HB1207 (As Introduced) - 1999 Regular Session

MISSISSIPPI LEGISLATURE

1999 Regular Session

To: Insurance; Ways and Means

By: Representative Simpson

House Bill 1207

AN ACT TO CREATE THE CERTIFIED CAPITAL COMPANY LAW TO PROVIDE INCENTIVES FOR INSURANCE COMPANIES TO INVEST IN QUALIFIED BUSINESS; TO PROVIDE THAT THE DEPARTMENT OF INSURANCE SHALL ESTABLISH RULES AND REGULATIONS CONCERNING APPLICATIONS AND QUALIFICATIONS FOR BECOMING A CERTIFIED CAPITAL COMPANY; TO PROVIDE THAT CERTIFIED INVESTORS SHALL BE ENTITLED TO CERTAIN PREMIUM TAX CREDITS; TO PROVIDE AGGREGATE LIMITATIONS ON THE PREMIUM TAX CREDITS; TO PROVIDE REQUIREMENTS FOR CONTINUATION OF CERTIFICATION; TO PROVIDE FOR DECERTIFICATION FOR VIOLATIONS; TO BRING FORWARD SECTIONS 27-15-103, 27-15-105, 27-15-107, 27-15-109, 27-15-113, 27-15-115, 27-15-117, 27-15-119, 27-15-121, 27-15-123, 27-15-125, 27-15-127, 27-15-129 AND 27-15-131, MISSISSIPPI CODE OF 1972, WHICH RELATE TO INSURANCE PREMIUM TAXES, FOR PURPOSES OF AMENDMENT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Certified Capital Company Law."

SECTION 2. The primary purpose of the Certified Capital Company Law is to provide assistance in the formation of new and expansion of existing businesses which create jobs in the state by providing an incentive for insurance companies to invest in certified capital companies.

SECTION 3. For the purpose of this law, the following terms shall mean:

(a) "Affiliate of a certified capital company or insurance company" means:

(i) Any person, directly or indirectly beneficially owning (whether through rights, options, convertible interests or otherwise), controlling or holding power to vote ten percent (10%) or more of the outstanding voting securities or other ownership interests of the certified capital company or insurance company, as applicable;

(ii) Any person ten percent (10%) or more of whose outstanding voting securities or other ownership interest are directly or indirectly beneficially owned (whether through rights, options, convertible interests or otherwise), controlled or held with power to vote by the certified capital company or insurance company, as applicable;

(iii) Any person directly or indirectly controlling, controlled by or under common control with the certified capital company or insurance company, as applicable;

(iv) A partnership in which the certified capital company or insurance company, as applicable, is a general partner; and

(vi) Any person who is an officer, director, employee or agent of the certified capital company or insurance company, as applicable, or an immediate family member of such officer, director, employee or agent.

(b) "Certification date" means the date on which a certified capital company is so designated by the Department.

(c) "Certified capital" means an investment of cash by a certified investor in a certified capital company which fully funds the purchase price of either or both its equity interest in the certified capital company or a qualified debt instrument issued by the certified capital company.

(d) "Certified capital company" means a partnership, corporation, trust or limited liability company, whether organized on a profit or not-for-profit basis, that has as its primary business activity the investment of cash in qualified businesses and that is certified by the Department as meeting the criteria of this law.

(e) "Certified investor" means any insurance company that (i) contributes certified capital pursuant to an allocation of premium tax credits under Section 6 of this act; or (ii) becomes irrevocably committed to contribute certified capital by preparing and executing a premium tax credit allocation claim.

(f) "Department" means the Department of Insurance.

(g) "Person" means any natural person or entity, including a corporation, general or limited partnership, trust or limited liability company.

(h) "Premium tax credit allocation claim" means a claim for allocation of premium tax credits prepared and executed by a certified investor on a form provided by the department and filed by a certified capital company with the department. The form shall include an affidavit of the certified investor pursuant to which such certified investor shall become legally bound and irrevocably committed to make an investment of certified capital in a certified capital company in the amount allocated (even if such amount is less than the amount of the claim), subject only to the receipt of an allocation pursuant to Section 6 of this act.

