Congressman Gene Green last Thursday criticized U.S. corporations who take out life insurance policies on their employees with the intent of making a profit and without the employees knowledge. Wal-Mart, and an estimated 25 percent of Fortune 500 companies engage in the practice. The companies can collect tens of thousands of dollars when an employee dies, while their family members receive nothing and know nothing of the policies. Many of the companies may have also illegally used the policies as a business tax shelter.
The people who should benefit from a life insurance policy should not be the company, but the families of the employees, said Green. I plan to introduce legislation that will force companies to inform employees and their families when they take out insurance policies and also reveal the amount of each policy. I have also sent a letter to IRS Commissioner Rosotti with regards to these companies receiving extra tax benefits they are not entitled to.
The letter to the IRS points toward two federal court decisions that found companies were improperly deducting corporate-owned life insurance premiums from their annual federal tax obligation.
These corporations are playing both sides for financial gain, all resulting from someones death. By calling the IRS attention to this matter, and introducing new legislation protecting the families, I hope to prevent these practices from continuing in the future, added Green.
