EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED WORKMEN’S COMPENSATION REINSURANCE ORGANIZATIONS.

SEC. 342. EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED WORKMEN’S COMPENSATION REINSURANCE ORGANIZATIONS. (a) In General.— Subsection (c) of section 501 (relating to list of exempt organizations), as amended by section 341, is amended by adding at the end the following new paragraph: “(27) Any membership organization if— “(A) such organization is established before June 1, 1996, by a State exclusively to reimburse its members for losses arising under workmen’s compensation acts, “(B) such State requires that the membership of such organization consist of— “(i) all persons who issue insurance covering workmen’s compensation losses in such State, and “(ii) all persons and governmental entities who self-insure against such losses, and “(C) such organization operates as a non-profit organization by— 110 STAT. 2071 “(i) returning surplus income to its members or workmen’s compensation policyholders on a periodic basis, and “(ii) reducing initial premiums in anticipation of investment income.”. (b) Effective Date.— The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.