(i) "Qualified business" means a business that meets all of the following conditions as of the time of a certified capital company's first investment in the business:

(i) It is headquartered in this state, and its principal business operations are located in this state;

(ii) It is a small business concern as defined in Section 121.201 of the small business size regulations of the United States Small Business Administration, 13 CFR 121.201.

A business predominantly engaged in professional services provided by accountants, lawyers or physicians shall not constitute a qualified business.

(j) "Qualified debt instrument" means a debt instrument issued by a certified capital company, at par value or a premium, with an original maturity date of at least five (5) years from date of issuance, a repayment schedule which is no faster than a level principal amortization over five (5) years, and interest, distribution or payment features which are not related to the profitability of the certified capital company or the performance of the certified capital company's investment portfolio.

(k) "Qualified distribution" means any distribution or payment to equity holders of a certified capital company in connection with the following:

(i) Costs and expenses of forming, syndicating, managing and operating the certified capital company, including reasonable and necessary fees paid for professional services (such as legal and accounting services) related to the formation and operation of the certified capital company and an annual management fee in an amount that does not exceed two and one-half percent (2-1/2%) of the value of the assets of the certified capital company; and

(ii) Any projected increase in federal or state taxes, including penalties and interest related to state and federal income taxes, of the equity owners of a certified capital company resulting from the earnings or other tax liability of the certified capital company to the extent that the increase is related to the ownership, management or operation of a certified capital company.

(l) "Qualified investment" means the investment of cash by a certified capital company in a qualified business for the purchase of any debt, equity or hybrid security, of any nature and description whatsoever, including a debt instrument or security which has the characteristics of debt but which provides for conversion into equity or equity participation instruments such as options or warrants.

(m) "State premium tax liability" means any liability incurred by an insurance company under the provisions of Section 27-15-103 et seq.

SECTION 4. (1) The department shall establish by rule or regulation the procedures for making an application to become a certified capital company. The applicant shall pay a nonrefundable application fee of Seven Thousand Five Hundred Dollars ($7,500.00) at the time of filing the application with the department.

(2) A certified capital company's equity capitalization at the time of seeking certification must be Five Hundred Thousand Dollars ($500,000.00) or more and must be in the form of unencumbered cash, marketable securities or other liquid assets.

(3) The department shall review the organizational documents of each applicant for certification and the business history of the applicant and shall determine that the applicant's cash, marketable securities and other liquid assets are at least Five Hundred Thousand Dollars ($500,000.00).

(4) The department shall verify that at least two (2) principals of the certified capital company or at least two (2) persons employed to manage the funds of the certified capital company have not less than two (2) years of experience in the venture capital industry.

(5) Any offering material involving the sale of securities of the certified capital company shall include the following statement:

"By authorizing the formation of a certified capital company, the state does not necessarily endorse the quality of management or the potential for earnings of such company and is not liable for damages or losses to a certified investor in the company. Use of the word "certified" in an offering does not constitute a recommendation or endorsement of the investment by the Department of Insurance. If applicable provisions of this law are violated, the state may require forfeiture of unused premium tax credits and repayment of used premium tax credits."

(6) Within thirty (30) days of application, the department shall issue the certification or shall refuse the certification and communicate in detail to the applicant the grounds for the refusal, including suggestions for the removal of those grounds. The department shall review and approve or reject applications in the order submitted, and in the event more than one (1) application is received by the department on any date, all such applications shall be reviewed and approved simultaneously, except in the case of incomplete applications or applications for which additional information is requested by the department and is not supplied by the applicant within the allowable time limits established by the department.

(7) No insurance company or any affiliate of an insurance company shall, directly or indirectly, manage a certified capital company or control the direction of investments for a certified capital company. This provision shall not preclude a certified investor, insurance company or any other party from exercising its legal rights and remedies (which may include interim management of a certified capital company) in the event that a certified capital company is in default of its statutory obligations or its contractual obligations to such certified investor, insurance company or other party.

SECTION 5. (1) Any certified investor who makes an investment of certified capital pursuant to an allocation of premium tax credits under Section 7 of this act shall, in the year of investment, earn a vested credit against state premium tax liability equal to one hundred percent (100%) of the certified investor's investment of certified capital. A certified investor shall be entitled to take up to ten percent (10%) of the vested premium tax credit in any taxable year of the certified investor.

