The Internal Revenue Service has decided to rescind recent advice it gave concerning variable annuity separate account reserve accounting.
The IRS is suspending IRS Revenue Ruling 2007-54, a batch of guidance that was released Aug. 16, IRS officials write today in IRS Revenue Ruling 2007-61.
The IRS and its parent, the U.S. Treasury Department, will replace the guidance with regulations that will address the same issues, officials write.
“The Treasury Department and the IRS are mindful of the benefits of notice and public comment and believe the issues in the revenue ruling would be more appropriately addressed by regulation,” officials write.
Revenue Ruling 2007-54 deals with situations in which VA tax reserves are greater than VA contract net surrender values.
When the tax reserves are greater than the net surrender values, life insurers should use the tax reserve figures to calculate the effects of decreases in VA separate account reserves on gross income, IRS officials wrote.