the company may commence an action in the district 
 court as in the case of a denial, but the action must be 
 commenced within two years of the date that the claim for refund 
 was filed. 

    (3)    Consent to extend time.  If the commissioner of 
 revenue and the company have, within the periods prescribed in 
 clause (1), consented in writing to any extension of time for 
 the assessment of the tax, the period within which a claim for 
 refund may be filed, or a refund may be made or allowed, if no 
 claim is filed, shall be the period within which the 
 commissioner of revenue and the company have consented to an 
 extension for the assessment of the tax and six months 
 thereafter.  

    (4)    Overpayments; refunds.  If the amount determined 
 to be an overpayment exceeds the taxes imposed by this section, 
 the amount of excess shall be considered an overpayment.  An 
 amount paid as tax constitutes an overpayment even if in fact 
 there was no tax liability with respect to which the amount was 
 paid. 

    Notwithstanding any other provision of law to the contrary, 
 in the case of any overpayment, the commissioner of revenue, 
 within the applicable period of limitations, shall refund any 
 balance of more than one dollar to the company if the company 
 requests the refund. 

    Subd. 13.    No liability in case of compliance with laws 
 of other states.  Each domestic insurance company, and its 
 officers, directors, and trustees, may comply with any law of 
 any state, territory, or political subdivision of either, which 
 imposes any license, or tax, and pay same, unless, prior to such 
 payment, such law is expressly held invalid by the United States 
 Supreme Court.  No such company, officer, director, or trustee 
 shall be subject to liability by reason of any such compliance 
 or payment either heretofore or hereafter made. 

    Subd. 14. Repealed, 1Sp1985 c 10 s 123 

    Subd. 15.    Guaranty association assessment offset.  An 
 insurance company may offset against its premium tax liability 
 to this state any amount paid pursuant to assessments made for 
 insolvencies which occur after July 31, 1994, under sections 
 60C.01 to 60C.22, and any amount paid pursuant to assessments 
 made after July 31, 1994, under Minnesota Statutes 1992, 
 sections 61B.01 to 61B.16, or sections 61B.18 to 61B.32 as 
 follows: 

    (a) Each such assessment shall give rise to an amount of 
 offset equal to 20 percent of the amount of the assessment for 
 each of the five calendar years following the year in which the 
 assessment was paid. 

    (b) The amount of offset initially determined for each 
 taxable year is the sum of the amounts determined under 
 paragraph (a) for that taxable year. 

    (c) Each year the commissioner of revenue shall compare 
 total guaranty association assessments levied over the preceding 
 five calendar years to the sum of all premium tax and corporate 
 franchise tax revenues collected from insurance companies, 
 without reduction for any guaranty association assessment offset 
 in the preceding calendar year, referred to in this subdivision 
 as "preceding year insurance tax revenues."  If total guaranty 
 association assessments levied over the preceding five years 
 exceed the preceding year insurance tax revenues, insurance 
 companies shall be allowed only a proportionate part of the 
 premium tax offset calculated under paragraph (b) for the 
 current calendar year.  The proportionate part of the premium 
 tax offset allowed in the current calendar year is determined by 
 multiplying the amount calculated under paragraph (b) by a 
 fraction, the numerator of which equals the preceding year 
 insurance tax revenues and the denominator of which equals total 
 guaranty association assessments levied over the preceding 
 five-year period.  The proportionate part of the premium tax 
 offset that is not allowed shall be carried forward to 
 subsequent tax years and added to the amount of premium tax 
 offset calculated under paragraph (b) prior to application of 
 the limitation imposed by this paragraph.  Any amount carried 
 forward from prior years must be allowed before allowance of the 
 offset for the current year calculated under paragraph (b).  The 
 premium tax offset limitation must be calculated separately for 
 (1) insurance companies subject to assessment under sections 
 60C.01 to 60C.22, and (2) insurance companies subject to 
 assessment under Minnesota Statutes 1992, sections 61B.01 to 
 61B.16, or sections 61B.18 to 61B.32.  When the premium tax 
 offset is limited by this provision, the commissioner of revenue 
 shall notify affected insurance companies on a timely basis for 
 purposes of completing premium and corporate franchise tax 
 returns.  The guaranty associations created under sections 
 60C.01 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 
 61B.16, and sections 61B.18 to 61B.32, shall provide the 
 commissioner of revenue with the necessary information on 
 guaranty association assessments.  The limitation in this 
 paragraph is effective for offsets allowable in 1999 and 
 thereafter. 

    (d) If the offset determined by the application of 
 paragraphs (a) to (c) exceeds the greater of the insurance 
 company's premium tax liability under this section or its 
 corporate franchise tax liability under chapter 290 prior to 
 allowance of the credit for premium taxes, then the insurance 
 company may carry forward the excess, referred to in this 
 subdivision as the "carryforward credit," to subsequent taxable 
 years.  The carryforward credit shall be allowed as an offset 
 against premium tax liability for the first succeeding year to 
 the extent that the premium tax liability for that year exceeds 
 the amount of the allowable offset for the year determined under 
 paragraphs (a) to (c).  The carryforward credit shall be 
 reduced, but not below zero, by the greater of the amount of the 
 carryforward credit allowed as an offset against the premium tax 
 under this paragraph or the amount of the carryforward credit 
 allowed as an offset against the insurance company's corporate 
 franchise tax liability under section 290.35, subdivision 6, 
 paragraph (d).  The remainder, if any, of the carryforward 
 credit must be carried forward to succeeding taxable years until 
 the entire carryforward credit has been credited against the 
 insurance company's liability for premium tax under this chapter 
 and corporate franchise tax under chapter 290 if applicable for 
 that taxable year. 

    (e) A refund paid by the Minnesota life and health 
 insurance guaranty association to member insurers under 
 Minnesota Statutes 1992, section 61B.07, subdivision 6, or 
 section 61B.24, subdivision 6, with respect to an assessment 
 payment which has been offset against taxes shall reduce the 
 carryforward credit determined under paragraph (d).  If the 
 refund exceeds the amount of the carryforward credit, it shall 
 be repaid by the insurers to the extent of the offset to the 
 state in the manner the commissioner of revenue requires. 

    HIST: 1967 c 395 art 1 s 15; 1969 c 1001 s 1; 1971 c 575 s 
 1-3; 1973 c 123 art 5 s 7; 1973 c 492 s 14; 1981 c 356 s 272; 
 1983 c 247 s 29,30; 1984 c 558 art 1 s 1-7; 1984 c 592 s 10-26; 
 1Sp1985 c 14 art 15 s 1; 1986 c 444; 1Sp1986 c 1 art 7 s 1; 
 1Sp1986 c 3 art 1 s 82; 1987 c 268 art 2 s 1; art 17 s 41; 1988 
 c 719 art 2 s 1; 1Sp1989 c 1 art 10 s 3; 1990 c 480 art 1 s 46; 
 art 6 s 1; 1990 c 604 art 2 s 1; 1992 c 511 art 6 s 1; 1992 c 
 549 art 9 s 2; 1993 c 375 art 10 s 1-3; 1994 c 587 art 1 s 2; 
 1994 c 625 art 8 s 2; 1995 c 264 art 9 s 3; art 13 s 1; 1996 c 
 446 art 1 s 3; 1997 c 7 art 1 s 17; 1997 c 31 art 2 s 1; 1997 c 
 84 art 6 s 2; 1997 c 225 art 3 s 2; 1998 c 389 art 16 s 10; 1998 
 c 407 art 5 s 1