Firm Partner, Josh Ungerman was quoted in a Tax Notes article published on August 27, 2024
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Josh O. Ungerman
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Firm Partner, Josh O. Ungerman, was quoted in a Tax Notes article published on August 27, 2024, written by Lauren Loricchio, titled "Scholars Propose Reforms to Tax Benefits of Life Insurance."
The article discusses a report drafted on August 23rd in which policymakers are being urged to address the misuse of cash value life insurance, which has increasingly become a tool for wealthy individuals to avoid taxes, rather than providing financial protection. The report comes amid an investigation by the Senate Finance Committee’s Democratic staff into private placement life insurance (PPLI). They suggest reforms, such as taxing the investment gains within these policies or capping the tax-exempt buildup, to prevent abuse and maintain tax system progressivity. This raised concerns about how such changes might affect current taxpayers and the industry’s commitment to financial security.
According to Mr. Ungerman, adjusting the rules for PPLI “prospectively, when wealthy taxpayers are following the advice of skilled tax practitioners, starts down a slippery slope of increasing tax rates on the highest earners while not increasing the tax rates themselves." He continued, "Taxpayers should be allowed to rely on the existing PPLI rules without any retroactive adjustments. Many families engaged in significant planning based on the rules as they stand today.”
The article discusses a report drafted on August 23rd in which policymakers are being urged to address the misuse of cash value life insurance, which has increasingly become a tool for wealthy individuals to avoid taxes, rather than providing financial protection. The report comes amid an investigation by the Senate Finance Committee’s Democratic staff into private placement life insurance (PPLI). They suggest reforms, such as taxing the investment gains within these policies or capping the tax-exempt buildup, to prevent abuse and maintain tax system progressivity. This raised concerns about how such changes might affect current taxpayers and the industry’s commitment to financial security.
According to Mr. Ungerman, adjusting the rules for PPLI “prospectively, when wealthy taxpayers are following the advice of skilled tax practitioners, starts down a slippery slope of increasing tax rates on the highest earners while not increasing the tax rates themselves." He continued, "Taxpayers should be allowed to rely on the existing PPLI rules without any retroactive adjustments. Many families engaged in significant planning based on the rules as they stand today.”
