§6050Y Returns Relating to Certain Life Insurance Contract Transactions

Summary

If you buy a life insurance policy or part of one in a reportable sale, you must file a tax-year report with the IRS. The report must give your name, address, and TIN; the name, address, and TIN of everyone who got payment in the sale; the sale date; the insurer’s name and the policy number; and each payment amount. You must also give each person named a written notice with a contact name, address, phone, and the same information about them (insurers do not have to include payment amounts in their notice). When an insurer gets that notice or learns the policy was moved to a foreign person, the insurer must file a report showing the seller’s name, address, and TIN, the seller’s investment in the contract (see section 72(e)(6)), and the policy number. The insurer must give each listed seller a written notice with a contact and that information. If someone pays reportable death benefits, they must file a report with payer and recipient names, addresses, and TINs, the payment dates, gross amounts, and an estimate of the buyer’s investment in the contract, and must give recipients the same written notice. Definitions: Payment = cash plus the fair market value of anything given in the sale. Reportable policy sale = meaning in section 101(a)(3)(B). Issuer = the life insurer bearing the risk on the date a report or notice is due. Reportable death benefits = amounts paid because the insured died under a contract that was transferred in a reportable policy sale.