II

106TH CONGRESS

2D SESSION S. 2874

To amend the Internal Revenue Code of 1986 to repeal the provision taxing

policyholder dividends of mutual life insurance companies and to repeal

the policyholders surplus account provisions.

IN THE SENATE OF THE UNITED STATES

JULY 14, 2000

Mr. MOYNIHAN (for himself, Mr. SCHUMER, Mr. CONRAD, Mr. BREAUX, Mr.

ROBB, Mr. MACK, Mr. LIEBERMAN, and Mr. DODD) 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 repeal

the provision taxing policyholder dividends of mutual life

insurance companies and to repeal the policyholders surplus account provisions.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Life Insurance Tax

5 Simplification Act of 2000’’.
2

•S 2874 IS

1 SEC. 2. REPEAL OF REDUCTION OF DEDUCTIONS FOR MU2 TUAL LIFE INSURANCE COMPANIES.

3 (a) IN GENERAL.—Section 809 of the Internal Rev4 enue Code of 1986 (relating to reductions in certain de5 ductions of mutual life insurance companies) is hereby re6 pealed.

7 (b) CONFORMING AMENDMENTS.—

8 (1) Subsections (a)(2)(B) and (b)(1)(B) of sec9 tion 807 of such Code are each amended by striking

10 ‘‘the sum of (i)’’ and by striking ‘‘plus (ii) any ex11 cess described in section 809(a)(2) for the taxable

12 year,’’.

13 (2)(A) The last sentence of section 807(d)(1) of

14 such Code is amended by striking ‘‘section

15 809(b)(4)(B)’’ and inserting ‘‘paragraph (6)’’.

16 (B) Subsection (d) of section 807 of such Code

17 is amended by adding at the end the following new

18 paragraph:

19 ‘‘(6) STATUTORY RESERVES.—The term ‘statu20 tory reserves’ means the aggregate amount set forth

21 in the annual statement with respect to items de22 scribed in section 807(c). Such term shall not in23 clude any reserve attributable to a deferred and un24 collected premium if the establishment of such re25 serve is not permitted under section 811(c).’’
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1 (3) Subsection (c) of section 808 of such Code

2 is amended to read as follows:

3 ‘‘(c) AMOUNT OF DEDUCTION.—The deduction for

4 policyholder dividends for any taxable year shall be an

5 amount equal to the policyholder dividends paid or accrued

6 during the taxable year.’’

7 (4) Subparagraph (A) of section 812(b)(3) of

8 such Code is amended by striking ‘‘sections 808 and

9 809’’ and inserting ‘‘section 808’’.

10 (5) Subsection (c) of section 817 of such Code

11 is amended by striking ‘‘(other than section 809)’’.

12 (6) Subsection (c) of section 842 of such Code

13 is amended by striking paragraph (3) and by redes14 ignating paragraph (4) as paragraph (3).

15 (7) The table of sections for subpart C of part

16 I of subchapter L of chapter 1 of such Code is

17 amended by striking the item relating to section

18 809.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2000.

22 SEC. 3. REPEAL OF POLICYHOLDERS SURPLUS ACCOUNT

23 PROVISIONS.

24 (a) IN GENERAL.—Section 815 of the Internal Rev25 enue Code of 1986 (relating to distributions to share-
4

•S 2874 IS

1 holders from pre-1984 policyholders surplus account) is

2 hereby repealed.

3 (b) CONFORMING AMENDMENTS.—

4 (1) Section 801 of such Code is amended by

5 striking subsection (c).

6 (2) The table of sections for subpart D of part

7 I of subchapter L of chapter 1 of such Code is

8 amended by striking the item relating to section

9 815.

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

11 this section shall apply to taxable years beginning after

12 December 31, 2000.

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