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SmallMutualInsuranceUpdateUnderSection831botheInternalRevenueCodesmallpropertycasualtyinsurerswithdirectornetwrittenannualpremiumsnotexceeding1.2millionmayelecttobetaxedontheirnetinvestmentincomes.Thisprovisionenactedin1986hadnotbeenadjustedtorefectthelast25yearsoinfation.Accountingorinfationaryincreasesinthelastquartercenturytheinvestmentincomeelectionshouldbe2.39million.TheSmallMutualInfationUpdateHR2198wasintroducedinJunebyRep.ErikPaulsenR-Minn.withco-sponsorsJoeDonnellyD-Ind.andAaronSchockR-Ill.Ienactedthebillwouldincreasethealternativetaxliabilitylimitationorsmallpropertycasualtyinsurancecompaniestoaccountorinfationsince1986andindexthethresholdtoutureinfation.Congressdidnotaddressmanytaxissuesin2011insteadhopingtotackletheissuein2012.ThroughNAMICx19seortstheSmallMutualInfationUpdatehasearnedthesupportokeycommitteechairmenandleadershipandhasbecomeapartothediscussion.Wewillcontinueworkingtoensureitisincludedinanytaxreormlegislation.1099ExpenseReportingThepresidentsignedlegislationonApril14thatrepealeda1099reportingprovisioninthehealthcarereormlaw.Hadtherepealnotbeenenactedanybusinessexpenseomorethan600inasingleyearwouldrequirethex1lingoaseparate1099ormwiththeInternalRevenueServicebeginningin2012.Currentlawrequiresax1lingorthoseexpensespaidtoanunincorporatedentitybutthenewrequirementwouldrequirex1lingsormundaneexpensessuchasphoneInternetserviceandox1cesupplies.NAMICquicklybeganitsworktogetthe1099provisionrepealedassoonasthehealthcarebillwasadoptedin2010.Weservedasthevoiceothepropertycasualtyinsuranceindustryinabroadcoalitionopposedtothenewrequirements.AspartotheoppositionweprovidedtomembersoCongressandthemediathereal-worldimpactthisprovisionwouldhavenotonlyintermsothex1lingsthemselvesbutthecostandresourcesrequiredorcompaniestoprepareorthechange.PatentReormTheU.S.patentsystemhasseenanexplosioninapplicationsorbusiness-methodpatentsstemmingroma1998FederalCircuitCourtdecisionthateliminatedthebusiness-methodexceptiontopatentability.NAMICjoinedwiththeFinancialServicesRoundtableandothersinJulyinurgingtheSenatetovoteontheHouseversionothebill.Section18othatbillwenturtherthantheSenateversiontowardlimitingtheabilityonon-practicingentitiesknownderogatorilyasx1cpatenttrollsx1dandtheirtrialattorneystoabuselow-qualitybusiness-methodpatentsanddisruptingtheoperationsomanyx1nancialinstitutions.NPEsexploitfawsbyx1linglawsuitsinvolvinglow-qualitybusiness-methodpatentswiththeexpectationosecuringlargesettlements.DueinlargemeasuretoourworktheSenatetookuptheHousebillitsx1rstweekbackromAugustrecess.Withthex1nancialservicessectorwesentstate-by-stateletterstosenatorsurgingpassagewithoutamendmentwhenthelegislationwasbroughttothefoor.AdoptedbybothchambersoCongressthebillwassignedintolawbythepresidentonSeptember16.NAMIC2011TheYearinReview15