Industry Battles Senators On Including Split Dollar Under Sarbanes-Oxley Act

The letters adds that ACLI, AALU and NAIFA are not aware of any situations where the SEC has treated split-dollar as a loan.

The letter asks the SEC to reconfirm this position in its Securities Exchange Act release regarding Sarbanes-Oxley.

In other tax news, the life insurance industry is engaged in a major lobbying effort seeking to sidetrack an attempt to tax businesses on the proceeds their receive on most corporate-owned life insurance policies.

Jack Dolan, an ACLI spokesman, says that as of last Wednesday evening, some 25,000 communications were sent by ACLI companies to members of the Senate, focusing on Senate Finance Committee members, and registering their opposition to language expected to be proposed by Sen. Jeff Bingaman, D-N.M.

Agent groups have also sent tens of thousands of communications to the Senate, although the exact numbers were not available at press time.

Bingaman says he intends to introduce an amendment to the Small Business and Farm Economic Recovery Act that would tax businesses on the proceeds from COLI policies if a covered individual dies more than one year after leaving employment.

This treatment would not apply to proceeds used to buy back any equity interest in a business, such as in a partnership arrangement.

If enacted into law, the new tax treatment would be retroactive, applying to all policies two years after the date of enactment.

The Finance Committee originally scheduled consideration of the Bingaman amendment for Sept. 19. However, that session was postponed and has not been rescheduled as of press time.

Finally, a group of health, business and labor associations have sent a joint letter to members of Congress asking them to nullify a Third Circuit Court of Appeals decision which, the group says, theatens retiree health benefits.

The Third Circuit decision, which was handed down in 2000 in the case of Erie County Retirees Assn. v. Erie County, said that providing a higher level of benefits to pre-65 retirees than to Medicare eligible retirees violates the Age Discrimination in Employment Act.

The associations say the case is wrongly decided. They want Congress to clarify that it is permissible for an employer to provide health benefits during the gap between retirement and Medicare eligibility without incurring liability.

If not clarified, the groups say, many employer-provided retiree health benefits could be decreased or eliminated.

Groups signing the letter include the ERISA Industry Committee, the American Association of Health Plans, the AFL-CIO and the American Benefits Council, all of Washington.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 30, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.