IRS And Treasury Provide Guidance For Insurance Providers On Alternative Minimum Tax Under The Inflation Reduction Act

The Treasury Department and the Internal Revenue Service today issued Notice 2023-20PDF, which provides interim guidance for insurance companies and certain other taxpayers for the new corporate alternative minimum tax (CAMT) until the issuance of proposed regulations.

The Inflation Reduction Act of 2022 created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning in 2023. Large corporations, including insurance companies, with average annual adjusted financial statement income exceeding $1 billion are the taxpayers generally affected by the CAMT. The Treasury Department and the IRS have issued Notice 2023-20 to provide certainty to insurance companies and certain other taxpayers.

In particular, Notice 2023-20 provides interim guidance for the determination of adjusted financial statement income as it relates to (1) variable contracts and similar contracts, (2) funds withheld reinsurance and modified coinsurance agreements, and (3) the basis of certain assets held by certain previously tax-exempt entities that received a “fresh start” basis adjustment.
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IRS Notice

The Treasury Department and the IRS released a proposed redesigned partnership form for tax year 2021 (filing season 2022). The proposed form is designed to provide greater clarity for partners on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits.

The redesigned form and instructions provide guidance to partnerships on how to report international tax information to their partners in a standardized format. This proposed form would apply to a partnership required to file Form 1065 only if the partnership has items of international tax relevance (generally foreign activities or foreign partners). The proposed changes would not affect domestic partnerships with no international tax items to report.

This early release is intended to afford time for stakeholder input and engagement. Treasury and IRS invite comments from affected stakeholders through Sept. 14, 2020. Written comments should be sent to the following email address: with the subject line: “International Form Changes.”
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