(2) The credit to be applied against state premium tax liability in any one (1) year may not exceed the state premium tax liability of the certified investor for such taxable year. All unused credits against state premium tax liability may be carried forward indefinitely until the premium tax credits are utilized.

(3) A certified investor claiming a credit against state premium tax liability earned through an investment in a certified capital company shall not be required to pay any additional retaliatory tax levied pursuant to Section 27-15-121 et seq., as a result of claiming that credit.

SECTION 6. (1) The aggregate amount of certified capital for which premium tax credits shall be allowed for all certified investors under this act shall not exceed the amount which would entitle all certified investors in certified capital companies to take aggregate credits of Fifteen Million Dollars ($15,000,000.00) per year. No certified capital company may file premium tax credit allocation claims in excess of the maximum amount of certified capital for which premium tax credits may be allowed as provided in this subsection (1).

(2) Certified capital for which premium tax credits are allowed will be allocated to certified investors in certified capital companies in the order that premium tax credit allocation claims are filed with the department by such certified capital companies on behalf of their certified investors. All filings made on the same day shall be treated as having been made contemporaneously.

(3) In the event that two (2) or more certified capital companies file premium tax credit allocation claims with the department on behalf of their respective certified investors on the same day, and the amount of such premium tax credit allocation claims exceeds in the aggregate the limit of available tax credits under the provisions of Section 6 of this act, capital for which premium tax credits are allowed shall be allocated among the certified investors on a pro rata basis with respect to the amounts claimed. The pro rata allocation for any one (1) certified investor shall be the product of a fraction, the numerator of which is the amount of the premium tax credit allocation claim filed on behalf of such certified investor and the denominator of which is the total of all premium tax credit allocation claims filed on behalf of all certified investors, multiplied by the aggregate limitation as provided in subsection (1) of this section.

(4) Within five (5) business days after the department receives a premium tax credit allocation claim filed by a certified capital company on behalf of one or more of its certified investors, the department shall notify the certified capital company of the amount of tax credits allocated to each of the certified investors in such certified capital company.

(5) In the event a certified capital company does not receive an investment of certified capital equaling the amount of premium tax credits allocated to a certified investor for which it filed a premium tax credit allocation claim within five (5) business days of its receipt of notice of allocation, that portion of the premium tax credits allocated to such certified investor in the certified capital company will be forfeited, and the department will reallocate that certified capital among the other certified investors in all certified capital companies on a pro rata basis with respect to the premium tax credit allocation claims filed on behalf of such certified investors by all certified capital companies.

(6) The maximum amount of certified capital for which premium tax credits shall be allowed to any one (1) certified investor (and its affiliates) in one or more certified capital companies in any year shall not exceed ten percent (10%) of the aggregate limitation as provided in subsection (1) of this section.

SECTION 7. (1) To continue to be certified, a certified capital company must make qualified investments according to the following schedule:

(a) Within the period ending three (3) years after its certification date, a certified capital company must have made qualified investments cumulatively equal to thirty percent (30%) of its certified capital.

(b) Within the period ending five (5) years after its certification date, a certified capital company must have made qualified investments cumulatively equal to fifty percent (50%) of its certified capital.

(2) The aggregate cumulative amount of all qualified investments made by the certified capital company from its certification date shall be considered in the calculation of the percentage requirements under this act. Any proceeds received from a qualified investment may be invested in another qualified investment and shall count toward any requirement in this act with respect to investments of certified capital.

(3) Any business which is classified as a qualified business at the time of the first investment in such business by a certified capital company shall remain classified as a qualified business and may receive follow-on investments from any certified capital company or any of its affiliates, and such follow-on investments shall be qualified investments even though such business may not meet the definition of a qualified business at the time of such follow-on investments.

(4) No qualified investment may be made at a cost to a certified capital company greater than fifteen percent (15%) of the total certified capital of the certified capital company at the time of investment.

(5) At its option, a certified capital company, before making a proposed investment in a specific business, may request from the department a written opinion that the business in which it proposes to invest should be considered a qualified business. Upon receiving such a request, the department shall have ten (10) working days to determine whether or not the business meets the definition of a qualified business and notify the certified capital company of its determination and an explanation thereof. If the department fails to notify the certified capital company with respect to the proposed investment within the ten-working-day period, the business in which the certified capital company proposes to invest shall be deemed to be a qualified business. If the department determines that the business in which the certified capital company proposes to invest does not meet all of the criteria set forth in Section 3(i) of this act, the department may nevertheless consider the business a qualified business and approve the investment if the department determines that the proposed investment will further state economic development.

