May 12, 2005 | Read Time: 1 minute
The leaders of the Senate Finance Committee say they are introducing legislation to crack down on companies that improperly benefit from charity-owned life-insurance policies.
Many charities buy life-insurance policies on their donors and sell the interest in the policies to companies, which make money when the donors die. Often, the companies wind up with far more money than they paid the charities, and the arrangement inappropriately affords benefits to private investors, according to a statement by Sen. Charles E. Grassley, Republican of Iowa and chairman of the Finance Committee, and Sen. Max Baucus of Montana, the committee’s ranking Democrat.
“I’m very concerned about snake-oil salesmen taking advantage of tax-exempt organizations to line their own pockets with life-insurance schemes,” Mr. Grassley said.
Details of the bill were not immediately available, but the senators said the legislation would be similar to proposals made by President Bush to impose taxes on companies that benefit from such arrangements.
