Employer-Owned Life Insurance Contracts: Tax Consequences of Non-Compliance

As part of the Pension Protection Act of 2006, Congress mandated under new § 6039I of the Internal Revenue Code of 1986, as amended ("IRC), the annual reporting of information regarding employer-owned life insurance contracts. This annual reporting is required on new IRS Form 8925, Report of Employer-Owned Life Insurance Contracts. This form must be filed by every employer that owns a life insurance contract on the life of one or more of its employees that was issued after August 17, 2006. Additionally, any life insurance contract for which there is material increase in death benefit or other material change is treated as a new contract. Hence, pre-August 17, 2006 contracts can become subject to this rule if they are materially modified.

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