Economic policy advocates don’t want to see Maryland’s hospitals let “off the hook” for what could be years of unpaid taxes on offshore insurance accounts, calling on lawmakers to abandon a plan to pause collections on those taxes.
In an attempt to settle an ongoing dispute over whether nonprofit hospitals should have been paying taxes for what’s known as “captive insurance” sheltered in the Cayman Islands, the Senate last month agreed to put collection of the tax on hold for two years while the Maryland Insurance Administration studied the issue.
But critics told the House Ways and Means Committee on Wednesday that the compromise, contained in Senate Bill 890, could open the door for hospitals to escape paying state taxes on out-of-state insurance premiums, particularly since it does not say whether hospitals will be required to pay any taxes owed once the study is completed.
“Our preference would be that this bill does not pass — that the MIA be able to go ahead with its process of being able to investigate this and collect the taxes owed,” Kali Schumitz with Maryland Center on Economic Policy, told the committee. “We’re particularly concerned also about the moratorium and the precedent it sets — a company going years not paying taxes that they owed and just getting let off the hook with no penalty.
Marceline White, executive director for the Economic Action...
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