Northbrook Life Insurance v. Commonwealth

DISSENTING OPINION BY

Judge PELLEGRINI.

I respectfully dissent because the majority’s holding, in effect, rewrites the legislation set forth under Section 1711 of the Guaranty Association Act.1

In this case, Northbrook Life Insurance Company (Northbrook) filed its tax return for 1993 indicating that it had reported taxable life insurance premiums in the amount of $79,681 and taxable annuity considerations of $34,201,422, yielding a tax liability of $685,622. It claimed a tax credit under The Pennsylvania Life and Health Insurance Guaranty Association Act (Act) of $159,171, which was comprised of life insurance assessments ($149,839.71) and annuity assessments ($9,331). When the Department of Revenue (Department) denied Northbrook the tax credit attributable to the annuity assessments, North-brook petitioned the Department’s Board of Appeals for resettlement which decided to allow Northbrook a $164,168.60 tax credit, including a credit for assessments related to taxable annuities.2 Subsequently, Northbrook petitioned for resettlement with the Board of Finance and Revenue (Board) arguing that it was entitled to a tax credit for assessments related to nontaxable annuities. When the Board denied that petition, Northbrook filed an appeal with this Court also arguing that it is entitled to a tax credit for assessments related to taxable annuities which the Board erroneously gave to Northbrook.

The majority reverses the Board on the basis that the Act allows for a tax credit against tax liability for “a proportionate part of the assessments described in section 1707” of the Act. It then goes on to define those assessments as including “assessments necessary to fund each account and sub-account,” and concludes that the annuities are sub-accounts. I disagree with this analysis because no matter how other terms are defined in the Act, Section 991.1711 of the Act, 40 P.S. § 991.1711(b), specifically excludes taxable and/or nontaxable annuities in the computation of credits for assessments paid.

Section 991.1711(b) of the Act provides:

(b) The proportionate part of an assessment which may be offset against a member company’s premium tax liability to the Commonwealth shall be determined according to a fraction of which *1228the denominator is the total premiums received by the company during the calendar year immediately preceding the year in which the assessment is paid and the numerator is that portion of the premiums received during such year on account of policies of life or health and accident insurance in which the premium rates are guaranteed during the continuance of the respective policies without a right exercisable by the company to increase said premium rates.

Clearly, the General Assembly delineated which types of accounts would be utilized in determining the tax credit for a specific reason. Had they not intended for there to be a distinction and not intended to specifically exclude annuities and other types of accounts, there would have been no reason to include specifically-named types of accounts and exclude all others.

Based on the rules of statutory construction, I dissent.

Judge SIMPSON joins.

. Act of May 17, 1921, P.L. 682, 40 P.S. § 991.1711.

. The Department’s Corporation Tax Bulletin No. 95 was revised in August 1995 to allow a tax credit for assessments related to taxable annuities.