The Internal Revenue Service wants to write a new regulation that would affect whether it treats a life insurance company as a member of a controlled group of corporations.

In the past, an Internal Revenue Code section excluded life insurers from controlled groups, to keep the groups from enjoying a specific tax benefit, officials write in a notice about the proposed regulation that appears today in the Federal Register.

Since then, other laws and regulations have used the provision that defines controlled groups — Section 1563 of the Internal Revenue Code – for other purposes.

Some of the newer laws and regulations, such as a research tax credit provision, do treat a life insurer as being part of a corporate group, and not as a “separate life insurance controlled group,” officials write.

Section 1563 also defines terms such as “component members and “excluded members.”

“Some taxpayers have argued that a corporation that is an ”excluded member” within the meaning of section 1563(b)(2) cannot, as a consequence, be a ‘member’ of a section 1563(a) controlled group generally,” officials write. “This line of argument tends to equate a corporation’s membership generally with such corporation’s status as a component member.”

The Treasury Department and the IRS disagree with those arguments and believe that, for the purposes of some regulations, a life insurers that is an “excluded member” ought to be treated as a “member of a controlled group under” for other purposes, officials write.

“Therefore, this proposed regulation clarifies that a corporation identified in section 1563(b)(2) as an excluded member of a controlled group is nevertheless a member of such group for purposes of section 1563(a),” officials write. “Accordingly, a corporation whose stock is held by such an excluded member may be treated as a component member of the controlled group of corporations. Finally, this proposed regulation further illustrates that an excluded member of a controlled group is treated as a member of such group by adding an example demonstrating that a controlled group can consist solely of excluded members.”