Bill > HR2054

This bill aims to prevent insurance companies from avoiding taxes by using reinsurance agreements with affiliated companies that are not subject to U.S. taxes. Specifically, it introduces new rules that will require insurance companies to include certain income from these reinsurance arrangements in their taxable income, rather than excluding it. This applies to premiums paid to "non-taxed reinsurance premiums," which are defined as payments made to an affiliated corporation for reinsurance of risks (excluding certain specific types of risks related to life insurance reserves) where the income from that premium isn't taxed in the U.S. The bill also defines "affiliated corporations" more broadly for this purpose, including companies that are at least 50% commonly controlled. Furthermore, it allows for an election where a foreign affiliated corporation can choose to treat income from these reinsurance arrangements as effectively connected with a U.S. trade or business, making it subject to U.S. taxation. This election would also exempt such income from certain excise taxes and coordinate with foreign tax credit provisions. The Secretary of the Treasury is empowered to issue regulations to ensure the proper implementation and prevent avoidance of these rules, including addressing various types of reinsurance transactions. The changes are set to take effect for taxable years beginning after December 31, 2013.