JEFFERSON CITY, Mo. (AP) — A state-created insurance company has built a competitive advantage by enjoying a best-of-both-worlds scenario — avoiding federal income taxes by claiming to be a public corporation yet generally operating as a private entity and shelling out big bucks for executive perks, according to a report Monday by the Missouri auditor.
The federal tax-exempt status has saved Missouri Employers Mutual Insurance Co. an estimated $50 million since it was created under a 1993 state law, helping it to build a surplus of more than $160 million and become a dominant workers' compensation insurance provider in Missouri, Auditor Tom Schweich said. The Columbia-based firm qualifies for the tax break by categorizing itself as an “independent public corporation.”
But MEM denies it is a public entity subject to Missouri's open-records-and-meetings law or the state auditor's office. Schweich recommended that lawmakers clarify whether it is appropriate for MEM to continue as a “public corporation” and, if so, whether restrictions should be imposed on employee pay and expenses.
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