Financial Services Regulatory Report: New Briefs

- The Clinton Administration has proposed, as part of its budget package, several changes to the Federal tax laws. Among them is a proposal to curtail the availability of Corporate Owned Life Insurance or COLI as it is called by banking organizations. While no specific legislation has been introduced, it seems clear that there is growing support in Congress for some action. Many different possibilities are currently under discussion in Washington and it is conceivable that the legislative possibilities range from the complete elimination of the tax advantages of COLI in all instances to the preservation of the advantages for COLI purchased in only certain limited circumstances. It is equally uncertain at this time if the COLI curtailment will be prospective (for insurance purchased after date of enactment of legislation) or if it would be retroactive (for insurance purchased prior to the enactment of legislation) or some combination thereof.