Tax Insights from Insurance Treasury and IRS release 2014-2015 Priority Guidance Plan September 9, 2014 In brief The Treasury and IRS recently released the 2014-2015 Priority Guidance Plan (PGP), which identifies 317 projects as published guidance priorities for the plan year ending June 2015, down from 324 projects originally identified as priorities for the plan year ending June 2014. The plan includes projects that will address a variety of issues including international taxation, employee benefits, health care, and seven items that are specific to the insurance industry. The plan also includes more routine guidance that is published each year. computed under AG 43 should be taken into account for purposes of the reserve ratio test under § 816(a) and the statutory reserve cap under § 807(d)(6) (Carried over); In detail The 2013-2014 PGP included 9 insurance-specific items, three of which were closed by publication, one of which was closed without publication, and five of which carried over to the 2014-2015 Plan. In addition, two new items were added, for a total of seven insurance items on the 2014-2015 Plan. The insurance specific items are set forth below:    Final regulations under § 72 on the exchange of property for an annuity contract. Proposed regulations were published on October 18, 2006 (Carried over); Guidance on annuity contracts with a long-term care insurance rider under §§ 72 and 7702B (Carried over); Guidance clarifying whether the Conditional Tail Expectation Amount  Guidance on exchanges under § 1035 of annuities for long-term care insurance contracts (Carried over);  Regulations under § 7702 defining cash surrender value (Carried 0ver);  Guidance providing de minimis relief under § 833 (New for 2014-2015); and  Guidance relating to captive insurance companies (New for 2014-2015). Of the new items, guidance providing relief under § 833 for Blue Cross organizations that do not satisfy the Medical Loss Ratio requirement of § 833(c)(5) was anticipated in final regulations that were published under that provision in early 2014. It is not yet known what issues will be addressed concerning captive insurance companies, but the addition of this item to the PGP is unsurprising due to the IRS loss in Rent-A-Center v. Commissioner. The 2013-2014 Priority Guidance Plan included four insurance specific items which did not carry forward to the 2014-2015 plan:  Revenue Ruling under § 801 addressing the application of Revenue Ruling 2005-40 or Revenue Ruling 92-93 to health insurance arrangements that are sponsored by a single employer. PUBLISHED 06/09/14 in IRB 2014-24 as REV. RUL. 2014-15 (RELEASED 05/08/14) www.pwc.com Tax Insights  Revenue Ruling on the determination of the company's share and policyholder's share of the net investment income of a life insurance company under § 812. PUBLISHED 02/24/14 in IRB 2014-09 as REV. RUL. 2014-07 (RELEASED 02/04/14).  Final regulations under § 833 to establish the method to be used by Blue Cross Blue Shield entities in determining the medical loss ratio required by that section. Proposed regulations were published on May 13, 2013. PUBLISHED 01/07/14 in FR as TD 9651.  Guidance to clarify which table to use for § 807(d)(2) purposes when there is more than one applicable table in the 2001 CSO mortality table. CLOSED WITHOUT PUBLICATION. The 2014-2015 PGP also lists a number of non-insurance specific projects that may be of interest to insurance companies, including projects in the areas of employee benefits, executive compensation, financial products, international tax, and transfer pricing. The takeaway The new Priority Guidance Plan highlights guidance projects to which the Treasury and IRS will devote resources in 2014-2015. Although there are no deadlines for guidance to be issued under the plan, insurance companies should be aware of developments on projects -particularly insurance projects -- that may be of interest for their business. Let’s talk For a deeper discussion, please contact: Anthony DiGilio Partner Office: 703-918-4812 Mobile: 202-253-9028 [email protected] Mark Smith Managing Director Office: 202-312-7518 Mobile: 202-412-2415 [email protected] © 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. Solicitation This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 2 pwc