Form 720 Life Insurance – IRS Form 720 Foreign Insurance Premiums (Golding & Golding)
Form 720 Life Insurance – IRS Form 720 Foreign Insurance Premiums
IRS Form 720 is used for many different purposes. In the realm of offshore disclosure and voluntary compliance of foreign assets and investments, the primary purpose of the form is to report the total quarterly premiums paid for foreign life insurance — and to submit a 1% excise tax to the IRS on the total premiums paid.
Sounds fair, right?
Unlike other aspects of offshore reporting, this particular form is not that bad. It typically serves as a supplement to other forms, such as Form 8938, FBAR, and more
Contents
Form 720 (Quarterly Federal Excise Tax Return)
Form 720 is reported quarterly to the IRS, in any year that foreign life insurance premiums were paid.
Unlike other IRS forms such as FBAR or FATCA Form 8938, which are filed irrespective of whether premiums are paid (once the aggregate cash value or surrender value thresholds are met), Form 720 is only filed (for life insurance premiums purposes anyway) in a quarter, in which premiums were paid.
What is a Foreign Life Insurance Policy?
Typically, a foreign life insurance policy is just a life insurance policy in a foreign country.
In many other countries, life insurance policies are much more versatile, and are used as more of an investment tool than just an insurance policy, per se.
Your foreign life insurance policy may have an investment component to it, along with the other complexities – but for form 720 purposes, it typically just means a foreign country company issued a non-U.S. life insurance policy.
Foreign Life Insurance Premiums
You may or may not be paying foreign life insurance policy premiums. With some policies, you are required to pay a premium for a few years, and then no further payments are due. Your policy may already be paid up.
Other types of foreign life insurance policies require an annual premium payment. If you are continuing to pay life insurance premiums on a foreign life insurance policy, you may be subject to a form 720 requirement.
How do I File & Report Form 720?
The form is required to be filed quarterly. In other words, for each quarter that you paid for life insurance premiums, you would file a form 720 to correlate to the monthly payment was made.
For example, if your foreign life insurance policy requires premiums to be paid twice a year in January and June — you would file two separate form 720 during the year, because you made foreign life insurance premium payments in two separate quarters.
EIN (Employer Identification Number)
An EIN is an Employer Identification Number. Many of our clients do not have an EIN.
In years past, clients could submit a Form 720 just using their social security number and that would be the end of it.
In more recent times, even in this type of situation in which his Social Security number is included and the filer is not an employer — the IRS will issue an EIN.
Not to worry, just having an EIN issued by the IRS should have no impact on your taxes.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
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