[Congressional Record Volume 142, Number 138 (Monday, September 30, 1996)]
[Extensions of Remarks]
[Page E1838]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      SAVINGS BANK LIFE INSURANCE

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                      Saturday, September 28, 1996

  Mr. NEAL of Massachusetts. Mr. Speaker, Savings Bank Life Insurance 
[SBLI] was created as the brainchild of Louis Brandeis. The law allowed 
for the establishment of a system of over-the-counter life insurance 
sales though mutual savings banks in Massachusetts. Lower insurance 
costs resulted because of the elimination of commissions and other 
traditional selling expense. Similar laws were passed in New York and 
Connecticut.
  Massachusetts has passed a law which consolidates SBLI into non-
public stock insurance company, while still allowing for the sale of 
its product through Massachusetts banking institutions. The law 
provided that the total surplus of the prior SBL insurance departments 
was to be paid out to current policyholders as an additional policy 
dividend over a 12-year period. Tax legislation is needed to clarify 
the Tax Code to assure that the 12-year dividend payout is treated as a 
deductible policy holder dividend as opposed to a non-deductible 
redemption of any equity interest.
  I have worked with Representatives Johnson and Houghton to address 
this issue. Unfortunately, the committee on Ways and Means was unable 
to complete action on a legislative proposal. It was determined such a 
proposal is noncontroversial. I have contacted Chairman Archer and 
requested the Committee on Ways and Means address this issue next year. 
I would like to submit for the record my letter to Chairman Archer and 
Chairman Archer's response. I hope Congress will be able to address 
this issue next year.
                                    Congress of the United States,


                                     House of Representatives,

                               Washington, DC, September 27, 1996.
     Hon. Bill Archer,
     Chairman, Committee on Ways and Means, Washington, DC.
       Dear Chairman Archer: During the 104th session of Congress, 
     I have contacted you about Savings Bank Life Insurance 
     [SBLI]. Tax legislation is needed to clarify the tax code to 
     assure that the 12-year dividend payout is treated as a 
     deductible policyholder dividend as opposed to a 
     nondeductible redemption of any equity interest.
       I have worked with Representatives Johnson and Houghton on 
     this issue. The Department of Treasury has indicated that it 
     has not objection to the proposal. I realize the Committee on 
     Ways and Means was unable to address this issue this year. I 
     hope we can work together to address this issue as earliest 
     as possible in the 105th Congress.
       Thank you in advance for consideration of this matter.
           Sincerely,
                                                  Richard E. Neal,
                                               Member of Congress.
                                  ____
                                  
                                      Committee on Ways and Means,


                                U.S. House of Representatives,

                               Washington, DC, September 28, 1996.
     Hon. Richard E. Neal,
     Rayburn HOB, Washington, DC.
       Dear Richie: Thank you for your letter of September 27, 
     1996 concerning the tax treatment of consolidations of life 
     insurance departments of mutual savings banks.
       I would be delighted to work with you next year, together 
     with Representatives Johnson and Houghton, in attempting to 
     resolve this issue. As you know, representatives of the U.S. 
     Treasury testified before the Committee during July of 1995 
     that the Administration does not oppose the provision. 
     Clearly, this provision merits a closer look, and I find it 
     regrettable, as do you, that the Committee schedule has not 
     permitted a review of this issue this year.
       Again, I look forward to working with you next year.
           With best personal regards,
                                                      Bill Archer,
     Chairman.

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