YELLOW ALERT: FATCA Clarification Bill Introduced; Would Ease $500 Million Compliance Burden on Insurance Brokers
The following is from the press release we issued today:
“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, President/CEO of The Council. “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. FATCA’s implementing regulations inappropriately deemed property/casualty insurance premiums as a financial product that should be subject to FATCA’s regulations.
The bill’s introduction this fall is particularly timely. As written, come January, 2017, the law requires premium dollars on every property/casualty insurance transaction relative to U.S. risk that is made solely between foreign financial institutions be reported to the IRS. 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 Council will continue to make the FATCA clarification of property/casualty insurance premiums a top legislative priority, and looks forward to seeing this bill signed into law.