FEDERAL LEGISLATION REINTRODUCED AIMED AT TAXING FOREIGN REINSURANCE AFFILATE INCOME
H. R. 2054 was introduced on May 20, 2013, and referred to the Ways and Means Committee. The bill would disallow the deduction for excess non-taxed reinsurance premiums with respect to United States risks paid to affiliates “to prevent the avoidance of tax by insurance companies through reinsurance with non-taxed affiliates.” Co-sponsored by Representatives Neal and Pascrell, the bill would amend the Internal Revenue Code of 1986. There are a number of excepted risks, but generally, the bill states that such “income shall be subject to tax under this subchapter to the same extent and in the same manner as if such income were the income of a domestic insurance company.” The amendment to the IRC would apply to taxable years beginning after December 31, 2013. Similar bills have been introduced in the past, but did not find their way to passage. See, for example, our previous posts concerning a prior versions of this proposal in 2009 and 2008.
This post written by John Pitblado.
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