PLEASE NOTE: Legislative Information cannot perform research, provide legal advice, or interpret Maine law. For legal assistance, please contact a qualified attorney.
An Act To Phase Out the Insurance Premium Tax on Annuities
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §2513, first ¶, as amended by PL 2011, c. 331, §12 and affected by §§16 and 17, is further amended to read:
EveryExcept as provided in section 2513-C, every insurance company or association that does business or collects premiums or assessments including annuity considerations in the State, including surety companies and companies engaged in the business of credit insurance or title insurance, shall, for the privilege of doing business in this State and in addition to any other taxes imposed for that privilege, pay a tax upon all gross direct premiums including annuity considerations, whether in cash or otherwise, on contracts written on risks located or resident in the State for insurance of life, annuity, fire, casualty and other risks at the rate of 2% a year. Every nonadmitted insurer that does business or collects premiums in the State shall, for the privilege of doing business in this State and in addition to any other taxes imposed for that privilege, pay a tax upon all gross direct premiums, whether in cash or otherwise, as provided in section 2531. For purposes of this sectionchapter, the term "annuity considerations" includes amounts paid to an insurance company for the purchase of a contract that may result in an annuity, even if the annuitization never occurs or does not occur until some time in the future and the amounts are in the meantime applied to an investment vehicle other than an annuity. This section does not apply to mutual fire insurance companies subject to tax under section 2517 or to captive insurance companies formed or licensed under Title 24-A, chapter 83 or under the laws of another state.
Sec. 2.  36 MRSA §2513-C  is enacted to read:
§ 2513-C. Tax on annuity considerations
 
1.  Phase-out of tax.     Notwithstanding the other provisions of this chapter, the rate of tax under this chapter for annuity considerations is 1.5% in calendar year 2020, 1% in calendar year 2021 and 0.5% in calendar year 2022. Beginning in calendar year 2023, annuity considerations are not subject to tax under this chapter, but taxes due for previous years may be collected.
 
2.  Application of reduced rate on annuities.     The reduced rates specified in subsection 1 for calendar years 2020, 2021 and 2022 apply to premiums on an annuity paid by annuity holders in this State only if the tax savings from the reduced rate are credited to the annuity holders. Upon request of the bureau, an insurer shall submit evidence that establishes that the tax savings derived from the reduced rate under this section have been credited to the annuity holders.
Sec. 3. 36 MRSA §2515, as amended by PL 2013, c. 331, Pt. C, §11, is further amended to read:
§ 2515.Amount of tax
In determining the amount of tax due under sections 2513 and 2531, each company shall deduct from the full amount of gross direct premiums the amount of all direct return premiums on the gross direct premiums and all dividends paid to policyholders on direct premiums, and the tax must be computed by those companies or their agents. Except when direct return premiums are returned in the same tax year that the premium was paid, the deduction allowed in this section may be taken only if the tax under this Part has been paid. For tax periods beginning on or after January 1, 2020, the deductions under this section related to annuity considerations may be deducted only from annuity considerations.
 
SUMMARY
This bill phases out the insurance premium tax on annuity considerations over 4 years beginning in 2020. During the phase-out period, the prescribed rate applies only if the insurer credits the savings from the rate reductions to annuity holders. The bill also specifies that certain deductions related to annuities may be deducted from annuity considerations for tax periods beginning on or after January 1, 2020.