Neal Bill Reintroduced to Defer the Deduction for Related-Party Reinsurance Premiums
On May 20, 2013, House Ways and Means Committee member, Congressman Richard Neal (D-MA), along with Senate Finance Committee member, Robert Menendez (D-NJ), reintroduced legislation (H.R. 2054/S.991) (hereinafter, the “Neal Bill”) designed to defer or deny the deduction for any reinsurance premiums paid to foreign-owned affiliates of U.S. insurance companies. Similar legislation has been proposed by representative Neal, most recently in the last Congress (H.R. 3157/S.1693). According to the bill’s sponsors, the bill is designed to eliminate what they say is a competitive advantage that may exist when U.S. insurance risks are reinsured to a foreign affiliate that is not subject to U.S. tax.
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