(6) All certified capital not currently invested in qualified investments by the certified capital company must be invested in cash deposited with a federally insured financial institution, certificates of deposit in a federally insured financial institution, investment securities that are obligations of the United States, its agencies or instrumentalities, or obligations that are guaranteed fully as to principal and interest by the United States, investment-grade instruments (rated in the top four (4) rating categories by a nationally recognized rating organization), obligations of this state, or any municipality in this state, or any political subdivision thereof; or any other investments approved in advance and in writing by the department.

(7) Each certified capital company shall report the following to the department:

(a) As soon as practicable after the receipt of certified capital, each certified capital company shall report the following to the department: (i) the name of each certified investor from which the certified capital was received, including such certified investor's insurance premium tax identification number; (ii) the amount of each certified investor's investment of certified capital and premium tax credits; and (iii) the date on which the certified capital was received.

(b) On a annual basis, on or before January 31, (i) the amount of the certified capital company's certified capital at the end of the immediately preceding year; (ii) whether or not the certified capital company has invested more than fifteen percent (15%) of its total certified capital in any one (1) business; and (iii) all qualified investments that the certified capital company made during the previous calendar year.

(c) Each certified capital company shall provide to the department annual audited financial statements, which shall include the opinion of an independent certified public accountant, within ninety (90) days of the close of the fiscal year. The audit shall address the methods of operation and conduct of the business of the certified capital company to determine if the certified capital company is complying with the statutes and program rules and that the funds received by the certified capital company have been invested as required within the time limits provided by Section 6(1) of this act.

(d) On or before January 31 of each year, each certified capital company shall pay an annual, nonrefundable certification fee of Five Thousand Dollars ($5,000.00) to the department; provided, that no such fee shall be required within six (6) months of the initial certification date of a certified capital company.

SECTION 8. A certified capital company may make qualified distributions at any time. In order to make a distribution to its equity holders, other than a qualified distribution, a certified capital company must have made qualified investments in an amount cumulatively equal to one hundred percent (100%) of its certified capital. A certified capital company may, however, make repayments of principal and interest on its indebtedness without any restriction whatsoever, including repayments of indebtedness of the certified capital company on which certified investors earned premium tax credits.

SECTION 9. (1) The department shall conduct an annual review of each certified capital company to determine if the certified capital company is abiding by the requirements of certification, to advise the certified capital company as to the eligibility status of its qualified investments, and to ensure that no investment has been made in violation of this act. The cost of the annual review shall be paid by each certified capital company according to a reasonable fee schedule adopted by the department.

(2) Any material violation of Section 7 of this act shall be grounds for decertification of the certified capital company. If the department determines that a certified capital company is not in compliance with the requirements of Section 7 of this act, it shall, by written notice, inform the officers of the certified capital company that the certified capital company may be subject to decertification in one hundred twenty (120) days from the date of mailing of the notice, unless the deficiencies are corrected and the certified capital company is again in compliance with all requirements for certification.

(3) At the end of the one-hundred-twenty-day grace period, if the certified capital company is still not in compliance with Section 7 of this act, the department may send a notice of decertification to the certified capital company and to all other appropriate state agencies.

(4) Decertification of a certified capital company may cause the recapture of premium tax credits previously claimed and the forfeiture of future premium tax credits to be claimed by certified investors with respect to such certified capital company, as follows:

(a) Decertification of a certified capital company within three (3) years of its certification date shall cause the recapture of all premium tax credits previously claimed and the forfeiture of all future premium tax credits to be claimed by certified investors with respect to such certified capital company.

(b) When a certified capital company meets all requirements for continued certification under Section 7(1)(a) of this act and subsequently fails to meet the requirements for continued certification under the provisions of Section 107(1)(b) of this act, those premium tax credits which have been or will be taken by certified investors within three (3) years from the certification date of the certified capital company will not be subject to recapture or forfeiture; however, all premium tax credits that have been or will be taken by certified investors after the third anniversary of the certification date of the certified capital company shall be subject to recapture or forfeiture.

