The Internal Revenue Service has issued proposed regulations on the new information reporting requirements for certain life insurance contracts under the Tax Cuts and Jobs Act (“TCJA”).
As enacted, the new reporting requirements under Internal Revenue Code 6050Y apply to reportable policy sales and payments of reportable death benefits occurring after December 31, 2017. Consistent with guidance issued last April, the proposed regulations contain transitional guidance delaying any reporting until final regulations are issued.
The proposed regulations provide taxpayers additional time to satisfy any reporting obligations for sales or payments made prior to publication of final regulations.
Among other things, the IRS said, these reporting requirements are designed to help persons who sell life insurance contracts properly report any gain from that sale.
Every person who acquires a life insurance contract, or any interest in a life insurance contract, in a reportable policy sale during the taxable year must file a return with the IRS. The acquirer also must furnish written statements to each payment recipient and the issuer named in the return. The issuer, upon receiving such a statement, must file a return with the IRS and must also furnish a written statement to the seller.
The IRS has released Form and Instructions for 1099-LS and Form and Instructions for Form 1099-SB, which provide specific instructions on these reporting requirements.
The proposed regulations also provide guidance on new reporting requirements applicable to each person who makes a payment of reportable death benefits (reportable on Form 1099-R) and how to calculate the amount of death benefits excluded from gross income.
Learn more: IRS.gov/tax-reform.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].