I 
108TH CONGRESS 
1ST SESSION H. R. 2127
To amend the Internal Revenue Code of 1986 to repeal tax benefits relating 
to company-owned life insurance. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2003
Mr. EMANUEL (for himself, Mr. FRANKS of Arizona, Mr. GREEN of Texas, 
Mr. HINCHEY, Mr. PAYNE, Mr. RYAN of Ohio, Mr. GRIJALVA, Mr. MAR-
KEY, Ms. DELAURO, Mr. FROST, Mr. LANTOS, Ms. KILPATRICK, Mr. 
DEFAZIO, Ms. LEE, and Mr. SMITH of Washington) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committees on Energy and Commerce, and Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to repeal 
tax benefits relating to company-owned life insurance.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Taxpayer Savings and 
Employee Notification Act of 2003’’.
SEC. 2. REPEAL TAX BENEFITS RELATING TO COMPANY-
OWNED LIFE INSURANCE. 
(a) INCLUSION OF LIFE INSURANCE INVESTMENT 
GAINS.—Section 72 of the Internal Revenue Code of 1986 
(relating to annuities; certain proceeds of endowment and 
life insurance contracts) is amended by inserting after 
subsection (j) the following new subsection: 
‘‘(k) TREATMENT
OF
NONQUALIFIED
COMPANY-
OWNED LIFE INSURANCE CONTRACTS.—
‘‘(1) IN
GENERAL.—In the case of a non-
qualified company-owned life insurance contract, the 
income on the contract (as determined under section 
7702(g)) for any taxable year shall be includible in 
gross income for such year. 
‘‘(2) NONQUALIFIED COMPANY-OWNED LIFE IN-
SURANCE
CONTRACT.—For the purposes of para-
graph (1)—
‘‘(A) 
IN
GENERAL.—The 
term 
‘non-
qualified company-owned life insurance con-
tract’ means any life insurance policy or endow-
ment contract held by any entity engaged in a 
trade or business. 
‘‘(B) EXCEPTIONS.—Such term shall not 
include—
‘‘(i) any policy or contract covering 
the life solely of individuals who are key 
persons (as defined in section 264(e)(3)), 
‘‘(ii) any contract which is acquired by 
the estate of a decedent by reason of the 
death of the decedent, 
‘‘(iii) any contract which is held under 
a plan described in section 401(a) or 
403(a), under a program described in sec-
tion 403(b), or under an individual retire-
ment plan, 
‘‘(iv) any contract which is a qualified 
funding asset (as defined in section 
130(d), but without regard to whether 
there is a qualified assignment), and 
‘‘(v) any contract which is purchased 
by an employer upon the termination of a 
plan described in section 401(a) or 403(a) 
and is held by the employer until all 
amounts under such contract are distrib-
uted to the employee for whom such con-
tract was purchased or the employee’s ben-
eficiary. 
‘‘(C) CONTRACTS HELD BY NATURAL PER-
SONS, PARTNERSHIPS, AND S CORPORATIONS.—
Rules similar to the rules of section 264(f)(5) 
shall apply.’’. 
(b) REPEAL
OF EXCLUSION
FOR DEATH BENE-
FITS.—Section 101 of such Code (relating to certain death 
benefits) is amended by adding at the end the following 
new subsection: 
‘‘(j) PROCEEDS
OF
NONQUALIFIED
COMPANY-
OWNED LIFE INSURANCE.—Notwithstanding any other 
provision of this section, there shall be included in gross 
income amounts received under a nonqualified company-
owned life insurance contract (as defined in section 72(k)) 
to the extent that such amounts exceed the sum of—
‘‘(1) the income on the contract (as determined 
under section 7702(g)) which as been previously in-
cluded in income, plus 
‘‘(2) the premiums paid (as defined in section 
7702(f)(1)) under the contract. 
Amounts included in gross income under the preceding 
sentence shall be so included under section 72.’’. 
(c) INFORMATION REPORTING.—Section 6047 of 
such Code (relating to information relating to certain 
trusts and annuity plans) is amended by redesignating 
subsection (g) as subsection (h) and by inserting after 
subsection (f) the following new subsection:
‘‘(g) NONQUALIFIED COMPANY-OWNED LIFE INSUR-
ANCE CONTRACTS.—The Secretary shall require the issuer 
of nonqualified company-owned life insurance contracts to 
make such returns and reports regarding such contracts 
(as defined in section 72(k)) to the Secretary, beneficiaries 
of such contracts, and such other persons as the Secretary 
may prescribe.’’. 
(d) REDUCTION IN PUBLIC DEBT.—The increase in 
Federal receipts in the United States Treasury by reason 
of the amendments made by this section shall be used sole-
ly for reduction of the public debt and for such purpose 
the Secretary of the Treasury shall deposit an amount 
equal to such receipts in the account established under 
section 3113 of title 31, United States Code. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contracts entered into after the 
date of the enactment of this Act. 
SEC. 3. DISCLOSURE. 
(a) IN GENERAL.—Not later than 60 days before the 
date of purchase of a nonqualified company-owned life in-
surance contract (as defined by section 72(k) of the Inter-
nal Revenue Code of 1986) by an entity on one or more 
of its employees, the entity shall provide to each such em-
ployee a written disclosure that shall contain the following 
information:
(1) A statement that the company plans to pur-
chase such contract on the life of the employee. 
(2) The identity of the insurance carrier with 
respect to such contract. 
(3) The amount of the benefit under such con-
tract. 
(4) The name of the beneficiary under such 
contract. 
(b) OBJECTION TO PURCHASE OF CONTRACT.—If 
such employee notifies such entity in writing before the 
date of purchase of such contract that the employee ob-
jects to the purchase, then the entity shall not purchase 
the contract. 
(c) ENFORCEMENT.—
(1) UNFAIR
OR
DECEPTIVE
ACT
OR
PRAC-
TICE.—A violation of either subsection (a) or (b) 
shall be treated as a violation of a rule defining an 
unfair or deceptive act or practice prescribed under 
section 18(a)(1)(B) of the Federal Trade Commis-
sion Act (15 U.S.C. 57a(a)(1)(B)). 
(2) ACTIONS BY THE FEDERAL TRADE COMMIS-
SION.—The Federal Trade Commission shall enforce 
this section in the same manner, by the same means, 
and with the same jurisdiction, powers, and duties 
as though all applicable terms and provisions of the
Federal Trade Commission Act (15 U.S.C. 41 et 
seq.) were incorporated into and made a part of this 
Act. 
(d) EFFECTIVE DATE.—This section shall apply to 
contracts entered into after the date of the enactment of 
this Act. 
SEC. 4. RULE OF CONSTRUCTION. 
Nothing in this Act, or the amendments made by this 
Act, shall be construed to affect any case in controversy, 
or any investigation by the Secretary of the Treasury, re-
lating to any leveraged company-owned life insurance con-
tract entered into on or before the date of the enactment 
of this Act.
Æ