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Wednesday, November 23, 2005

Foreign Life Insurance Policy Reporting

U.S. taxpayers are generally required to report their ownership interests in non-U.S. bank accounts using Form 90-22.1. At first analysis, one wouldn't think that an interest in a foreign life insurance policy is a reportable account. However, some practitioners have been advised that the Department of Treasury believes that premium payments for insurance policies with cash surrender value or other investment features constitute "deposits" within the meaning of Form 90-22.1. Therefore, if a life insurance policy is a "whole life" or other type of policy with investment value, then it is an "other financial account" subject to reporting. Whether this is a correct interpretation is unknown, but conservative reporting would indicate that such policies should be reported.
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