(c) Once a certified capital company has met all requirements for continued certification under Section 7(1)(a) and Section 7(1)(b) of this act, and is subsequently decertified, those premium tax credits which have been or will be taken by certified investors within five (5) years from the certification date of the certified capital company will not be subject to recapture or forfeiture. Those premium tax credits to be taken subsequent to the fifth year of certification shall be subject to forfeiture only if the certified capital company is decertified within five (5) years from its certification date.

(d) Once a certified capital company has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital in qualified investments, all premium tax credits claimed or to be claimed by its certified investors shall no longer be subject to recapture or forfeiture.

(5) Once a certified capital company has invested an amount cumulatively equal to one hundred percent (100%) of its certified capital in qualified investments, the certified capital company shall no longer be subject to regulation by the department.

(6) The department shall send written notice to the address of each certified investor whose premium tax credit has been subject to recapture or forfeiture, using the address last shown on the last premium tax filing.

(7) The department shall have the authority to waive any recapture or forfeiture of credits if, after considering all facts and circumstances, it determines that such waiver will have the effect of furthering state economic development.

SECTION 10. The premium tax credit established under this act may be transferred or sold. The department shall promulgate regulations to facilitate the transfer or sale of the premium tax credits. Any such transfer or sale shall not affect the time schedule for taking the premium tax credit as provided in this act. Any premium tax credits recaptured pursuant to Section 9 of this act shall be the liability of the taxpayer which actually claimed the premium tax credits.

SECTION 11. The department shall make and promulgate rules and regulations necessary to carry out the provisions of this act within sixty (60) days of the effective date of this act. Such rules and regulations shall provide that the department shall begin accepting applications for certification as a certified capital company not later than ninety (90) days of the effective date of this act. Such rules and regulations shall further provide that any certified capital company may file premium tax credit allocation claims on behalf of its certified investors at any time on or after its certification date and that premium tax credits shall be earned by and vested in certified investors at the time of such investment of certified capital, although such premium tax credits may not be claimed or utilized until 1999.

SECTION 12. Section 27-15-103, Mississippi Code of 1972, is brought forward as follows:

27-15-103. (1) Except as otherwise provided in Section 83-61-11, in addition to the license tax now or hereafter provided by law, which tax shall be paid when the company enters or is admitted to do business in this state, there is hereby levied and imposed upon all foreign insurance companies and associations, including life insurance companies and associations, health, accident and industrial insurance companies and associations, fire and casualty insurance companies and associations, and all other foreign insurance companies and associations of every kind and description, an additional annual license or privilege tax of three percent (3%) of the gross amount of premium receipts received from, and on insurance policies and contracts written in, or covering risks located in this state, except for premiums received on policies issued to fund a deferred compensation plan qualified under Section 457 of the Federal Tax Code for federal tax exemption. In determining said amount of premiums, there shall be deducted therefrom premiums received for reinsurance from companies authorized to do business in this state, cash dividends paid under policy contracts in this state, and premiums returned to policyholders and cancellations on accounts of policies not taken, and, in the case of mutual insurance companies (including interinsurance and reciprocal exchanges, but not including mutual life, accident, health or industrial insurance companies) any refund made or credited to the policyholder other than for losses. The term "premium" as used herein shall also include policy fees, membership fees, and all other fees collected by the companies. No credit or deduction from gross premium receipts shall be allowed for any commission, fee or compensation paid to any agent, solicitor or representative. Provided, however, that any foreign insurance carrier selected to furnish service to the State of Mississippi under the State Employees Life and Health Insurance Plan shall not be required to pay the annual license or privilege tax on the premiums collected for coverage under the said plan.

(2) In the event that the Mississippi Supreme Court or another court finally adjudicates that any tax levied prior to July 1, 1985, under the provisions of this section was collected unconstitutionally and that a liability for a credit or refund for such collection has accrued, then the rate of tax set forth above shall be increased to four percent (4%) for a period of six (6) years beginning July 1 following such adjudication.

(3) The taxes herein levied and imposed for the calendar year 1982 and all calendar years thereafter shall be reduced by the net amount of income tax paid to this state for the preceding calendar year, provided, in no event may the credit be taken more than once. The credit herein authorized shall, in no event, be greater than the premium tax due under this section; it being the purpose and intent of this paragraph that whichever of the annual insurance premium tax or the income tax is greater in amount shall be paid.

