SECTION 3. EXEMPTION

PROCEDURE

.01 A person otherwise required to remit the insurance excise tax on account of premiums paid to a foreign insurance or reinsurance company may consider the premiums exempt from the insurance excise tax under an income tax treaty if the premiums are paid to an insurer or reinsurer that is a resident for treaty purposes of a country with which the United States has a treaty containing an excise tax exemption and, prior to filing the return for the taxable period, such person has knowledge that there was in effect for such taxable period a closing agreement between the Internal Revenue Service and the foreign insurer or reinsurer as provided by section 3.04(2). As part of the closing agreement, the foreign insurer or reinsurer must agree to be liable as a United States

2003-45 I.R.B. 1029 November 10, 2003

taxpayer for the insurance excise tax pursuant to section 4371 et seq., subject to an applicable exemption under the relevant treaty or any other United States treaty. However, a person required to remit the excise tax may not consider the premiums exempt if prior to filing the return for the taxable period such person has knowledge that the foreign insurer or reinsurer did not qualify for benefits under the relevant treaty during the taxable period.

.02 Premiums paid on policies written by a foreign insurer or reinsurer cannot qualify for exemption from the insurance excise tax under a treaty with a qualified exemption to the extent that the risks covered by such premiums are reinsured with a person not entitled to the benefits of the relevant treaty or any other treaty that provides exemption from the insurance excise tax. Premiums paid on policies written by a foreign insurer or reinsurer cannot qualify for exemption from the insurance excise tax under a treaty with an exemption subject to an anti-conduit arrangement limitation to the extent that the premium is paid pursuant to a conduit arrangement as defined in the treaty.

.03 In addition to the requirements of sections 3.01 and 3.02, premiums paid on policies written by a foreign insurer or reinsurer cannot qualify for exemption from the insurance excise tax under a treaty to which the United States is a party unless the foreign insurer or reinsurer qualifies for benefits under the relevant treaty, including the limitation on benefits provision.

.04 A foreign insurer or reinsurer that wishes to enter into a closing agreement under this revenue procedure must:

(1) Submit the following information and documentation:

a. A statement signed under penalties of perjury that:

i. The foreign insurer or reinsurer is a resident of (name of treaty country) for purposes of the income tax treaty between the United States and (name of treaty country); and

ii. The foreign insurer or reinsurer qualifies for benefits under the Limitation on Benefits Article of the income tax treaty between the United States and

(name of treaty country), accompanied by an explanation of the basis on which the foreign insurer or reinsurer so qualifies;

b. A letter of credit in the amount of $75,000. The Service may determine at any time that circumstances warrant a letter of credit in an increased amount and will notify the taxpayer if such a determination is made;

c. A completed Form SS–4 ( Applica- tion for Employer Identification Number ) to apply for an EIN if the applicant does not already have an EIN;

d. A list of the position titles of those persons who will be the responsible parties for performance under the closing agreement, and the names, addresses, and telephone numbers of those persons as of the date the application is submitted; and

(2) Enter into a closing agreement identical to the form set forth in Appendix A of this revenue procedure for treaties with qualified exemptions, or Appendix B of this revenue procedure for treaties with an exemption subject to an anti-conduit arrangement limitation.

.05 (1) Any foreign insurer or reinsurer wishing to enter into a closing agreement under this revenue procedure should submit a request for a closing agreement in accordance with Rev. Proc. 2003–1, 2003–1 I.R.B. 1, or any successor procedure, with the user fee stated in Appendix A of Rev. Proc. 2003–1, or any successor procedure, to the following address:

Internal Revenue Service Attn: LM:IN:FP 1111 Constitution Avenue, NW Washington, DC 20224 Telephone: (202) 435–5080 Fax: (202) 435–5082

(2) The request must be accompanied by three (3) copies of the closing agreement with an original signature on each copy and the information and documentation required by section 3.04. The Internal Revenue Service will sign the closing agreement and return one (1) copy to the Taxpayer.