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106TH CONGRESS

1ST SESSION H. R. 630

To amend the Internal Revenue Code of 1986 to reiterate the denial of

the charitable contribution deduction for transfers associated with splitdollar insurance arrangements.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 9, 1999

Mr. ARCHER (for himself and Mr. RANGEL) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to reiterate

the denial of the charitable contribution deduction for

transfers associated with split-dollar insurance arrangements.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. CHARITABLE SPLIT-DOLLAR LIFE INSURANCE,

4 ANNUITY, AND ENDOWMENT CONTRACTS.

5 (a) IN GENERAL.—Subsection (f) of section 170 of

6 the Internal Revenue Code of 1986 (relating to disallow7 ance of deduction in certain cases and special rules) is
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1 amended by adding at the end the following new para2 graph:

3 ‘‘(10) SPLIT-DOLLAR LIFE INSURANCE, ANNU4 ITY, AND ENDOWMENT CONTRACTS.—

5 ‘‘(A) IN GENERAL.—Nothing in this sec6 tion or in section 545(b)(2), 556(b)(2), 642(c),

7 2055, 2106(a)(2), or 2522 shall be construed to

8 allow a deduction, and no deduction shall be al9 lowed, for any transfer to or for the use of an

10 organization described in subsection (c) if in

11 connection with such transfer—

12 ‘‘(i) the organization directly or indi13 rectly pays, or has previously paid, any

14 premium on any personal benefit contract

15 with respect to the transferor, or

16 ‘‘(ii) there is an understanding or ex17 pectation that any person will directly or

18 indirectly pay any premium on any per19 sonal benefit contract with respect to the

20 transferor.

21 ‘‘(B) PERSONAL BENEFIT CONTRACT.—

22 For purposes of subparagraph (A), the term

23 ‘personal benefit contract’ means, with respect

24 to the transferor, any life insurance, annuity, or

25 endowment contract if any direct or indirect
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1 beneficiary under such contract is the trans2 feror, any member of the transferor’s family, or

3 any other person (other than an organization

4 described in subsection (c)) designated by the

5 transferor.

6 ‘‘(C) EXCISE TAX ON PREMIUMS PAID.—

7 ‘‘(i) IN GENERAL.—There is hereby

8 imposed on any organization described in

9 subsection (c) an excise tax equal to the

10 premiums paid by such organization on

11 any life insurance, annuity, or endowment

12 contract if the payment of premiums on

13 such contract is in connection with a trans14 fer for which a deduction is not allowable

15 under subparagraph (A).

16 ‘‘(ii) PAYMENTS BY OTHER PER17 SONS.—For purposes of clause (i), pay18 ments made by any other person pursuant

19 to an understanding or expectation re20 ferred to in subparagraph (A) shall be

21 treated as made by the organization.

22 ‘‘(iii) REPORTING.—Any organization

23 on which tax is imposed by clause (i) with

24 respect to any premium shall file an an25 nual return which includes—
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1 ‘‘(I) the amount of such pre2 miums paid during the year and the

3 name and TIN of each beneficiary

4 under the contract to which the pre5 mium relates, and

6 ‘‘(II) such other information as

7 the Secretary may require.

8 The penalties applicable to returns re9 quired under section 6033 shall apply to

10 returns required under this clause. Returns

11 required under this clause shall be fur12 nished at such time and in such manner as

13 the Secretary shall by forms or regulations

14 require.

15 ‘‘(D) REGULATIONS.—The Secretary shall

16 prescribe such regulations as may be necessary

17 to carry out the purposes of this paragraph.’’

18 (b) EFFECTIVE DATE.—

19 (1) IN GENERAL.—Except as otherwise pro20 vided in this subsection, the amendment made by

21 this section shall apply to transfers made after Feb22 ruary 8, 1999.

23 (2) EXCISE TAX.—Except as provided in para24 graph (3) of this subsection, section 170(f)(10)(C)

25 of the Internal Revenue Code of 1986 (as added by
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1 this section) shall apply to premiums paid after the

2 date of the enactment of this Act.

3 (3) REPORTING.—Clause (iii) of such section

4 170(f)(10)(C) shall apply to premiums paid after

5 February 8, 1999 (determined as if the tax imposed

6 by such section applies to premiums paid after such

7 date).

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