H-1206              _______________________________________________

                                                   HOUSE BILL NO. 1866

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Representative Wang

Read first time 2/8/89 and referred to Committee on Revenue.

AN ACT Relating to credits against insurance premium taxes; and amending RCW 48.32.145 and 48.32A.090.

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

        Sec. 1.  Section 11, chapter 109, Laws of 1975-'76 2nd ex. sess. as amended by section 1, chapter 183, Laws of 1977 ex. sess. and RCW 48.32.145 are each amended to read as follows:

          Every member insurer which during any calendar year shall have paid one or more assessments levied pursuant to RCW 48.32.060(1)(c) ((as now or hereafter amended shall be)) before August 1, 1989, is entitled to take, as a credit against any premium tax falling due under RCW 48.14.020, one-fifth of the aggregate amount of such aggregate assessments during such calendar year for each of the five consecutive calendar years beginning with the calendar year following the calendar year in which such assessments are paid:  PROVIDED, That whenever an assessment or uncredited portion thereof is or becomes less than one thousand dollars, the entire amount may be credited against the premium tax at the next time the premium tax is paid.

        Sec. 2.  Section 9, chapter 259, Laws of 1971 ex. sess. as last amended by section 2, chapter 183, Laws of 1977 ex. sess. and RCW 48.32A.090 are each amended to read as follows:

          (1) The association shall issue to each insurer paying an assessment under this chapter before August 1, 1989, certificates of contribution, in appropriate form and terms as prescribed or approved by the commissioner, for the amounts so paid into the respective funds.  All outstanding certificates against a particular fund shall be of equal dignity and priority without reference to amounts or dates of issue.

          (2) An outstanding certificate of contribution shall be shown by the insurer in its financial statements as an admitted asset for such amount and period of time as the commissioner may approve:  PROVIDED, That unless a longer period has been allowed by the commissioner the insurer shall in any event at its option have the right to so show a certificate of contribution as an admitted asset at percentages of original face amount for calendar years as follows:

            100% for the calendar year of issuance;

             90% for the first calendar year after the year of issuance;

             80% for the second calendar year after the year of issuance;

             70% for the third calendar year after the year of issuance;

             60% for the fourth calendar year after the year of issuance;

             50% for the fifth calendar year after the year of issuance;

             40% for the sixth calendar year after the year of issuance;

             30% for the seventh calendar year after the year of issuance;

             20% for the eighth calendar year after the year of issuance;

             10% for the ninth calendar year after the year of issuance; and

              0% for the tenth and subsequent calendar years after the year of issuance.

          Notwithstanding the foregoing, if the value of a certificate of contribution is or becomes less than one thousand dollars, the entire amount may be written off by the insurer in that year.

          (3) The insurer shall offset the amount written off by it in a calendar year under subsection (2) of this section against its premium tax liability to this state accrued with respect to business transacted in such year.

          (4) Any sums recovered by the association representing sums which have theretofore been written off by contributing insurers and offset against premium taxes as provided in subsection (3) of this section, shall be paid by the association to the commissioner and by him deposited with the state treasurer for credit to the general fund of the state of Washington.

          (5) No distribution to stockholders, if any, of a liquidating insurer shall be made unless and until the total amount of assessments levied by the association with respect to such insurer have been fully recovered by the association.