Bill · S. 4279· Senate(119-S-4279)
PPLI Abuse Act
- Introduced
- 4/13/2026
- Last activity
- 4/13/2026 — Read twice and referred to the Committee on Finance.
- Sponsored by
- Ron Wyden
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
This bill, titled the "Protecting Proper Life Insurance from Abuse Act," seeks to amend the Internal Revenue Code of 1986 regarding the tax treatment of private placement contracts. It reclassifies certain private placement contracts as something other than life insurance or annuity contracts if they do not meet specific requirements for segregated asset accounts. The legislation changes how holders of these contracts are taxed on their share of income, losses, and distributions. Additionally, the bill establishes new reporting requirements for issuers of these contracts. It also introduces significant penalties for failing to meet these new reporting obligations.
Yes
Does this raise taxes on the highest earners?+6
The bill reclassifies certain private placement contracts to ensure income is recognized and taxed even if not distributed, targeting high-income contract holders.
Does this make what the government does easier for the public to see?+3
The bill mandates new annual reporting and statement requirements for private placement contract issuers.
Does this give people more protection from unfair business practices?+2
The bill introduces new reporting and transparency requirements for issuers of private placement contracts.
The opposite
Would high-income households be better off under this?-7
The bill increases the tax burden on holders of certain high-value private placement contracts by treating undistributed income as taxable.
Would business owners be better off under this?-5
Issuers of these contracts face significant new reporting obligations and heavy financial penalties for non-compliance.
Who it would affect, and how
Potential Positive Impacts for People
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Tax Transparency for Asset Owners: Under Section 2(d)(1)(A), holders of applicable private placement contracts will be treated as holding their share of assets and receiving net income or loss directly. This ensures that income is recognized even if it is not actually distributed.
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Clarity on Distributions: Section 2(d)(2) provides specific rules for how "excess distributions" are treated as ordinary income, which provides a clear framework for taxpayers receiving payments such as withdrawals or death benefits.
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Standardized Reporting: Section 3(a) requires reporting issuers to provide annual returns and written statements to taxpayers. This ensures that individuals have a documented record of their income, loss, and adjusted basis for tax purposes.
Potential Negative Impacts for People
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Tax Burden on Contract Holders: Under Section 2(d)(1), holders of these contracts will be treated as having received or accrued their share of net income, even if that money hasn't actually been distributed to them. Furthermore, Section 2(d)(2)(A) requires that excess distributions be included in a taxpayer's gross income as ordinary income.
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Strict Requirements for Asset Accounts: Section 2(c)(1) creates a high bar for segregated asset accounts, requiring that they support at least 25 private placement contracts. Failure to meet these specific organizational requirements results in the contract being treated as an "applicable private placement contract," which changes its tax status.
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Heavy Penalties for Issuers: Section 3(a)(2) imposes a significant financial penalty of $1,000,000, plus an additional $1,000,000 for each subsequent 30-day period of non-compliance, for any person who fails to file the required initial return.
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For High Income Households-7Good For Business Owners-5
- Economy And Finance
- Increases Wealthy Taxes+6Improves Consumer Protection+2
- Governance And Ideology
- Improves Government Transparency+3
- 4/13/2026
- Read twice and referred to the Committee on Finance.
- Introduced in Senate