The Internal Revenue Service has issued the temporary regulations it needs to issue to implement new corporate-owned life insurance reporting procedures.
The Pension Protection Act of 2006 created a section of the Internal Revenue Code, Section 6039I, which requires companies that own COLI to file a COLI return each year.
The COLI return should show the number of employees that the company employs, the number insured by COLI contracts, the total amount of COLI coverage in force, and the company’s name, address and industry.
The COLI return also will have to indicate whether the company has gotten permission from the employees covered by the COLI policies to include the employees in the COLI arrangements.
Congress included the COLI reporting provision in the PPA because of concerns that Congress had no way to know what was really going on in the COLI market.
The new temporary regulations, published in the Federal Register, state that the IRS commissioner can prescribe the manner of satisfying the Section 6039I reporting requirements.
The temporary regulations apply to tax years ending after Nov. 13, 2007, and expire Nov. 9, 2010, the IRS says.
The IRS also has published a notice of proposed rulemaking in connection with the temporary regulations.