SECTION 13. Section 27-15-105, Mississippi Code of 1972, is brought forward as follows:

27-15-105. Every insurance company which, having been admitted to do business in this state, has withdrawn or shall hereafter withdraw from the state, shall continue to be liable for the tax hereby imposed and shall be required to make and file the annual statement thereof as is herein required and pay the required tax so long as it shall continue to collect premiums from its policyholders in the state.

SECTION 14. Section 27-15-107, Mississippi Code of 1972, is brought forward as follows:

27-15-107. Every insurance company liable for the tax under the provisions hereof shall make and file with the State Tax Commission a full and correct statement, under the oath of its president, secretary or other duly authorized officer at its home or head office in this country, of the gross amount of its premium receipts during the reporting period, and shall, at the time of filing such report, pay to the State Tax Commission the tax levied hereby upon the premium collections for said period, computed as provided in Sections 27-15-103 and 27-15-109.

Such report and payment are due as follows:

For the period July 1 through September 30, the report and payment are due by October 20;

For the period October 1 through December 31, the report and payment are due by February 20;

For the period January 1 through March 31, the report and payment are due by April 20;

For the period April 1 through June 30, the report and payment are due by July 20.

On or before July 31, 1982, every insurance company liable for the payment of tax hereunder shall make and file with the State Tax Commission, as provided herein, a report of the gross amount of its premium receipts not heretofore reported for periods prior to July 1, 1982, and shall, at the time of filing such report, pay to the State Tax Commission the tax levied upon the premium collections for said periods computed as provided in Sections 27-15-103 and 27-15-109.

Every insurance company liable for the payment of tax hereunder shall file an annual reconciliation statement of taxes paid during the previous year. The annual reconciliation statement shall be in the form prescribed by the State Tax Commission and shall be filed with the State Tax Commission on or before February 20 following the close of each calendar year.

The State Tax Commission shall have the authority to promulgate rules and regulations, not inconsistent with this article, as it may deem necessary to enforce its provisions.

SECTION 15. Section 27-15-109, Mississippi Code of 1972, is brought forward as follows:

27-15-109. (1) Except as otherwise provided in Section 83-61-11, there is hereby levied and imposed upon each domestic company doing business in this state an annual tax of three percent (3%) of the gross amount of premiums collected by such domestic company on insurance policies and contracts written in, or covering risks located in this state, except for premiums received on policies issued to fund a retirement, thrift or deferred compensation plan qualified under Section 401, Section 403 or Section 457 of the Federal Tax Code for federal tax exemption. Provided, however, that a domestic insurance company against which is levied additional premium tax under retaliatory laws of other states in which it does business, as a result of the tax increase provided by Sections 27-15-103 through 27-15-117, may deduct the total of such additional retaliatory tax from the state income tax due by it to the State of Mississippi. The insurance carriers selected to furnish service to the State of Mississippi, under the State Employees Life and Health Insurance Plan, shall not be required to pay the premium tax levied against insurance companies under this section on the premiums collected for coverage under the state employees plan.

(2) Except as expressly provided by subsection (1) of this section, all of the provisions of Sections 27-15-103 through 27-15-117 shall be applicable to such domestic insurance companies. However, the statement filed with the State Tax Commission by domestic insurance companies as provided in Section 27-15-107 shall include therein a sworn statement of all additional retaliatory premium taxes paid by them to other states as a result of the increase in premium taxes imposed by Sections 27-15-103 through 27-15-117, itemized by states to which paid.

(3) In the event that the Mississippi Supreme Court or another court finally adjudicates that any tax levied prior to July 1, 1985, under the provisions of this section was collected unconstitutionally and that a liability for a credit or refund for such collection has accrued, then the rate of tax set forth above shall be increased to four percent (4%) for a period of six (6) years beginning July 1 following such adjudication.

