House Legislation Addresses Agents Tax Concern

By Steven Brostoff

Washington

Legislation addressing a major tax concern for insurance agents has been introduced in the House of Representatives by Rep. Mark Foley, R-Fla.

The legislation would allow businesses such as insurance agencies 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 must be amortized ratably over 15 years.

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

It addresses a concern that is being raised more and more by IIABA members in the wake of the Gramm-Leach-Bliley Act, he said.

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

However, he said, many agents selling their businesses feel they are not getting fair value because of the difficulties faced by the acquiring agency in writing off the expirations over the 15-year period.

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

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

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

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

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

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House Legislation Addresses Agents Tax Concern

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