To amend the Internal Revenue Code of 1986 to repeal tax benefits relating to company-owned life insurance.

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 nonqualified 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 insurance contract.--
        For the purposes of paragraph (1)--
                    ``(A) In general.--The term `nonqualified company-
                owned life insurance contract' means any life insurance 
                policy or endowment 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 section 403(b), or 
                        under an individual retirement 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 distributed to the employee 
                        for whom such contract was purchased or the 
                        employee's beneficiary.
                    ``(C) Contracts held by natural persons, 
                partnerships, and s corporations.--Rules similar to the 
                rules of section 264(f)(5) shall apply.''.
    (b) Repeal of Exclusion for Death Benefits.--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 included 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 Insurance 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 solely 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 insurance contract (as defined by 
section 72(k) of the Internal Revenue Code of 1986) by an entity on one 
or more of its employees, the entity shall provide to each such 
employee a written disclosure that shall contain the following 
information:
            (1) A statement that the company plans to purchase 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 contract.
            (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 objects to the purchase, then the entity shall not 
purchase the contract.
    (c) Enforcement.--
            (1) Unfair or deceptive act or practice.--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 
        Commission Act (15 U.S.C. 57a(a)(1)(B)).
            (2) Actions by the federal trade commission.--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, relating to any leveraged company-owned 
life insurance contract entered into on or before the date of the 
enactment of this Act.

Summary: Taxpayer Savings and Employee Notification Act of 2003 - Amends the Internal Revenue Code to include in gross income from nonqualified company-owned life insurance contracts (as defined by this Act) income and death benefits (amounts exceeding reported income and premiums).States that violations of such provisions shall be treated as a violation of an unfair or deceptive act or practice under the Federal Trade Commission Act.