Excise Tax May Not Be Imposed on Retrocession Insurance Transactions, Federal Judge Rules
February 6, 2014
DOCUMENTS
- Order
WASHINGTON, D.C. — The Internal Revenue Service may not assess excise tax on retrocessional transactions, a federal judge has ruled, therefore Validus Reinsurance Ltd. is entitled to a refund of taxes it paid for nine retrocession policies issued by foreign reinsurers.
On Feb. 5, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia held that 26 U.S.C. § 4371 does not impose an excise tax on retrocession insurance transactions because such transactions do not involve “taxable” insurance contracts.
Pursuant to 26 U.S.C. § 4371, insurance transactions involving policies issued by foreign insurers or reinsurers are …
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