Bipartisan Bill Would Adjust Tax Liability for Mutual Insurers

By Jason Bramwell
 
Two Iowa lawmakers led a bipartisan group of five senators in introducing a bill on July 23 that would increase the alternative tax liability limitation for small property and casualty insurance companies.
 
The Small Mutual Inflation Update, which was introduced by Democratic Senator Tom Harkin and Republican Senator Chuck Grassley, would adjust the eligible premium index for inflation – for the first time since 1986 – to $2.012 million, increasing the current maximum limit and indexing it to inflation thereafter.
 
Currently, property and casualty insurers with annual premiums above $350,000 but less than $1.2 million can elect to be taxed on their net investment income as opposed to their annual operating income.
 
Harkin said the legislation would benefit Iowa's small insurance companies, which largely serve rural communities and rely on this adjustment to provide additional surplus and cash flow to pay customers' insurance claims.
 
"These companies have served Iowa communities for decades and are an integral part of Iowa's economy," he said in a written statement.
 
Grassley said some thresholds in tax law are not indexed for inflation, resulting in those thresholds becoming outdated.
 
"Our legislation updates a key threshold for small insurance companies so they can continue serving their rural customers," he added. "This legislation helps to ensure that small mutual insurance companies will continue to be able to serve rural residents who have unique circumstances, such as living far from a fire station, and so are often unable to obtain private property insurance through traditional insurance companies."
 
The legislation was cosponsored by senators Roy Blunt (R-MO), Amy Klobuchar (D-MN), and Jay Rockefeller (D-WV).
 

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.