Orrin Hatch: “The provisions of S. 2020 concerning excise taxes to be levied on transfers of insurance products are of some interest…”

“The provisions of S. 2020 concerning excise taxes to be levied on transfers of insurance products are of some interest to me. It is clear that there are abuses in the system, and I am appreciative of the chairman and his staff for their substantial work to address those problems. It is my concern that the proposed excise tax language is so broadly drawn that it will stop what I believe are legitimate transactions that constitute best practice in this area. I am aware of a commercial loan structure that relies upon a valid insurable interest between donors and charities, where the lender has isolated both donors and charities from all lending risks. Further, there is an agreeable known benefit to the charity at loan inception, which is not reliant upon the payment of an insurance death benefit, and the loan structure does not include outside investors. The loan is never recharacterized from inception to payoff as anything but a loan. Is it the intent of the chairman in this provision to shut down a straightforward loan transaction?”