§6050Y Returns relating to certain life insurance contract transactions

Summary

Require anyone who buys, sells, or pays out certain life insurance contracts in a "reportable policy sale" to send information to the IRS for the tax year when the sale or payment happens. A buyer who gets an interest in such a policy must report their name, address, and taxpayer ID; the people who received payments; the sale date; the insurer and policy number; and each payment amount. The buyer must also give each person named a written statement with the filer’s contact info and the same details (insurers do not have to list payment amounts on those statements). When an insurer is told of a transfer or gets the buyer’s statement, the insurer must report the seller’s name, address, taxpayer ID, the seller’s "investment in the contract" (see section 72(e)(6)), and the policy number, and must give similar written statements. Anyone who pays reportable death benefits must report the payer’s and recipients’ names, addresses, taxpayer IDs, payment dates, gross amounts, and an estimate of the buyer’s investment in the contract, and must give each recipient a written statement with contact info and those details. Definitions: payment = cash plus fair market value received in the sale; reportable policy sale = as defined in section 101(a)(3)(B); issuer = the life insurance company that bears the contract risk on the reporting date; reportable death benefits = amounts paid because of the insured’s death on a transferred contract.