Insurance premiums; excise tax consequences. This ruling describes the insurance excise tax consequences (under section 4371 of the Code) of insurance premiums paid by one foreign insurer (foreign insurer) to another (foreign reinsurer). In particular, the ruling addresses the excise tax consequences of such payments where the foreign insurer is eligible for a waiver of the excise tax by income tax treaty but the foreign reinsurer is not. There are two types of insurance excise tax waivers provided by treaty. The ruling addresses both types of waivers. Rev. Rul. 58-612 clarified and amplified.

International operation of ships or aircraft; foreign corporation. This ruling assists a foreign corporation engaged in the international operation of ships or aircraft, and its shareholders, in determining whether the foreign corporation is organized in a country that grants an “equivalent exemption” from tax for purposes of section 883(a) and (c) of the Code. The ruling also assists a nonresident alien individual engaged in the international operation of ships or aircraft in determining whether a country grants an equivalent exemption for purposes of section 872(b). The ruling does not, however, provide substantive guidance under section 883. Rev. Ruls. 89-42, 97-31, and 2001-48 modified and superseded.

This announcement sets forth a voluntary compliance initiative that encourages any foreign person who has failed to pay excise taxes due under section 4371 of the Code, or failed to disclose that it has claimed a waiver from the taxes pursuant to an income tax treaty, to become compliant with its obligations. In general, if a taxpayer participates in this initiative in accordance with the terms laid out in this announcement, the IRS will not conduct examinations covering insurance excise tax liabilities arising under the four situations set forth in Rev. Rul. 2008-15 (this Bulletin), or any similar fact pattern, to the extent that premiums are paid or received by the participating taxpayer during any quarterly tax period prior to October 1, 2008.