General Instructions

Purpose of Form

Generally, an applicable exempt organization must file a Form 8921 for each structured transaction under which it makes reportable acquisitions of applicable insurance contracts. See Definitions below for terms used in these instructions and Form 8921. For more information on the reporting requirements, see section 6050V. See When and Where to File below regarding filing deadlines.

Who Must File

Applicable exempt organizations must file Form 8921 if they acquire a direct or indirect interest in an applicable insurance contract after August 17, 2006, and on or before August 17, 2008, regardless of the date of the structured transaction itself. A separate Form 8921 must be filed with respect to each separate structured transaction to which the organization is a party. See Definitions below.

How to Complete Form

In order to be considered complete, Form 8921 must be completed in its entirety with all required attachments. If the information required exceeds the space provided, attach additional sheets. The additional sheets must be in the same order as the lines to which they correspond. Include your organization's name, employer identification number (EIN), and the structured transaction identifier (STI) at the top of each additional sheet.

Round off cents to whole dollars. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

When and Where to File

If an applicable exempt organization makes a reportable acquisition after August 17, 2006, and on or before August 17, 2008, it must file a Form 8921 according to the following schedule.

IF reportable acquisitions were made, or new or corrected information was obtained, after... AND on or before... THEN file an initial or subsequent Form 8921 by...
August 17, 2006, August 17, 2007, November 1, 2007
August 17, 2007, August 17, 2008, October 31, 2008

If any information required by Form 8921 is unavailable at the time of filing, or if any information already provided changes or is found to be in error, then an updated or corrected Form 8921 must be filed according to the above schedule.

Where to send.   Send Form 8921 to the following address.

Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0027

  If filing using a private delivery service, the private delivery service can tell you how to get written proof of the mailing date.

Penalty

There is a penalty under section 6721 for the failure to file a required Form 8921 by the required filing date. See When and Where to File earlier. Other penalties are imposed for failure to include all information and required attachments, or for inclusion of incorrect information. See sections 6721 and 6724(d)(1)(B)(xiv).

If one or more failures are due to intentional disregard of the filing requirement (or the correct information reporting requirement), then the penalty per failure is the greater of (a) $100 or (b) 10% of the value of the benefit of any applicable insurance contract for which information is required to be included on the return. In this case, the penalty imposed for such intentional disregard is not taken into account in applying any calendar year limitation. See section 6721(e).

No penalty shall be imposed for any failure if it is shown that such failure is due to reasonable cause and not to willful neglect. See section 6724(a).

Definitions

Applicable Exempt Organization

An applicable exempt organization is generally a religious, charitable, scientific, literary, educational, amateur sports or similar organization, a governmental organization, a fraternal society operating on a lodge system, a veterans' organization, an Indian tribal government, a cemetery company, or an employee stock ownership plan. See section 6050V(d)(3) for more details. The term “organization,” when used in these instructions, refers to an applicable exempt organization.

Applicable Insurance Contract

An applicable insurance contract is any life insurance, annuity, or endowment contract in which both an applicable exempt organization and a person other than an applicable exempt organization have directly or indirectly held an interest (whether or not at the same time). However, a contract is not an applicable insurance contract if:

  • Each person directly or indirectly holding an interest in the contract (other than an applicable exempt organization) has an insurable interest in the insured under the contract that is independent of the applicable exempt organization's interest in the contract,

  • The sole interest in the contract of each involved person is as a named beneficiary, or

  • Under certain circumstances, the sole interest in the contract of each person other than an applicable exempt organization is as a beneficiary of one or more trusts holding an interest in the contract, or as a trustee who holds an interest in the contract solely in a fiduciary capacity. See section 6050V(d)(2).

Broker/Advisor

A broker/advisor is any person that, for compensation, supplies professional services to the other parties to the structured transaction. This transaction role includes persons providing legal, financial, accounting, or other advice, as well as persons providing brokerage or investment banking services.

Contract Beneficiary

A contract beneficiary is any person eligible to receive death or endowment benefits, in the case of life or endowment insurance, or annuity payments in the case of annuities. There may be more than one contract beneficiary with respect to a single contract.

Contract Form

Each contract form must be identified by each contract type (such as a life insurance policy, endowment policy, or annuity contract). Each contract form must also be separately identified if the contract forms are issued by different insurers or if they have differing terms (such as different premium structures, investment options, or withdrawal options) from other contracts of the same type. For example, if the answers with respect to any two contracts differ for line 10a, 10b, 10c, 11, 12d, 13a, 15a, or 17 of Form 8921, then the two contracts constitute separate contract forms, and each contract form must be identified and reported in a separate column for purposes of answering questions under Part III of Form 8921.

Contract Owner

A contract owner is any person possessing any benefits and burdens of ownership as they relate to applicable insurance contracts. Generally, this is any person with the power to change a beneficiary designation, to borrow a part (or all) of a policy's cash value, or to otherwise withdraw funds. There may be more than one contract owner with respect to a single contract.

Creditor

A creditor is a person that supplies funds in return for a fixed return or a variable rate of return that is determined by an interest rate index and a spread.

Insurable Interest

Insurable interest is a state law concept which requires that a life insurance policyholder have a direct interest in the continuance of the life of the insured. For example, a tax-exempt organization may have an insurable interest in the lives of its donors. An organization's role in a structured transaction is to provide an insurable interest if one or more applicable insurance contracts are purchased based on the organization's relationship to the insured individual.

Investor

An investor is a person, other than a creditor, that supplies funds in return for an equity interest. An equity interest exists wherever compensation is variable and uncertain in amount, timing, or both (other than with respect to a variable interest contract) at the time the outlay of funds is made.

Party to the Structured Transaction

A party to the structured transaction is any person (other than the applicable exempt organization filing the Form 8921) that is known to hold (directly or indirectly) an interest in one or more applicable insurance contracts, or who otherwise receives (or will receive) amounts from the structured transaction. An insured is not a party to the transaction, unless that person has an interest in the applicable insurance contract or the structured transaction other than as an insured.

Reportable Acquisition

A reportable acquisition is one in which an acquisition is made of a direct or indirect interest in an applicable insurance contract when the acquisition is a part of a structured transaction involving a pool of such contracts.

Structured Transaction

A structured transaction is any transaction in which an applicable exempt organization acquires a direct or indirect interest in a pool of applicable insurance contracts.

Structured Transaction Identifier (STI)

A structured transaction identifier (STI) is a 4-digit number used to identify the structured transaction for which a Form 8921 is being filed. See instructions for line 2, below.


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