New York City ~ Corporate Income Tax: Company Required to Include HMO Subsidiaries in Combined Returns

In a general corporation tax (GCT) case involving an out-of-state holding company that had health maintenance organization (HMO) subsidiaries, the New York City Tax Appeals Tribunal concluded that the company was required to include the HMOs in its combined returns for the years at issue. The tribunal rejected the company’s assertion that the HMOs were exempt from the GCT as insurance corporations. It was clear that, in overhauling Public Health Law Article 44, the New York Legislature did not consider HMOs to be providing insurance. In fact, the Legislature enacted Public Health Law §4411 specifically to prevent any conflation of HMOs with insurers. In addition, relevant provisions of the New York Insurance Law distinguished between insurers and HMOs and between entities doing an insurance business and those doing an HMO business. Accordingly, the tribunal reversed an administrative law judge’s determination that had allowed the company’s refund claims.

Aetna, Inc., New York City Tax Appeals Tribunal, TAT(E)12-3(GC) and TAT(E)12-4(GC), June 3, 2016, ¶600-808



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