Credits for Annuities Sustained


[author: James L. Fritz]


An equal division (3-3) of the Pennsylvania Supreme Court has resulted in the affirmance of a 2010 Commonwealth Court decision allowing credit against premiums tax liability for Pennsylvania Life and Health Insurance Guaranty Association assessments paid by companies selling fixed premium annuities.  Allstate life Insurance Co. v. Commonwealth, No. 68 MAP 2010, August 2, 2012, affirming 992 A.2d 910 (Pa. Cmwlth. 2010).  Suspended Justice Orie Melvin did not participate in the case.


The statute indicates that all assessments were intended to be recoverable, either by increasing premiums or (where premiums are fixed) by taking credit against the issuer’s Pennsylvania premiums tax.  The statute provided for the creditable portion of an assessment to be determined by applying a fraction whose denominator included all premiums and the numerator included fixed premiums.  However, only the statutory language addressing the denominator included annuity premiums.  The numerator language referenced only premiums from “life or health and accident” policies.  Finding the omission of annuity premiums to be inconsistent with other sections of the statute and with legislative intent, the justices supporting the result below considered the statute ambiguous and ruled that annuities must be considered in order to effectuate the express purpose of the assessment and credit statute.


The three justices supporting the Commonwealth Court’s decision did not specifically discuss the lower court’s determination that a separate fraction must be applied to the annuity portion of the Guaranty Assn. assessments.  However, this aspect of the decision below was implicitly sustained.


Three other justices would have reversed the Commonwealth Court, on the basis that the plain language of the numerator provision was not ambiguous and must be enforced to exclude annuities from the numerator (thereby assuring zero credit for assessments made against annuities).


Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.