Local bail bond company lobbies for tax break

March 25--With the help of an Orlando lawmaker, a local bail bonds company is lobbying the Florida Legislature for a new tax break.

The company, Accredited Surety and Casualty Company Inc. of Orlando, wants lawmakers to slash the effective tax rate that it and other bail underwriters pay in Florida insurance-premium taxes from more than 20 percent to less than 2 percent.

Accredited and other boosters say the move would make it easier for it and other Florida-based bail underwriters to grow and compete across the country. They also say it would make Florida more attractive to out-of-state insurers thinking about moving their headquarters.

The legislation is part of a broader lobbying campaign by the national bail-bond underwriting industry to persuade states to change the way they calculate taxes on bail bond insurance. The Texas Legislature enacted a similar change last year.

The change would cost Florida taxpayersabout $700,000 a year, according to state economists.

The House version of the tax cut (HB 939), which breezed through the House Insurance & Banking Subcommittee this week, is being sponsored by Orlando Democratic Rep. Linda Stewart, a former Orange County commissioner. Stewart said the bill was brought to her by Accredited Surety President Deborah Jallad, whose family is active in Orange County politics.

"We're just trying to put them on the same scale as other states," Stewart said.

It is the rare Democrat-backed bill advancing through the House, where Republicans hold a large majority. For instance, it is the only bill sponsored by a Democratic lawmaker to get a hearing so far this session by the House Finance & Tax Subcommittee, which is led by Rep. Ritch Workman, R-Melbourne. It's also the only one of the six bills Stewart is sponsoring this year that has received a hearing.

The tax cut is being sponsored in the Senate by Sen. Jeff Brandes, a Republican from St. Petersburg, which is home to another large bail underwriter: Bankers Insurance Co.

The companies are active campaign contributors. Records show that Accredited and its affiliated companies have donated $2,500 directly to Stewart and $7,500 to the Republican Party of Florida, among other donations. Bankers has given $15,000 to the Republican Party and $30,000 to Republican Gov. Rick Scott's "Let's Get to Work" political committee.

Under Florida law, insurance companies are generally required to pay a 1.75 percent tax on the total premium amounts they collect from customers. But the companies that insure bail bonds say that approach is unfair to their industry, because they keep a much smaller portion of the premium amounts for themselves compared to insurance companies in other lines of business, such as property or health.

Bail underwriters say that in Florida, for example, they keep only 8 percent of the total premiums. The remaining 92 percent goes to the front-line bail bond agents, whose job is to ensure the defendant who posted the bond appears at all subsequent court hearings.

The result: Bail underwriters say they are paying an effective tax rate of nearly 22 percent in Florida.

Lobbyists say the problem is magnified outside of Florida because many other states require out-of-state bail underwriters to pay extra "retaliatory taxes" based on the tax structures in their home state. So a Florida company underwriting bonds in Texas, for instance, would have to pay taxes to Texas equal to both the regular rate there plus the amount it would owe in Florida tax.

But opponents warn that Florida could set a dangerous precedent by allowing bail bond insurers to carve out the commissions they pay to agents when calculating their taxes. That's because other insurance companies might then seek similar tax cuts, which would cost the state many times more than the $700,000 a year bail underwriters would save.

One legislator called it an unnecessary industry giveaway, particularly when the state still has trouble paying for so many needs and wants, even with a budget surplus this year. "I'm not willing to contribute $700,000 to this particular category," Sen. Nancy Detert, R-Venice.

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