I 

108TH CONGRESS 

1ST SESSION H. R. 808

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 HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2003

Mr. HOUGHTON (for himself, Mr. NEAL of Massachusetts, Mr. KLECZKA, Mr. 

CRANE, Mr. BECERRA, Mr. HERGER, Mr. RANGEL, Mr. MCINNIS, Mr. 

TANNER, Mr. BRADY of Texas, Mrs. JOHNSON of Connecticut, Mr. POMEROY, Mr. RAMSTAD, and Mr. RYAN of Wisconsin) 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 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 2003’’. 
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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 duction 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, 2003. 

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-
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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, 2002.

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