CLIENT-LIST-DEPRECIATION BATTLE WILL RAGE AGAIN IN CONGRESS

CLIENT-LIST-DEPRECIATION BATTLE WILL RAGE AGAIN IN CONGRESS

The battle to allow insurance agents and other businesses to depreciate client lists will be fought in Congress once again.

Tax treatment of intangible assets, such as customer lists, affects not only insurance agencies, but banks, newspapers, magazines and any business that depends on client lists whose actual value is unclear.Insurance agents, in their push to clarify the tax status of customer lists, have gained the support of Rep. Dan Rostenkowski, D-Ill., who included in his pending tax bill a provision that allows independent insurance agents to depreciate their customer lists when they acquire an agency.

The House is expected to vote today on the Rostenkowski tax measure.

While that bill is expected to be vetoed by President Bush if it wins congressional approval, insurance agent lobbyists are eyeing a chance to include the issue in a compromise measure that might emerge from the ashes of the tax bill.

"We do like the Rostenkowski insurance provision and we support it, but we do not support the overall bill," said Robert Rusbuldt, a lobbyist with the Independent Insurance Agents of America.

The Rostenkowski proposal joins other pieces of legislation that have been introduced during the past year, but have yet to win passage. Rep. Rostenkowski's provision would set a 14-year depreciation schedule for all intangible assets, and allow goodwill to be included in the valuations.

That depreciation schedule is twice as long as the one agents now use, but it provides a guaranteed tax deduction and allows goodwill to be included, said Daniel J. Blum, president of the National Association of Professional Insurance Agents.

The problem was dramatized in congressional testimony last October when one agent, Henry Batjer of San Angelo, Texas, claimed the IRS pounded his agency with $60,000 in back taxes after disallowing his organization's depreciation schedule following a merger.

The Bush administration reiterated its interest in supporting a depreciation schedule for intangible assets during January when the president's budget proposals were released by the Department of the Treasury.

Additional legislation already pending in Congress has lined up substantial support, industry lobbyists said.

A House bill, H.R. 1456, introduced by Rep. Guy Vander Jagt, R-Mich., Rep. Barbara Kennelly, D-Conn., and Beryl Anthony, D-Ark., is accompanied by a similar bill in the Senate. That bill, S. 1245, is sponsored by Tom Daschle, D-S.D., and Steve Symms, R-Idaho.

More than 200 legislators have signed on as sponsors of those bills, the lobbyists said.