Heard on the Web: Charitable Life Insurance Gift Program Blows Up on University, Donors
Summary
According to a report in the Des Moines Sunday Register and as further reported in TaxProf Blog, nearly 1,700 contributors to a University of Northern Iowa athletic scholarship fund lost an estimated $6.8 million in accumulated insurance this year when school officials determined the benefit violated federal tax law. The charitable split-dollar arrangements should have been terminated 10 years ago when Congress eliminated the favorable benefits associated with such arrangements and imposed severe tax penalties on their continued use.
Full Text:
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PGDC Editor's Note: In 1999 Congress ended charitable split-dollar arrangements (P.L. 106-170, the Tax Relief Extension Act of 1999) and the IRS handed down severe penalties in Notice 99-36, 1999-1 C.B. 1284. See also IRS Guidance on Split-Dollar Insurance Reporting Requirements.
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