Benefit News

IRS Issues Safe Harbor for Insurance Company-Owned Life Insurance

September 11, 2007 - The Internal Revenue Service released a significant new private ruling concluding that, as a result of 1997 tax law changes, insurers owning life insurance on the lives of their employees are subject to a reduction in income tax deductions for reserves (for life companies) or loss deductions (for non-life companies). Fortunately, the release of the PLR is preceded by the release today of Revenue Procedure 2007-61, in which the Service indicated that it would not apply the holding of the PLR and require insurance companies to reduce their deductions if the insurance arrangement meets an easily-satisfied safe harbor test set forth in the Revenue Procedure.

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