Life insurers seem to have won big changes in the current version of the Senate’s current version of H.R. 1, the Tax Cuts and Jobs Act.
At press time, an official copy of the bill text did not appear to be available online.
Sahil Kapur, a Bloomberg reporter, posted a copy of what appears to be a leaked version of the bill text around 6:37 p.m. A copy of the tweet Kapur used to distribute the text is available here.
A comparison of the life insurance provisions, earlier official versions of the bill and an early copy of a package of life insurance amendments proposed by Sen. Tim Scott, R-S.C., shows that the current version appears to reflect the changes Scott proposed.
Scott, a member of the Senate Finance Committee, offered the life insurance amendment about two weeks ago, when the committee was marking up a “chairman’s mark” version of the bill introduced by Sen. Orrin Hatch, R-Utah, the chairman of the committee.
Scott, for example, asked the committee to soften a change Hatch proposed in the rules for accounting “deferred acquisition cost” (DAC) expenses, or spending on marketing, underwriting, agent commissions, and other activities associated with attracting new life insurance and annuity customers.
Analysts at the Joint Committee on Taxation predicted the DAC change would lead to a gain of about $23 billion for the federal government over 10 years, implying the change might cost life insurers an average of about $2 billion per year.
The Republican leaders managing the Senate tax bill provision process seem to have apply the changes Scott requested in the current version of the bill.
Scott proposed increasing the DAC tax amortization period to 15 years, from the 10-year period proposed in the bill, and increasing the capitalization rates for new business by 20%.
The current version of the bill incorporates those changes.
The original version of the House bill included a provision, included in the final version of the House bill or in the original Senate version, that would have let life insurers keep only 76.5% out of their statutory reserves in their tax reserves for tax purposes.
Senate leaders appeared to be thinking about putting a revised version of the Brady life reserve provision in their version of H.R. 1.
Scott proposed letting life insurers make 95% of their statutory reserves tax reserves.
The current Senate version of the Senate bill would let life insurers make 92.87% of their statutory reserves tax reserves.
Members of the Senate have been debating the tax bill all day and appear to be heading toward a vote.
Senate Democrats complained for most of the day that they had not seen the bill text. Senate Republicans gave Democrats a copy of the text, which is more than 400 pages long, arout 7 p.m. today.
—Read 5 Senate Republican Tax Bill Sections for Agents to Track on ThinkAdvisor.