SECTION 16. Section 27-15-113, Mississippi Code of 1972, is brought forward as follows:

27-15-113. All taxes for which any company is liable under the provisions of this chapter or any other title or chapter which imposes a tax on insurance premiums shall be collected and recovered by the State Tax Commission in the same manner provided by law for the collection of sales taxes; and all administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties and interest for nonpayment of taxes, failure to file returns, and for other noncompliance with the provisions of said chapter, and all other requirements and duties imposed upon taxpayers, shall apply to all persons liable for taxes under the provisions of this chapter or any other title or chapter which imposes a tax on insurance premiums and the commission shall exercise all the power and authority and perform all the duties with respect to taxpayers under this chapter or any other title or chapter which imposes a tax on insurance premiums as are provided in said sales tax law, except that in cases of conflict, then the provisions of this chapter or any other title or chapter which imposes a tax on insurance premiums shall control.

SECTION 17. Section 27-15-115, Mississippi Code of 1972, is brought forward as follows:

27-15-115. In addition to all other taxes authorized by law, insurance companies shall pay the license and privilege taxes imposed by Sections 27-15-81 and 27-15-83, the taxes imposed by Sections 27-15-103 to 27-15-117, ad valorem taxes on real estate and tangible personal property, state income tax, sales tax levied on a vendor with a requirement of adding it to the sales price and use tax levied on the cost of tangible personal property purchased outside this state for use within this state.

SECTION 18. Section 27-15-117, Mississippi Code of 1972, is brought forward as follows:

27-15-117. All of the provisions of Sections 27-15-103 to 27-15-117 shall be applicable to mutual and reciprocal insurance companies and associations.

SECTION 19. Section 27-15-119, Mississippi Code of 1972, is brought forward as follows:

27-15-119. (1) Notwithstanding any other provisions of the laws of this state, the rate of the annual license or privilege tax on the gross amount of premium receipts received from and on annuity policies and contracts written in or covering risks located in this state shall be one percent (1%) upon all insurance companies and associations from July 1, 1994, through June 30, 1995, and thereafter there shall be no annual license or privilege tax on the gross amount of premium receipts received from and on annuity policies and contracts written in or covering risks located in this state upon all insurance companies and associations. Provided, however, an annual license or privilege tax on the gross amount of premium receipts received from and on policies and contracts issued to fund a retirement, thrift or deferred compensation plan qualified under Section 401, Section 403, an individual retirement annuity qualified under Section 408 or Section 457 of the Federal Tax Code for federal tax exemption shall not be imposed on any foreign or domestic company, unless such foreign company has its principal place of business in a state which imposes a license or privilege tax on such policies issued by companies having their principal place of business in Mississippi, in which case said foreign company shall be taxed at the same rate its state of principal business imposes a license or privilege tax on Mississippi companies with respect to such policies. Provided further, in the event an insurance company has heretofore included in its premium charge the tax required hereby, said premium charges on all such annuity policies and contracts shall be reduced by the amount of said tax within one hundred twenty (120) days from the effective date of this section. This latter provision shall apply to all such annuity policies and contracts qualified under Section 401, Section 403, Section 408 or Section 457 of the Federal Tax Code for federal tax exemption presently in force as well as to those hereafter issued.

SECTION 20. Section 27-15-121, Mississippi Code of 1972, is brought forward as follows:

27-15-121. Sections 27-15-121 to 27-15-127 shall be known as the "Mississippi Insurance Premium Tax Retaliatory Law."

SECTION 21. Section 27-15-123, Mississippi Code of 1972, is brought forward as follows:

27-15-123. When by or pursuant to the laws of any other state or foreign country any taxes, licenses and other fees, in the aggregate, and any fines, penalties, deposit requirements or other material obligations, prohibitions or restrictions are or would be imposed upon Mississippi insurers, or upon the agents or representatives of such insurers, which are in excess of such taxes, licenses and other fees, in the aggregate, or which are in excess of the fines, penalties, deposit requirements or other obligations, prohibitions, or restrictions directly imposed upon similar insurers, or upon the agents or representatives of such insurers, of such other state or country under the statutes of this state, so long as such laws of such other state or country continue in force or are so applied, the same taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material obligations, prohibitions or restrictions of whatever kind shall be imposed by the State Tax Commission or the Commissioner of Insurance upon the insurers, or upon the agents or representatives of such insurers, of such other state or country doing business or seeking to do business in Mississippi. Any tax, license or other fee or other obligation imposed by any city, county or other political subdivision or agency of such other state or country on Mississippi insurers or their agents or representatives shall be deemed to be imposed by such state or country within the meaning of this section.

