IRS Revokes Ruling on Foreign Insurance Excise Tax

Part I

Section 4371. -- Foreign Insurance Excise Tax

The Internal Revenue Service (IRS) has reconsidered Revenue Ruling 2008-15, 2008-1 C.B. 633, in view of the decision of the United States Court of Appeals for the District of Columbia Circuit in the case of Validus Reinsurance, Ltd. v. United States, 786 F.3d 1039 (2015). As a result, the IRS will no longer apply the one-percent excise tax imposed by section 4371(3) to premiums paid on a policy of reinsurance issued by one foreign reinsurer to another foreign insurer or reinsurer under the situations described in Rev. Rul. 2008-15. Rev. Rul. 2008-15 is hereby revoked.

No inference should be drawn that the revocation of Rev. Rul. 2008-15 affects the liability for excise tax under section 4371 on any other policies of insurance or reinsurance. For example, absent a foreign reinsurer qualifying for a treaty waiver or an exemption from tax under section 4373(1), the IRS will apply a one-percent excise tax under section 4371(3) to reinsurance premiums paid on a policy of reinsurance, as defined in section 4372(f), issued by that foreign reinsurer to either:

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 2008-15 is revoked.

DRAFTING INFORMATION

The principal author of this revenue ruling is Stephen M. Peng of the Office of Associate Chief Counsel (International). For further information regarding this revenue ruling, contact Mr. Peng at (202) 317-4966 (not a toll-free call).