n-05-35.pdf

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# Part III - Administrative, Procedural, and Miscellaneous

Electronic submission of lists identifying contracts subject to closing agreements
under Rev. Rul. 2005-6

Notice 2005-35

This notice provides procedures under which a list identifying the contracts
subject to a closing agreement under Rev. Rul. 2005-6, 2005-6 I.R.B. 471, may
be submitted to the Internal Revenue Service in electronic format.

Rev. Rul. 2005-6 provides that for purposes of determining whether a
contract qualifies as a life insurance contract under § 7702 of the Internal
Revenue Code, and as a modified endowment contract (MEC) under § 7702A,
charges for qualified additional benefits (QABs) must be taken into account under
the expense charge rule of § 7702(c)(3)(B)(ii). The revenue ruling provides
three alternatives to life insurance contract issuers whose compliance systems
do not currently account for charges for QABs under the expense charge rule of
§ 7702(c)(3)(B)(ii). Under Alternatives B and C of the ruling an issuer may
request relief in the form of a closing agreement under which contracts will not be
treated as having failed the requirements of § 7702(a) or as MECs under
§ 7702A by reason of improperly accounting for charges for existing QABs. The
issuer's request for a closing agreement must include a list identifying the
contracts for which relief is requested.

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The Internal Revenue Service has learned that, in some cases, a list
identifying the contracts subject to a closing agreement may be sufficiently large
that it could be burdensome for issuers to provide the list on paper. Accordingly,
an issuer may submit the list electronically, in read-only format, on either a CD-
ROM or diskette. Adobe Portable Document format is a suitable format. Other
formats may be arranged on a case-by-case basis. The issuer must provide a
total of 3 CD-ROMs or diskettes, one for each of the three (3) copies of the
closing agreement.

The principal author of this notice is Melissa S. Luxner of the Office of
Associate Chief Counsel (Financial Institutions & Products). For further
information regarding this notice contact Melissa S. Luxner at (202) 622-3970
(not a toll-free call).