TAX-EXEMPT STATUS FOR CERTAIN STATE WORKER’S COMPENSATION ACT COMPANIES.

SEC. 963. TAX-EXEMPT STATUS FOR CERTAIN STATE WORKER’S COMPENSATION ACT COMPANIES. (a) In General.—Section 501(c)(27) (relating to membership organizations under workmen’s compensation acts) is amended by adding at the end the following: “(B) Any organization (including a mutual insurance company) if— “(i) such organization is created by State law and is organized and operated under State law exclusively to— “(I) provide workmen’s compensation insurance which is required by State law or with respect to which State law provides significant disincentives if such insurance is not purchased by an employer, and “(II) provide related coverage which is incidental to workmen’s compensation insurance, “(ii) such organization must provide workmen’s compensation insurance to any employer in the State (for employees in the State or temporarily assigned out-of-State) which seeks such insurance and meets other reasonable requirements relating thereto, “(iii)(I) the State makes a financial commitment with respect to such organization either by extending the full faith and credit of the State to the initial debt of such organization or by providing the initial operating capital of such organization, and (II) in the case of periods after the date of enactment of this subparagraph, the assets of such organization revert to the State upon dissolution or State law does not permit the dissolution of such organization, and “(iv) the majority of the board of directors or oversight body of such organization are appointed by the chief executive officer or other executive branch official of the State, by the State legislature, or by both.”. (b) Conforming Amendments.—Section 501(c)(27) is amended by inserting “(A)” after “(27)”, by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively, and by redesignating clauses (i) and (ii) of subparagraphs (B) and (C) (before redesignation) as subclauses (I) and (II), respectively. (c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1997.