WASHINGTON - The Internal Revenue Service has clarified that life settlement funds will be subject to a 30 percent withholding tax unless the funds are structured in a tax transparent manner where the investor is located in a jurisdiction with a relevant double tax treaty with the United States.
The IRS position was stated in a letter was requested by officials in Luxembourg after the IRS issued two Revenue Rulings, IRS 2009-13 & IRS 2009-14 in May 2009 that confirmed the official position of the IRS on certain key tax issues as they related to the life settlement asset class.
This latest update reaffirms the original rulings, Luxembourg officials said.
