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Publication 510
taxmap/pubs/p510-043.htm#en_us_publink1000117313

Chapter 8
Foreign Insurance Taxes(p38)


Tax is imposed on insurance policies issued by foreign insurers. Any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit they are made, signed, issued, or sold, is liable for the tax.
The following tax rates apply to each dollar (or fraction thereof) of the premium paid.
  1. Casualty insurance and indemnity, fidelity, and surety bonds: 4 cents. For example, on a premium payment of $10.10, the tax is 44 cents.
  2. Life, sickness, and accident insurance, and annuity contracts: 1 cent. For example, on a premium payment of $10.10, the tax is 11 cents.
  3. Reinsurance policies covering any of the taxable contracts described in items (1) and (2): 1 cent.
However, the tax does not apply to casualty insurance premiums paid to foreign insurers for coverage of export goods in transit to foreign destinations.
taxmap/pubs/p510-043.htm#en_us_publink1000117314
Premium.(p38)
Premium means the agreed price or consideration for assuming and carrying the risk or obligation. It includes any additional charge or assessment payable under the contract, whether in one sum or installments. If premiums are refunded, claim the tax paid on those premiums as an overpayment against tax due on other premiums paid or file a claim for refund.
taxmap/pubs/p510-043.htm#en_us_publink1000117315

When liability attaches.(p38)

rule
The liability for this tax attaches when the premium payment is transferred to the foreign insurer or reinsurer (including transfers to any bank, trust fund, or similar recipient designated by the foreign insurer or reinsurer) or to any nonresident agent, solicitor, or broker. A person can pay the tax before the liability attaches if the person keeps records consistent with that practice.
taxmap/pubs/p510-043.htm#en_us_publink1000117316

Who must file.(p38)

rule
The person who pays the premium to the foreign insurer (or to any nonresident person such as a foreign broker) must pay the tax and file the return. Otherwise, any person who issued or sold the policy, or who is insured under the policy, is required to pay the tax and file the return.
Where Refund
The person liable for this tax must keep accurate records that identify each policy or instrument subject to tax. These records must clearly establish the type of policy or instrument, the gross premium paid, the identity of the insured and insurer, and the total premium charged. If the premium is to be paid in installments, the records must also establish the amount and anniversary date of each installment.
The records must be kept at the place of business or other convenient location for at least 3 years after the later of the date any part of the tax became due, or the date any part of the tax was paid. During this period, the records must be readily accessible to the IRS.
The person having control or possession of a policy or instrument subject to this tax must keep the policy for at least 3 years after the date any part of the tax on it was paid.
Deposit
For information on reinsurance premiums paid from one foreign insurer to another foreign insurer, see Rev. Rul. 2008-15. You can find Rev. Rul. 2008-15 on page 633 of I.R.B. 2008-12 at www.irs.gov/pub/irs-irbs/irb08-12.pdf.
taxmap/pubs/p510-043.htm#en_us_publink1000117319

Treaty-based positions under IRC 6114.(p38)

rule
You may have to file an annual report disclosing the amount of premiums exempt from United States excise tax as a result of the application of a treaty with the United States that overrides (or otherwise modifies) any provision of the Internal Revenue Code.
Attach any disclosure statement to the first quarter Form 720. You may be able to use Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), as a disclosure statement. See the Instructions for Form 720 for information on how and where to file.
See Revenue Procedure 92-14 in Cumulative Bulletin 1992-1 for procedures you can use to claim a refund of this tax under certain U.S. treaties.