[Congressional Record Volume 143, Number 18 (Wednesday, February 12, 1997)]
[Extensions of Remarks]
[Page E224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E224]]



                      PRE-NEED FUNERAL TRUST BILL

                                 ______
                                 

                           HON. PATSY T. MINK

                               of hawaii

                    in the house of representatives

                      Wednesday, February 12, 1997

  Mrs. MINK of Hawaii. Mr. Speaker, I recently introduced legislation 
(H.R. 684) to relieve the tax burden for individuals who have purchased 
preneed funeral trusts. A preneed funeral trust is one in which monies 
are set aside for future funeral costs, in order to alleviate funeral 
expenses that may abruptly saddle remaining family members with 
tremendous and even unexpected financial burden. Individuals usually 
enter into a contract and purchase preneed funeral trusts with funeral 
or burial service providers, deciding at that time on final 
arrangements for themselves and/or family members.
  H.R. 684 would remedy a bureaucratic inequity related to preneed 
funeral trusts which was created by a January 29, 1988 Internal Revenue 
Ruling (87-127). Under this IRS ruling, individuals purchasing preneed 
funeral trusts are required to report money in these trusts on their 
1040 income tax forms and pay taxes on the interest income earned by 
these trusts, despite the fact that this interest is not returned to 
the purchaser. This has created confusion on the part of the purchasers 
who believe it unfair that they be assessed this tax on interest they 
never receive nor benefit from.
  The ruling also established two classes of taxpayers with 
disproportionate tax treatment. Trusts purchased before the effective 
date of the ruling were subject to a grandfather clause, establishing a 
significant inequity between trusts purchased before and after the 
effective date.
  H.R. 684 would require providers of preneed funeral trusts--funeral 
homes or cemeteries--to pay the tax on interest earned on the trusts, 
unless the interest is returned to the purchaser.
  A related provision from the Ways and Means Committee was included in 
the vetoed Balanced Budget Act of 1995 that would have allowed 
providers of preneed funeral trusts to elect to pay the tax on interest 
earned on these trusts.
  I urge my colleagues to support H.R. 684 to relieve families from 
unwarranted taxes.

                          ____________________