IRS Priority Guidance Plan – Insurance Items

Every year, the U.S. Department of the Treasury and Internal Revenue Service release a Priority Guidance Plan (the Plan) that identifies specific areas and projects to be emphasized during that period. On 10.20.17, the IRS released the 07.01.17 to 06.30.18 Plan, which includes several insurance industry items.

Part 2 of the Plan focuses on “burden reduction” projects that will be completed during the year and includes two insurance initiatives:

  • Guidance under Chapter 4 revising the withholding requirements on insurance premiums
  • Guidance under IRC § 954(i) regarding foreign statement reserves when measuring qualified insurance income

Part 4 of the Plan focuses on general guidance projects that will not necessarily be completed during the year and contains three insurance items:

  • Issue final regulations under IRC § 72 that will simplify or approve the 10.18.06 proposed regulations regarding the exchange of property for an annuity contract.
  • Issue guidance related to IRC §§ 807 and 816 to provide clarity and simplification on the implementation of principles-based reserve methods for life insurance and annuity contracts, including “stochastic reserves based on conditional tail expectation.”
  • Issue guidance on the 04.24.15 proposed regulations related to passive foreign investment companies and foreign insurance companies.

Projects related to Notice 2016-66 and captive insurance companies are excluded from the Plan as they are a focus of the IRS examination and compliance campaign teams. Several issues mentioned in the 2016-2017 Priority Guidance Plan were removed from the current Plan to focus on key areas. We will provide updates as notices, amendments, and other guidance are released on these and other topics.

Johnson Lambert
Johnson Lambert | Author