Topic: Tax Related Developments
New York State Clarifies Taxation of Unauthorized Insurance Companies
Three recent decisions (March 3, 2016) by a New York State Division of Tax Appeals administrative law judge help to clarify the taxation of unauthorized insurance companies subject to New York State taxation.
Read MoreCongress Expands and Tightens Section 831(b) Small Insurance Company Election
On December 18, 2015, Congress enacted the Protecting Americans from Tax Hikes Act of 2015, making, among other items, several significant changes to the provisions of Internal Revenue Code Section 831(b), which provides generally favorable tax treatment for electing small insurance companies.
Read MoreNinth Circuit Overturns Taxpayer-Friendly Decision in Demutualizations
The Ninth Circuit has overturned a favorable decision for taxpayers in demutualizations, ruling that taxpayers have a zero basis in their membership interests in the former mutual insurance company, and therefore also in the shares of stock received in a demutualization of the company. As a result, all proceeds from a subsequent sale of such shares is taxable as gain.
Read MoreSC Court Says Sales Tax Inapplicable to Cellphone Insurance Premiums
During the last few years, many states have undertaken aggressive efforts to collect sales tax on amounts paid for service contracts a/k/a extended warranties, which in most states are deemed not to be insurance products.
Read MoreLegislation Reintroduced to Clarify Application of NRRA to Captives
As discussed in our earlier article on the topic (a copy of which can be accessed here) and our prior entry on this site (which can be accessed here), uncertainty remains over whether the self-procurement tax and regulatory provisions of the Non-admitted and Reinsurance Reform Act, enacted as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, apply to non-admitted insurance procured from a captive insurance company.
Read MoreValidus Wins Round Two: Wholly-Foreign Retrocessions Not Subject to Federal Excise Tax
On May 26, 2015, the United States Court of Appeals for the District of Columbia upheld a lower court decision and ruled that the IRS could not impose excise tax on certain wholly-foreign retrocessions of insurance.
Read MoreProposed Tax Regulations Issued on PFIC Rules for Insurance Companies
The Internal Revenue Service late last week issued proposed regulations addressing what constitutes the “active conduct of an insurance business” for purposes of the passive foreign investment company (“PFIC”) rules.
Read MoreInternal Revenue Service finds Contracts protecting against Foreign Currency Fluctuations not to be Insurance
Companies looking to establish insurance coverage, especially in situations involving a captive type of arrangement, will, as always, need to focus on the qualification of the coverage as insurance for U.S. federal income tax purposes.
Read MoreTaxing Foreign Reinsurance Transactions: Déjà vu All Over Again
President Obama’s fiscal year 2016 budget once again contains a revenue proposal to tax certain reinsurance transactions between U.S. insurers and foreign reinsurers. The proposal would apply to a U.S. ceding company that reinsures property/casualty risks with an affiliated foreign reinsurer.
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