The Internal Revenue Services has resolved a tax issue that has held up the sale of American Life Insurance Company by American International Group Inc., according to published reports.

AIG’s plan to sell Alico, a foreign life unit, to MetLife Inc. for $15 billion has been sidetracked when the question arose about whether Alico must withhold U.S. taxes on income distributed to foreign clients who own Alico’s annuities and life insurance policies.

The question arose during negotiations because of a 2004 IRS ruling that insurers must withhold U.S. taxes on income distributed to foreign clients who own their policies.

On Thursday, the IRS told AIG that Alico is exempt from that ruling, according to the Wall Street Journal, citing executives close to the negotiations.

In a related development, AIG said today it intends to sell in a public offering the remaining 9,192,662 shares of common stock of Transatlantic Holdings Inc. owned by American Home Assurance Company, an AIG subsidiary.