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H.R. 630 Charitable Split Dollar Life Insurance, Annuity and Endowment Contracts

106th CONGRESS
1st Session
H. R. 630
To amend the Internal Revenue Code of 1986 to reiterate the denial of the charitable contribution deduction for transfers associated with split-dollar insurance arrangements.
IN THE HOUSE OF REPRESENTATIVES
February 9, 1999
Mr. ARCHER (for himself and Mr. RANGEL) 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 reiterate the denial of the charitable contribution deduction for transfers associated with split-dollar insurance arrangements.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. CHARITABLE SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, AND ENDOWMENT CONTRACTS.

(a) IN GENERAL- Subsection (f) of section 170 of the Internal Revenue Code of 1986 (relating to disallowance of deduction in certain cases and special rules) is amended by adding at the end the following new paragraph:
`(10) SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, AND ENDOWMENT CONTRACTS-
`(A) IN GENERAL- Nothing in this section or in section 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall be construed to allow a deduction, and no deduction shall be allowed, for any transfer to or for the use of an organization described in subsection (c) if in connection with such transfer--
`(i) the organization directly or indirectly pays, or has previously paid, any premium on any personal benefit contract with respect to the transferor, or
`(ii) there is an understanding or expectation that any person will directly or indirectly pay any premium on any personal benefit contract with respect to the transferor.
`(B) PERSONAL BENEFIT CONTRACT- For purposes of subparagraph (A), the term `personal benefit contract' means, with respect to the transferor, any life insurance, annuity, or endowment contract if any direct or indirect beneficiary under such contract is the transferor, any member of the transferor's family, or any other person (other than an organization described in subsection (c)) designated by the transferor.
`(C) EXCISE TAX ON PREMIUMS PAID-
`(i) IN GENERAL- There is hereby imposed on any organization described in subsection (c) an excise tax equal to the premiums paid by such organization on any life insurance, annuity, or endowment contract if the payment of premiums on such contract is in connection with a transfer for which a deduction is not allowable under subparagraph (A).
`(ii) PAYMENTS BY OTHER PERSONS- For purposes of clause (i), payments made by any other person pursuant to an understanding or expectation referred to in subparagraph (A) shall be treated as made by the organization.
`(iii) REPORTING- Any organization on which tax is imposed by clause (i) with respect to any premium shall file an annual return which includes--
`(I) the amount of such premiums paid during the year and the name and TIN of each beneficiary under the contract to which the premium relates, and
`(II) such other information as the Secretary may require.
The penalties applicable to returns required under section 6033 shall apply to returns required under this clause. Returns required under this clause shall be furnished at such time and in such manner as the Secretary shall by forms or regulations require.
`(D) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph.'
(b) EFFECTIVE DATE-
(1) IN GENERAL- Except as otherwise provided in this subsection, the amendment made by this section shall apply to transfers made after February 8, 1999.
(2) EXCISE TAX- Except as provided in paragraph (3) of this subsection, section 170(f)(10)(C) of the Internal Revenue Code of 1986 (as added by this section) shall apply to premiums paid after the date of the enactment of this Act.
(3) REPORTING- Clause (iii) of such section 170(f)(10)(C) shall apply to premiums paid after February 8, 1999 (determined as if the tax imposed by such section applies to premiums paid after such date).