House Legislation Addresses Agents TaxConcern

By Steven Brostoff

Washington

Legislation addressing a major tax concern for insurance agentshas been introduced in the House of Representatives by Rep. MarkFoley, R-Fla.

The legislation would allow businesses such as insuranceagencies to amortize up to $5 million in intangible assets,including expirations, in the first year the assets are acquired,and the rest over the next 14 years.

This contrasts with current law, in which intangible assets mustbe amortized ratably over 15 years.

Justin Roth, director of federal government affairs for theAlexandria, Va.-based Independent Insurance Agents and Brokers ofAmerica, told National Underwriter that the legislation isIIABAs number one tax priority for the 108th Congress.

It addresses a concern that is being raised more and more byIIABA members in the wake of the Gramm-Leach-Bliley Act, hesaid.

Since GLB, Mr. Roth said, there have been a lot ofconsolidations among insurance agencies.

However, he said, many agents selling their businesses feel theyare not getting fair value because of the difficulties faced by theacquiring agency in writing off the expirations over the 15-yearperiod.

Similarly, Mr. Roth said, larger agencies interested inacquiring are put off by the expiration period.

In seeking legislation to allow a $5 million write off in thefirst year, he said, the relief sought by IIABA will be targeted atsmaller businesses, which comprise about 90 percent of theassociations membership.

At the same time, Mr. Roth said, IIABA wants the proposal tohave the smallest fiscal impact possible. He noted that in an eraof significant budget deficits, a large tax relief bill will bedifficult to enact politically.

IIABA, he said, wants to have the budget impact of thelegislation scored immediately. After that, Mr. Roth said, IIABAwill begin the process of getting co-sponsors for the legislationduring the associations annual legislative meeting next month.

Reproduced from National Underwriter Edition, March 17, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.