Newly Released Charitable Split-Dollar Insurance Reporting Requirements

The IRS has issued Notice 2000-24; 2000-IRB 1 (April 5, 2000) to help charitable organizations comply with new information reporting requirements for charitable split-dollar insurance arrangements. IRS will be revising Forms 4720, 990, 990-PF, and 5227 for tax years beginning after December 31, 1999. IRS will also create a new reporting Form 8870, "Information Return for Transfers Associated with Personal Benefit Contracts." The new Form is expected by May 15, 2000.

CTAC Commentary

The Ticket to Work and Work Incentives Improvement Act of 1999 contains new IRC §170(f)(10), prohibiting charitable deductions for transfers connected to split-dollar insurance arrangements. Under that provision, charitable organizations that pay premiums on disallowed split-dollar insurance contracts also must pay an excise tax and report information on premiums paid after February 8, 1999. Furthermore, the reporting requirements apply to charitable organizations, including private foundations, supporting organizations, charitable remainder trusts and charitable lead trusts, that pay premiums after February 8, 1999, in connection with certain life insurance, annuity, and endowment contracts