Revenue Procedure 2023-21
Internal Revenue Service
2023-19 I.R.B. 837
   
     
     
 26 CFR 601.105: Examination of returns and claims for refund, credit or abatement; determination of tax liability      
 (Also: 842(b))      
     
 Rev.Proc. 2023-21      
     
 SECTION 1. PURPOSE      
     
This revenue procedure provides the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under section 842(b) of the Internal Revenue Code for taxable years beginning after December 31, 2021. Instructions are provided for computing foreign insurance companies' liabilities for the estimated tax and installment payments of estimated tax for taxable years beginning after December 31, 2021. For more specific guidance regarding the computation of the amount of net investment income to be included by a foreign insurance company on its U.S. income tax return, see Notice 89-96, 1989-2 C.B. 417. For the domestic asset/liability percentage and domestic investment yield, as well as instructions for computing foreign insurance companies' liabilities for estimated tax and installment payments of estimated tax for taxable years beginning after December 31, 2020, see Rev.Proc. 2022-36, 2022-40 I.R.B. 274.   
     
 SECTION 2. PERCENTAGES AND YIELDS.01 DOMESTIC ASSET/LIABILITY PERCENTAGES FOR 2022. The Secretary determines the domestic asset/liability percentage separately for life insurance companies and property and liability insurance companies. For the first taxable year beginning after December 31, 2021, the relevant domestic asset/liability percentages are:   
     
127.7 percent for foreign life insurance companies, and   
199.7 percent for foreign property and liability insurance companies..02 DOMESTIC INVESTMENT YIELDS FOR 2022. The Secretary is required to prescribe separate domestic investment yields for foreign life insurance companies and for foreign property and liability insurance companies. For the first taxable year beginning after December 31, 2021, the relevant domestic investment yields are:   
     
3.0 percent for foreign life insurance companies, and   
2.4 percent for foreign property and liability insurance companies..03 SOURCE OF DATA FOR 2022. The section 842(b) percentages to be used for the 2022 taxable year are based on tax return data from the 2020 taxable year.   
     
 SECTION 3. ESTIMATED TAXES      
     
To compute estimated tax and the installment payments of estimated tax due for taxable years beginning after December 31, 2021, a foreign insurance company must compute its estimated tax payments by adding to its income other than net investment income the greater of (i) its net investment income as determined under section 842(b)(5) that is actually effectively connected with the conduct of a trade or business within the United States for the relevant period, or (ii) the minimum effectively connected net investment income under section 842(b) that would result from using the most recently available domestic asset/liability percentage and domestic investment yield. Thus, for installment payments due after the publication of this revenue procedure, the domestic asset/liability percentages and the domestic investment yields provided in this revenue procedure must be used to compute the minimum effectively connected net investment income. However, if the due date of an installment is less than 20 days after the date this revenue procedure is published in the Internal Revenue Bulletin, the asset/liability percentages and domestic investment yields provided in Rev.Proc. 2022-36 may be used to compute the minimum effectively connected net investment income for such installment. For further guidance in computing estimated tax, see Notice 89-96.   
     
 SECTION 4. EFFECTIVE DATE      
     
This revenue procedure is effective for taxable years beginning after December 31, 2021.   
     
 SECTION 5. DRAFTING INFORMATION      
     
The principal author of this revenue procedure is Sheila Ramaswamy of the Office of Associate Chief Counsel (International). For further information regarding this revenue procedure contact Sheila Ramaswamy at (202) 317-6938 (not a toll free number).