U.S. House Bill H.R. 6159 Would Relax FATCA Insurance Reporting Requirements, Council of Insurance Agents and Brokers Notes
Sep 27, 2016
In a press release issued last Friday, September 23, 2016, the Council of Insurance Agents & Brokers (“CIAB” or “Council”) applauded H.R. 6159, which was introduced the same day by U.S. Representatives John Larson and Ed Royce.
The CIAB described the legislation as “a critical step to clarifying that property/casualty insurance premiums are irrelevant to tax evasion and should not be included as part of the Foreign Account Tax Compliance Act (“FATCA”).”
“If signed into law, the bill would ease a projected $500 million compliance burden that does nothing to further FATCA’s goals to combat tax evasion,” the CIAB continued.
“The Council has been working with the Department of Treasury and Members of Congress to clarify that property/casualty insurance premiums cannot be used as a form of tax evasion, and have no place in the scope of FATCA regulations,” said Ken A. Crerar, CIAB President and CEO. “The fact is that property/casualty insurance policies do not have any cash value to them, and it is impossible to use a property/casualty insurance policy as a vehicle to avoid taxes. We’re grateful that this legislation makes that distinct clarification in the U.S. law and we thank Congressmen John Larson and Ed Royce for their leadership on the issue. We look forward to working with them to see this legislation to the President’s desk.”
Congress passed FATCA in 2010 as an effort to combat the treatment of foreign financial institutions as a vehicle to evade U.S. taxes. The CIAB said FATCA’s implementing regulations inappropriately deemed property and casualty insurance premiums as a financial product that should be subject to FATCA’s regulations.
As written, come January, 2017, FATCA requires premium dollars on every property and casualty insurance transaction relative to U.S. risk that is made solely between foreign financial institutions be reported to the Internal Revenue Service. “That reporting burden makes compliance with the law extremely difficult and cumbersome, and bears no fruit to the government’s effort to combat tax evasion,” the CIAB added.
The CIAB said it will continue to make the FATCA clarification of property and casualty insurance premiums a top legislative priority.
H.R. 6159 was referred to the U.S. House Committee on Ways and Means.
To access complete bill information, click here.
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