IRS Digital Dispatch September 12, 2003


J

John H. Fisher

Contents

1. Treasury/IRS Issue Guidance on Split Dollar Life Insurance

2. New Services Replace Distinct EIN Hotline Number

3. Recent Technical Guidance

* * * * *

1. Treasury/IRS Issue Guidance on Split Dollar Life Insurance

The Treasury Department and the IRS issued guidance on split-dollar life
insurance arrangements, which involve two parties agreeing to split the
premiums and/or benefits of a life insurance policy. These arrangements
are often used for executive compensation or for gifts among family
members.

The final regulations provide that the tax treatment of split-dollar life
insurance arrangements will be determined under one of two sets of rules,
depending on who owns the policy. If the executive owns the policy, the
employer’s premium payments are treated as loans to the executive.
Consequently, unless the executive is required to pay the employer
market-rate interest on the loan, the executive will be taxed on the
difference between market-rate interest and the actual interest.

If the employer is the owner, the employer’s premium payments are treated
as providing taxable economic benefits to the executive. The economic
benefits include the executive’s interest in the policy cash value and
current life insurance protection.

See the Treasury news release:
http://www.treas.gov/press/releases/js726.htm

For more information see:
Rev. Rul. 2003-105, Split-Dollar Life Insurance Arrangements
http://www.treas.gov/press/releases/reports/js726attachment1.pdf

Final Regulations
http://www.treas.gov/press/releases/reports/js726attachment2.pdf

2. New Services Replace Distinct EIN Hotline Number

Two new services for business taxpayers have allowed the IRS to close its
distinct telephone number for obtaining an employer identification number.
Taxpayers needing an EIN now should use either the new business and
specialty tax line, (800) 829-4933, or the new Online EIN Internet
application at http://www.irs.gov. The old EIN number will be answered
until Oct. 1, but replaced with a recorded message directing callers to
the new number after that date. Hours for the new business and specialty
tax line are Mondayâ€"Friday, 7:30 a.m. to 10 p.m. local time. Online EIN is
available 24 hours a day, seven days a week.

3. Recent Technical Guidance

Announcement 2003-56 advises certain taxpayers with fiscal years beginning
in 2002 and ending after May 5, 2003, of additional reporting requirements
due to the recent change in the capital gains tax rates. See:
http://www.irs.gov/pub/irs-drop/a-03-56.pdf

Notice 2003-60 provides guidance on a number of collection issues arising
from a Supreme Court decision. The Court held that the federal tax lien
attaches to the rights of the delinquent taxpayer in property held as a
tenancy by the entirety, even though state law insulates entireties
property from the claims of creditors of only one spouse. See:
http://www.irs.gov/pub/irs-drop/n-03-60.pdf

Notice 2003-64 announces that the Treasury Department and the IRS will
amend the definition of a qualified low-income community investment. See:
http://www.irs.gov/pub/irs-drop/n-03-64.pdf

* * * * *

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"Jack" - John H. Fisher - (e-mail address removed)
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=:)
 
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