NU Online News Service, Jan. 8, 3:07 p.m. – Massachusetts Mutual Life Insurance Company, Springfield, Mass., is calling for the permanent repeal of Section 809 of the Internal Revenue Code.

Section 809 imposes a complicated formula that makes policyholders who collect dividends from mutual insurers, which are owned by the policyholders, pay more income taxes than shareholders who collect a similar amount of dividends from stock-company insurers.

Last year, when Congress enacted an economic stimulus bill, it included a provision that suspended Section 809 until the end of 2003. The temporary suspension will save MassMutual policyholders alone about $40 million, the company says.

MassMutual argues that the IRS adopted Section 809 at a time when mutuals seemed to have an edge over stock companies. Now, stock companies dominate the industry, and there is no good reason to continue to make mutual company policyholders pay the extra taxes, MassMutual says.