Washington
The life insurance industry is concerned that a new IRS revenue ruling will reduce the attractiveness of life insurance and annuity products to nonresident aliens.
Revenue Ruling 2004-97, issued Sept. 3 by the Internal Revenue Service and the Treasury Department, imposes a 30% withholding tax on payments made to nonresident aliens from life insurance and annuity contracts issued by foreign branches of U.S. insurance companies.
"The ruling penalizes companies that have branch offices in countries with which the U.S. does not have a tax treaty," says Frank Keating, president and CEO of the American Council of Life Insurers. He adds that "it penalizes the companies customers as well," and contends that it also "makes U.S. products uncompetitive as compared to products not subject to such a tax, including products issued by subsidiaries of U.S. insurers."
