NAMIC Urges Small Company Tax Rules Update

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By Steven Brostoff, Washington Editor

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NU Online News Service, Nov. 20, 4:30 p.m. EDT,Washington?The National Association of Mutual InsuranceCompanies is hopeful that Congress will update the tax rulesaffecting small property-casualty companies.

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"This is very doable," said Marliss A. Browder, federal affairsrepresentative for the Indianapolis-based NAMIC.

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While it won't happen this year, she said, provisions to updatethe small p-c company tax rules are contained in bill pending inboth the House and the Senate and which have already been approvedby the relevant committees.

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Ms. Browder noted that the p-c tax rules have not been addressedby Congress since the Tax Reform Act of 1986.

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Under legislation approved by the Senate Finance Committee,insurance companies whose revenues do not exceed $600,000 and whichderive at least 50 percent of revenues from net or director writtenpremium would be tax exempt, she said.

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Insurance companies with revenues between $600,000 and $1.2million could elect to be taxed on their investment income, Ms.Browder said. These thresholds are indexed for inflation in theSenate bill, she added.

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Meanwhile, the House Ways and Means Committee recently approveda slightly different version of the p-c tax rules. Under the Housebill, Ms. Browder said, the same $600,000 threshold for tax exemptstatus.

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However, she said, the threshold for the election to be taxed oninvestment income would be $1.89 million, although this would notbe indexed for inflation.

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