The Self-Insurance Institute of America’s (SIIA) proposed clarifications to the Protecting Americans from Tax Hikes (PATH) Act have been included in the legislative text of the congressional omnibus appropriations bill.
The recommended changes, which are a result of nearly two years of meetings and advocacy from SIIA and members of the industry, relate to the treatment of 831(b) captives within the PATH Act.
In October 2016, SIIA, in collaboration with 15 state captive insurance associations, sent a letter to the US Department of Treasury and the Internal Revenue Service requesting guidance and clarification around the PATH Act revisions to section 831(b).
According to Ryan Work, vice president of government relations at SIIA, the proposed changes included in the legislature can be summarised as: “Clarification of the ‘look-through’ language to the insured policyholders regarding first diversification test (20 percent rule); the clarification of the definition of ‘specified asset’ under the second diversification test to mean the aggregate amount of the relevant specified assets; and the clarification of specified asset and spousal ownership to address concerns surrounding community property and spousal attribution issues.”
Though attempts to move a 2018 long-term spending bill have previously had issues, it is expected that the House of Representatives will consider the bill today and that it may be considered by the Senate over the coming days.
