[Congressional Record (Bound Edition), Volume 149 (2003), Part 5]
[Extensions of Remarks]
[Page 6050]
[From the U.S. Government Publishing Office, www.gpo.gov]




             FORMER INSURANCE AGENTS TAX EQUITY ACT OF 2003

                                 ______
                                 

                             HON. PAUL RYAN

                              of wisconsin

                    in the house of representatives

                       Wednesday, March 12, 2003

  Mr. RYAN of Wisconsin. Mr. Speaker, I come to the floor today with my 
colleagues Congressman Jerry Weller, Congressman Jerry Kleczka, 
Congressman Tom Petri, Congressman Mark Green, and Congresswoman Tammy 
Baldwin, to introduce the Former Insurance Agents Tax Equity Act of 
2003, a bill designed to correct a minor oversight in the Taxpayer 
Relief Act of 1997. This legislation will help ensure that certain 
retired insurance agents are not unfairly subjected to self-employment 
tax. It will bring consistency and fairness to the tax treatment of 
similarly situated former insurance agents.
  Under current law, a small number of agents are forced to pay self-
employment taxes on their retirement payments, while their peers at 
other insurance companies do not. This is because a change in the 
Taxpayers Relief Act of 1997 (TRA) was drafted in a way that 
unintentionally excluded a small group of agents.
  In the TRA, Congress enacted a provision designed to clarify that 
certain termination payments received by valued, long-term former 
insurance agents should be exempt from self-employment tax. 
Unfortunately, the changes in 1997 provided clarification for most 
agents, but not others, as a result of how certain insurance companies 
structure their agent agreements.
  As enacted, the 1997 provision provides that payments to a retired 
agent are exempt from self-employment tax when the agent's eligibility 
is tied to length of service, but not when the actual amounts of the 
payments are tied to the agent's length of service. Simply put, this is 
a distinction without a difference. There is no reason to provide 
different tax treatment for arrangements that are so similar just 
because the sum of an agent's termination payment is determined by 
varying the amount of compensation rather than the term of 
compensation.
  Hard-working agents whose payments are tied to their length of 
service deserve the same fair treatment accorded to their counterparts 
at other insurance companies. Both types of contract seek to satisfy 
the same goal of rewarding loyal, long-time agents with more generous 
retirement payments. All of these payments, of course, continue to be 
subjected to income taxes.
  The Former Insurance Agents Tax Equity Act of 2003 would simply 
strike language in the Internal Revenue Code that prevents companies 
from using a former agent's length of service in determining the amount 
of termination payment the agent will receive. In doing so, this bill 
fulfills Congress' intentions with the TRA and provides equitable tax 
treatment for all former agents. In addition, the budget implications 
are minor since only a very small number of agents are affected. This 
provision enjoys the support of thousands of insurance agents around 
the country, as well as the National Association of Life Underwriters, 
the Coalition of Exclusive Agents, and the National Association of 
Independent Insurers.
  In the interest of ensuring that termination payments to former 
insurance agents are treated fairly and consistently under our tax 
laws, I hope that you will join me in supporting the Former Insurance 
Agents Tax Equity Act of 2003.

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