Insurance industry representatives will meet with a Treasury tax official Tuesday in an effort to block enforcement of an excise tax provision.
The industry reps will try to persuade Eric Solomon, assistant secretary for tax policy, to get the Treasury Department to delay or rescind an IRS guidance, given in March in Revenue Ruling 2008-15, that would require domestic insurers to pay a 1% excise tax every time a premium is ceded to a foreign insurer or reinsurer.
Insurers also would have to pay a 4% tax when they started the arrangement.
The combination of the 4% initial tax and the 1% tax on later cedings would create a cascading effect, according to industry lawyers and lobbyists.
The March revenue ruling sets out the IRS position that the federal excise tax on insurance and reinsurance premiums imposed by Section 4371 of the Internal Revenue Code really is a "cascading tax."
Unless rescinded, the Treasury guidance will take effect Oct. 1.
