Sarbanes-Oxley Won't Affect IRS Approach to Split-Dollar Rules, Says Treasury Official


At a conference in Washington September 13 Treasury's Michael Doran said the loan prohibitions of recently enacted corporate reform legislation won't affect IRS guidance on the loan treatment of certain split-dollar arrangements.

Document Type: News Stories

Tax Analysts Document Number: Doc 2002-21025 (2 original pages) [PDF]

Tax Analysts Electronic Citation: 2002 TNT 179-4

Citations: (13 Sep 2002)


=============== SUMMARY ===============


At a conference in Washington September 13 Treasury's Michael Doran said the loan prohibitions of recently enacted corporate reform legislation won't affect IRS guidance on the loan treatment of certain split-dollar arrangements.

During a panel discussion on the proposed split-dollar life insurance regulations (REG-164754-01) at ALI-ABA's annual Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers Conference, Doran, assistant Treasury benefits tax counsel, said it is unlikely that the existence of the Sarbanes- Oxley law (P.L. 107-204) will have any effect on the IRS's approach to split-dollar arrangements. (For the full text of REG-164754-01, see Doc 2002-16108 (24 original pages) [PDF] or 2002 TNT 135-10 .)

Whether the new law applies to split-dollar arrangements is a question for the Securities and Exchange Commission because the SEC has jurisdiction to interpret the language, Doran said.


=============== FULL TEXT ===============


At a conference in Washington September 13 Treasury's Michael Doran said the loan prohibitions of recently enacted corporate reform legislation won't affect IRS guidance on the loan treatment of certain split-dollar arrangements.

During a panel discussion on the proposed split-dollar life insurance regulations (REG-164754-01) at ALI-ABA's annual Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers Conference, Doran, assistant Treasury benefits tax counsel, said it is unlikely that the existence of the Sarbanes- Oxley law (P.L. 107-204) will have any effect on the IRS's approach to split-dollar arrangements. (For the full text of REG-164754-01, see Doc 2002-16108 (24 original pages) [PDF] or 2002 TNT 135-10 .)

Whether the new law applies to split-dollar arrangements is a question for the Securities and Exchange Commission because the SEC has jurisdiction to interpret the language, Doran said.

Treasury has no formal rules of interpreting the legislation, but "what we do have is a half-century of thinking on whether split- dollar arrangements are treated as loans," he said.

Doran said he had no idea of how the SEC is going to come out on the issue but noted that Treasury has made a distinction between employer- and employee-owned arrangements in determining loan treatment -- a distinction he said is intended to result in a fair measure of tax for those arrangements.

On the other hand the new law takes an "all or nothing" approach with loan arrangements -- it's criminal or not criminal, he said. Considering the new law's approach, Doran said it is reasonable to ask if it can really be the case that if one puts the employer's name down as the owner of a split-dollar policy it won't be a crime, but if the employee's name is listed as owner it will be a crime.

"I question whether the SEC will form a distinction like we have in the regs," Doran said.



Code Section: Miscellaneous
Geographic Identifier: United States
Subject Area: Tax system administration issues
Compliance
Cross Reference: For the full text of REG-164754-01, see Doc 2002-16108 (24 original
pages) [PDF] or 2002 TNT 135-10 .
Author: Harris, J. Christine
Institutional Author: Tax Analysts