II

106TH CONGRESS

2D SESSION S. 3099

To amend the Internal Revenue Code of 1986 to clarify the exemption

from tax for small property and casualty insurance companies, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 22, 2000

Mr. GRAMS introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to clarify

the exemption from tax for small property and casualty

insurance companies, and for other purposes.

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

3 SECTION 1. CLARIFICATION OF EXEMPTION FROM TAX FOR

4 SMALL PROPERTY AND CASUALTY INSUR5 ANCE COMPANIES.

6 (a) ANTI-ABUSE RULE.—Paragraph (15) of section

7 501(c) of the Internal Revenue Code of 1986 is amended

8 by redesignating subparagraph (C) as subparagraph (D)
2

•S 3099 IS

1 and by inserting after subparagraph (B) the following new

2 subparagraph:

3 ‘‘(C) Subparagraph (A) shall apply only to

4 a company or association which is solely and di5 rectly owned by its policyholders and is orga6 nized and operates only in 1 State.’’

7 (b) PREMIUM LIMITATIONS INCREASED TO REFLECT

8 INFLATION SINCE FIRST IMPOSED.—

9 (1)(A) Subparagraph (A) of section 501(c)(15)

10 of such Code is amended by striking ‘‘$350,000’’

11 and inserting ‘‘$531,000’’.

12 (B) Paragraph (15) of section 501(c) of such

13 Code is amended by adding at the end the following

14 new subparagraph:

15 ‘‘(E) In the case of any taxable year begin16 ning in a calendar year after 2000, the

17 $531,000 amount set forth in subparagraph (A)

18 shall be increased by an amount equal to—

19 ‘‘(i) $531,000, multiplied by

20 ‘‘(ii) the cost-of-living adjustment de21 termined under section 1(f)(3) for such

22 calendar year by substituting ‘calendar

23 year 1999’ for ‘calendar year 1992’ in sub24 paragraph (B) thereof.
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•S 3099 IS

1 If the amount as adjusted under the preceding

2 sentence is not a multiple of $1,000, such

3 amount shall be rounded to the next lowest

4 multiple of $1,000.’’

5 (2)(A) Clause (i) of section 831(b)(2)(A) of

6 such Code is amended to read as follows:

7 ‘‘(i) the net written premiums (or, if

8 greater, direct written premiums) for the

9 taxable year exceed the amount applicable

10 under section 501(c)(15)(A) but do not ex11 ceed $1,819,000, and’’.

12 (B) Paragraph (2) of section 831(b) of such

13 Code is amended by adding at the end the following

14 new subparagraph:

15 ‘‘(C) INFLATION ADJUSTMENT.—In the

16 case of any taxable year beginning in a calendar

17 year after 2000, the $1,819,000 amount set

18 forth in subparagraph (A) shall be increased by

19 an amount equal to—

20 ‘‘(i) $1,819,000, multiplied by

21 ‘‘(ii) the cost-of-living adjustment de22 termined under section 1(f)(3) for such

23 calendar year by substituting ‘calendar

24 year 1999’ for ‘calendar year 1992’ in sub25 paragraph (B) thereof.
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•S 3099 IS

1 If the amount as adjusted under the preceding

2 sentence is not a multiple of $1,000, such

3 amount shall be rounded to the next lowest

4 multiple of $1,000.’’

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after

7 December 31, 2000.

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