SECTION 22. Section 27-15-125, Mississippi Code of 1972, is brought forward as follows:

27-15-125. Sections 27-15-121 through 27-15-127 shall not apply as to personal income taxes, nor as to ad valorem taxes on real or personal property nor as to special purpose obligations or assessments imposed by another state in connection with particular kinds of insurance, other than property insurance, except that deductions, from premium taxes or other taxes otherwise payable, allowed on account of real estate or personal property taxes paid shall be taken into consideration by the State Tax Commission in determining the propriety and extent of retaliatory action under this section.

SECTION 23. Section 27-15-127, Mississippi Code of 1972, is brought forward as follows:

27-15-127. For the purposes of Sections 27-15-121 to 27-15-127 the domicile of a foreign insurer other than insurers formed under the laws of Canada, shall be that state designated by the insurer in writing filed with the commissioner at time of admission to this state or within six (6) months after the effective date of Sections 27-15-121 to 27-15-127, whichever date is the later, and may be any one (1) of the following states:

(a) That in which the insurer was first authorized to transact insurance;

(b) That in which is located the insurer's principal place of business in the United States; or

(c) That in which is held the larger deposit of trusteed assets of the insurer for the protection of its policyholders and creditors in the United States.

If the insurer makes no such designation its domicile shall be deemed to be that state in which is located its principal place of business in the United States.

In the case of an insurer formed under the laws of Canada or a province thereof, its domicile shall be deemed to be that province in which its head office is situated.

SECTION 24. Section 27-15-129, Mississippi Code of 1972, is brought forward as follows:

27-15-129. (1) The amount of premium tax payable pursuant to Sections 27-15-103, 27-15-109, 27-15-119 and 83-31-45, Mississippi Code of 1972, shall be reduced from the amount otherwise fixed in such sections if the payer files a sworn statement with the required annual report showing as of the beginning of the reporting period that at least the following amounts of the total admitted assets of the payer were invested and maintained in qualifying Mississippi investments as hereinafter defined in subsection (2) of this section over the period covered by such report:

Percentage of Total Admitted Percentage of Premium

Assets in Qualifying Tax Payable

Mississippi Investments

1% 99%

2% 98%

3% 97%

4% 96%

5% 95%

6% 94%

7% 93%

8% 92%

9% 91%

10% 80%

15% 70%

20% 60%

25% 50%

(2) For the purpose of this section, "a qualifying Mississippi investment" is hereby defined as follows:

(a) Certificates of deposit issued by any bank or savings and loan association domiciled in this state;

(b) Bonds of this state or bonds of municipal, school, road or levee districts, or other political subdivisions of this state;

(d) Real property located in this state;

(e) Policy loans to residents of Mississippi, or other loans to residents of this state, or to corporations domiciled in this state;

(f) Common or preferred stock, bonds and other evidences of indebtedness of corporations domiciled in this state; and

(g) Cash on deposit in any bank or savings and loan association domiciled in this state.

(3) If the credits, or any part thereof, authorized by the preceding provisions of this section shall be held by a court of final jurisdiction to be unconstitutional and void for any reason or to make the annual premium taxes levied by Sections 27-15-103, 27-15-109, 27-15-119 and 83-31-45, Mississippi Code of 1972, unlawfully discriminatory or otherwise invalid under the Fourteenth Amendment or the Commerce Clause of the Constitution of the United States or under any state or other Federal Constitutional provisions, it is hereby expressly declared that such fact shall in no way affect the validity of the annual premium taxes levied thereby, and that such provisions would have been enacted even though the Legislature had known this credit section would be held invalid.

(4) This section shall apply to taxes accruing and investments existing from and after July 1, 1985.

SECTION 25. Section 27-15-131, Mississippi Code of 1972, is brought forward as follows:

27-15-131. In the event a company has overpaid taxes levied pursuant to Section 27-15-103, 27-15-109, 27-15-119 or 83-31-45, the commissioner may give credit for such overpayment and allow the company to take credit on subsequent returns or, if necessary, in the discretion of the commission, refund such overpayemnt as otherwise provided by Section 37-15-113.

SECTION 26. This act shall take effect and be in force from and after July 1, 1999.