The $20M Question: Is an Insurance Company’s ‘Unique Arrangement’ a Tax Credit and Rebate Loophole?

• Joe Wertz
  BioRecent Stories

  

  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

One of the state’s largest insurance companies may have used a loophole in the law to take about $20 million in job creation tax credits from two separate economic development programs, according to an analysis by The Oklahoman.

David Gallagher / Flickr

Farmers Insurance Co. Inc. is based in Los Angeles and one of the biggest insurance companies in Oklahoma.

Farmers Insurance Co. Inc., based in Los Angles, received $9.6 million in Quality Jobs rebate payments from 2002 to 2011, according to state tax records, reported Paul Monies, the paper’s database editor.

The company also claimed at least $8.8 million in home office tax credits against its insurance premium tax over the last 10 years, Monies wrote, citing data from the Oklahoma Insurance Department.

The Oklahoma Quality Jobs Program Act gives quarterly cash rebates for job creation and — according to the Department of Commerce’s annual incentive guide — forbids participants from claiming both home office premium tax credits and Quality Jobs rebates, but the company was able to claim both by splitting its operations.

Even though employees could be in the same office building, Farmers Insurance assigns their job functions to separate incentive programs.

The company told The Oklahoman that it discussed the arrangement with Department of Commerce officials more than a decade ago, when the state was competing with other states for a Farmers Insurance regional office.

Farmers Insurance is likely the only insurance company taking both the Quality Jobs rebates and the home office premium tax credits, Don Hackler, deputy general counsel for the Commerce Department, told the paper, noting that the annual incentives guide is a “CliffsNotes” summation of the law.

“You can’t take both incentives for the same activity, but since you have separate activities, you can take different incentives for each activity,” Hackler said.