[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1652 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1652

  To amend the Internal Revenue Code of 1986 to clarify the exemption 
   from the self-employment tax for termination payments received by 
                    former life insurance salesmen.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 16, 1997

  Mr. Weller 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 clarify the exemption 
   from the self-employment tax for termination payments received by 
                    former life insurance salesmen.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CLARIFICATION OF EXEMPTION FROM SELF-EMPLOYMENT TAX FOR 
              CERTAIN TERMINATION PAYMENTS RECEIVED BY FORMER LIFE 
              INSURANCE SALESMEN.

    (a) Internal Revenue Code.--Section 1402 of the Internal Revenue 
Code of 1986 (relating to definitions) is amended by adding at the end 
the following new subsection:
    ``(k) Codification of Treatment of Certain Termination Payments 
Received by Former Life Insurance Salesmen.--Nothing in subsection (a) 
shall be construed as including in the net earnings from self-
employment of an individual any amount received during the taxable year 
from a life insurance company on account of services performed by such 
individual as a life insurance salesman for such company if--
            ``(1) such amount is received after termination of such 
        individual's agreement to perform such services for such 
        company,
            ``(2) such individual performs no services for such company 
        after such termination and before the close of such taxable 
        year, and
            ``(3) the amount of such payment--
                    ``(A) depends solely on policies sold by such 
                individual during the last year of such agreement and 
                the extent to which such policies remain in force for 
                some period after such termination, and
                    ``(B) does not depend to any extent on length of 
                service or overall earnings from services performed for 
                such company.''
    (b) Social Security Act.--Section 211 of the Social Security Act is 
amended by adding at the end the following new subsection:

``Codification of Treatment of Certain Termination Payments Received by 
                     Former Life Insurance Salesmen

    ``(j) Nothing in subsection (a) shall be construed as including in 
the net earnings from self-employment of an individual any amount 
received during the taxable year from a life insurance company on 
account of services performed by such individual as a life insurance 
salesman for such company if--
            ``(1) such amount is received after termination of such 
        individual's agreement to perform such services for such 
        company,
            ``(2) such individual performs no services for such company 
        after such termination and before the close of such taxable 
        year, and
            ``(3) the amount of such payment--
                    ``(A) depends solely on policies sold by such 
                individual during the last year of such agreement and 
                the extent to which such policies remain in force for 
                some period after such termination, and
                    ``(B) does not depend to any extent on length of 
                service or overall earnings from services performed for 
                such company.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning before, on, or after the date of the 
enactment of this Act.
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