The Massachusetts Governor released his proposed fiscal year 2015 budget, which includes a tax provision that is targeted directly at the insurance industry. Currently, income earned by pass-through entities, such as partnerships, owned by licensed life or property and casualty insurers is excluded from Massachusetts income tax because the owners are subject to a premiums tax instead. The proposal would treat pass-through entities owned by insurance companies as corporate entities for Massachusetts tax purposes. A similar proposal had been discussed in the Multistate Tax Commission Financial Institutions Work Group but ultimately did not materialize. The provision would apply when an insurance company owns, directly or indirectly, at least 50% of an entity engaged in a non-insurance trade or business that would otherwise be treated as a partnership or disregarded entity. In that case, the net income that passes through to the insurance company with respect to the non-insurance trade or business would be taxed as if the partnership or disregarded entity were a corporation subject to the state’s corporate excise tax.