ACLI Applauds Committee OK Of Bill Encouraging Annuitizing

ACLI, Keating says, wants to work with all members of the Ways and Means Committee on the issue of retirement security.

In other news, the life insurance industry is concerned that the Treasury Department is reconsidering a proposal that could impose substantial burdens on insurance agents trying to comply with the customer identification program (CIP) mandated by the USA Patriot Act.

Carl Wilkerson, chief counsel with ACLI, notes that during the first stages of rulemaking relating to the CIP, Treasury considered requiring photocopies of drivers licenses or other documents used to verify that customers are who they say they are.

ACLI, he says, opposed this as unnecessarily burdensome on insurance agents and companies. For example, Wilkerson says, agents might, in effect, have to travel with miniature copying machines in order to meet the requirement.

ACLI instead advocated a certification standard in which the agent would attest that he or she had examined the customers identification. Treasury ultimately adopted this standard.

However, some members of Congress raised concerns about this, Wilkerson says, and now Treasury is seeking information from the public about requiring a photocopy of identification documents.

ACLI, he says, working with the National Association of Insurance and Financial Advisors, has sent alerts to members asking them to send in letters to Treasury opposing any photocopy requirement.

The letters must be filed with Treasury by July 31.

Finally, the Internal Revenue Service has issued two Revenue Rulings aimed at curtailing the use of life insurance and annuities to avoid current taxation on investment earnings.

However, the rulings are not expected to have a major impact on the industry.

The two rulings, numbers 2003-91 and 2003-92, involve arrangements in which life insurance and annuity contracts are wrapped around other investments in a way that, according to the IRS, seeks to defer tax on the investment earnings.

Laurie Lewis, chief counsel for federal taxation with ACLI, says the first ruling, 2003-91, really does not break any new ground.

Rather, she says, it sets forth in summary fashion the principles behind the concept of investor control.

While there are some technical issues ACLI would like to clarify, Lewis says the ruling is not alarming.

The second ruling, 2003-92, involves certain partnership arrangements. These tend to be private placements, Lewis says, that are occurring primarily offshore.

While some domestic companies do these arrangements, Lewis says, they are not a mainstream design.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 28, 2003. Copyright 2003 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.