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February 19, 2006 at 02:00 PM
The life insurance industry has decided to relaunch its efforts to have Congress pass legislation allowing life insurance companies with property-casualty affiliates to file consolidated tax returns.
The Financial Services Roundtable, which is playing a key role in the campaign, said the industry has decided to renew this battle–which has been under way in one form or another since 1958–because its efforts to get two other long-standing tax headaches off the books, Secs. 809 and 815, ultimately had been successful.
Roundtable lobbyists are looking to win support from all industry trade groups for the campaign, which it hopes to begin when Congress returns from its Presidents’ Day recess.
According to Scott Talbott, a senior vice president for government affairs at the Roundtable, the trade group is looking for additional co-sponsors for legislation introduced last year in both houses of Congress and also is preparing “talking point” documents for submission to members of Congress when they return from recess.
“This is a priority issue for the Financial Services Roundtable,” Talbott said. “We are seeking to coordinate with other trade groups and companies to get this done this year.
“While it may be an uphill battle this year,” he conceded, “we will not be deterred. We hope our efforts this year will set a firmer stage for success, perhaps in the next Congress.”
Sec. 809, which affects mutual insurance companies, and Sec. 815, which affects stock insurance companies, have been rendered moot by several laws. These tax laws were imposed by Congress in 1984 as a way of creating a level playing field between the two entities.
Mutual companies were able to suspend payments under Sec. 809 for short periods in the late 1990s and early years of this century, and finally were able to get it off the books through a law passed in 2004. The same law gives stock companies the opportunity to reorganize over the next two years and therefore escape payments under the provision, time enough the industry believes to wipe the pre-1984 debt off their books.
As a result, according to Talbott, industry tax officials now are turning their attention to the consolidated returns issue. “Life insurance companies feel it is time to renew the effort to get consolidated return reform, or, at least, modernization of the rules,” he said. “This is an administrative issue about what can be reported on the corporate income tax return,” he said.
The vehicles for providing for consolidated returns are H.R. 3019, a bipartisan bill with a host of sponsors, including Reps. Jim Ramstad, R-Minn., Charles Rangel, D-N.Y., Nancy Johnson, R-Conn., Phil English, R-Pa., J.D. Hayworth, R-Ariz., Tom Reynolds, R-N.Y., Kenny Hulshof, R-Mo., Earl Pomeroy, D-N.D., Walter Jones, R-N.C., and Michael McNulty, D-N.Y.
Similar legislation, S. 1293, has many sponsors in the Senate, including Sens. Jim Bunning, R-Ky., Trent Lott, R-Miss., Kent Conrad, D-N.D., and Gordon Smith, R-Ore.
