Date Requested: January 24, 2019
Time Requested: 10:24 AM
Agency: Insurance Commission
CBD Number: Version: Bill Number: Resolution Number:
1513 Introduced SB30
CBD Subject: Insurance


7152, 1331

Sources of Revenue:

Special Fund

Legislation creates:

Decreases Existing Revenue

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    If enacted, Senate Bill 30 will eliminate the taxes paid by insurance companies on annuity considerations. SB30 will have no direct fiscal impact on the operations of the Insurance Commissioner, but it will reduce revenues collected by the Insurance Commissioner and deposited into the Insurance Tax Fund for transfer by the State Treasurer to State General and Special Revenue accounts.
    Senate Bill 30, if enacted, would eliminate taxation on annuity considerations collected and received by a life insurer. The tax is levied on the insurer (company) selling the annuity and not on the individual purchaser of the annuity.
     The OIC estimates that this would result in a reduction in net revenues of approximately $4.56 million per year to the State’s General Revenue Fund.
    The net annuity tax revenues collected under §33-3-15 for the prior three fiscal years are as follows:
    FY2018 - $4,138,920.58
    FY2017 - $4,487,186.81
    FY2016 - $5,056,402.76

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues -4,560,837 -4,560,837 -4,560,837

Explanation of above estimates (including long-range effect):

    The average net annuity collections for the three years is $4,560,836.72, however this average and the numbers above do not reflect the full amount of credits that may be taken in future periods against the taxes collected in these fiscal years. Annuity tax paying companies that have elected to pay their taxes on a “front-end” basis can request a refund for any tax paid since the inception of the policy if it has not annuitized. For the past 5 years, credits and refunds on annuity taxes paid for “front-end” basis companies have averaged $791,000 dollars annually.
    SB30 does not state that the repeal of the annuity tax assessed per §33-3-15 effective January 1, 2019, will remove future annuity tax credits and annuity tax refund amounts for front-end surrenders. If the ability to receive a credit or refund of annuity taxes paid for front end surrenders is not removed along with the annuity tax, then it is estimated that an additional net revenue loss will occur until all credits / refunds have expired. This would bring the annual potential revenue tax reduction for the enactment of SB30 to an estimated $5.35 million each year.
    Long Term Impact:
    OIC records reflect that approximately $8.8 billion in deferred back-end annuities have been sold in WV, so the potential annuity tax loss would approximate $88 million (1% of the annuities sold) in total long-term revenue reduction. However, a portion of those annuities may be surrendered prior to annuitization and therefore not subject to the tax. It is unknown what portion of the deferred back-end annuities will fail to annuitize.


    As currently drafted, the annuity tax would be eliminated retroactively to January 1, 2019. The retroactive elimination of the annuity tax will present significant operational inefficiencies for the Offices of the Insurance Commissioner and the Special and General Revenue accounts impacted. Consideration should be given to a prospective implementation date.

    Person submitting Fiscal Note: Melinda Kiss
    Email Address: