IRS Develops Correction Procedures

Revenue Procedure 2008-40 provides a procedure that a life insurer can use to “remedy the failure of one or more contracts to meet the definition of a life insurance contract under Section 7702(a) or to satisfy the requirements of Section 101(f) of the Internal Revenue Code.”

Revenue Procedure 2008-41 provides a procedure that the issuer of a variable life or variable annuity contract can use to “remedy an inadvertent failure of a variable contract to satisfy the diversification requirements of Section 817(h) of the Internal Revenue Code.”

Revenue Procedure 2008-42 provides a procedure that a life insurer can use to “automatically obtain a waiver, under Section 7702(f)(8) or Section 101(f)(3)(H) of the Internal Revenue Code, for certain reasonable errors that caused the contract to fail to satisfy the requirements of Section 7702 or Section 101(f).”