SECTION 6. APPLICATION OF SAFE

HARBOR METHOD TO CERTAIN CONTRACTS WITH INSTALLMENT PREMIUMS

An insurance company using one of the special methods of reporting gross premiums written in § 1.832–4(a)(5) for a category of insurance contracts with installment premiums may apply the safe harbor method to determine the amount of premium acquisition expenses treated as incurred for the taxable year with regard to those contracts. The company’s premium acquisition expenses treated as incurred for the taxable year with regard to those contracts, however, cannot exceed the annual pro rata expense limitation of § 1.832–4(a)(5)(vii). If the insurance company is required to reduce the amount of premium acquisition expenses

2002–28 I.R.B. 107 July 15, 2002

2002–9, provided that the taxpayer complies with the following filing requirements. The taxpayer must complete and file a Form 3115 in duplicate. The original must be filed with the taxpayer’s amended federal income tax return for its first taxable year beginning after December 31, 1999. A copy of the Form 3115 must be filed with the national office (see Rev. Proc. 2002–9 for the address) no later than when the taxpayer’s amended return is filed. The amended return must be filed no later than January 21, 2003. A taxpayer that wants to change to the safe harbor method for a taxable year earlier than its first taxable year ending on or after December 31, 2001, must take into account the § 481(a) adjustment required as a result of the change over a four-year adjustment period. See sections 4.01 and 4.04(1) of Rev. Proc. 2002–19. .04 Pending applications with national office . If a taxpayer filed an application or ruling request with the national office to make a change in method of accounting for premium acquisition expenses for a taxable year beginning before January 1, 2002, and the application or ruling request is pending with the national office on June 20, 2002, the taxpayer may make the method change under this revenue procedure. However, the national office will process the application or ruling request in accordance with the authority under which it was filed, unless prior to September 20, 2002, the taxpayer notifies the national office that it wants to make the method change under this revenue procedure. If the taxpayer timely notifies the national office that it wants to make the method change under this revenue procedure, the application or ruling request will be considered closed and any user fee that was submitted with the application or ruling request will be returned to the taxpayer.