I just stumbled onto this recently.
I am a US citizen with a PR in Canada. In 2015, we purchased some Canadian based insurance which includes a term life policy with no cash value and some travel insurance.
It appears we are required to file Form 720 and remit the Excise Tax on a Quarterly basis. Unfortunately, we will have to file late returns if we are in fact required to file. I am hoping the penalties are not too bad. The tax will be around $30 per year.
Any advice would be greatly appreciated.
Form 720 US Excise Tax on Foreign Insurance
Moderator: Mark T Serbinski CA CPA
-
Canadian Newbie
- Posts: 71
- Joined: Thu Mar 12, 2015 11:59 am
First I've heard of this form but as an individual I don't think you have to file it. Correct me if I'm wrong though.
From a quick search though, it appears that if you are a business, manufacturer or airline or retailer that deals in goods for which excise taxes are due then you are required to file form 720.
So unless you are a business that deals in goods and services subject to excise taxes you wouldn't fill this form out.
Again I'm not 100% on this
From a quick search though, it appears that if you are a business, manufacturer or airline or retailer that deals in goods for which excise taxes are due then you are required to file form 720.
So unless you are a business that deals in goods and services subject to excise taxes you wouldn't fill this form out.
Again I'm not 100% on this
Frank,
Excise tax applies to LOTS of things, not just those you mentioned.
Foreign life insurance premiums do indeed have excise tax needed to be paid, and even individuals would owe this tax.
I do not believe that the tax treaty has any provision overriding the collection of this tax.
The poster might want to contact the Insurance firm, as they might have sought an exemption for themselves, or for one of their clients.
Excise tax applies to LOTS of things, not just those you mentioned.
Foreign life insurance premiums do indeed have excise tax needed to be paid, and even individuals would owe this tax.
I do not believe that the tax treaty has any provision overriding the collection of this tax.
The poster might want to contact the Insurance firm, as they might have sought an exemption for themselves, or for one of their clients.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Hi nelsona,
You are right, I looked at the form again and there is a whole list of items with excise tax. I also did a search on this forum and there doesn't seem to be a whole lot of information about f720...one of those lesser known forms I gather.
From what I could see in the treaty, there doesn't appear to be relief.
Here's a scenario:
I am a Canadian Citizen, I have life insurance through my professional association, premiums are deducted from paycheck. This will pay an amount to my wife (USC and PR of Canada) only in the event that I pass away.
As part of the same insurance, I have 200k on my wife which will pay out to me only in the event of her death.
Am I correct in my assumption that because I am a non US person who has the policy and pays the premium, that my wife would not have to worry about form 720 as an additional part of her yearly IRS ritual? In the case of 720, a quarterly submission.
If this is the case then perhaps other households in a similar scenario would benefit from the non US person holding the policy...if it's possible to work it out that way.
I only mention it because this is something that I have through work with extremely low premiums vs purchasing a policy outside of place of employment.
You are right, I looked at the form again and there is a whole list of items with excise tax. I also did a search on this forum and there doesn't seem to be a whole lot of information about f720...one of those lesser known forms I gather.
From what I could see in the treaty, there doesn't appear to be relief.
Here's a scenario:
I am a Canadian Citizen, I have life insurance through my professional association, premiums are deducted from paycheck. This will pay an amount to my wife (USC and PR of Canada) only in the event that I pass away.
As part of the same insurance, I have 200k on my wife which will pay out to me only in the event of her death.
Am I correct in my assumption that because I am a non US person who has the policy and pays the premium, that my wife would not have to worry about form 720 as an additional part of her yearly IRS ritual? In the case of 720, a quarterly submission.
If this is the case then perhaps other households in a similar scenario would benefit from the non US person holding the policy...if it's possible to work it out that way.
I only mention it because this is something that I have through work with extremely low premiums vs purchasing a policy outside of place of employment.
-
Canadian Newbie
- Posts: 71
- Joined: Thu Mar 12, 2015 11:59 am
[quote="nelsona"]US persons paying the policy premiums are involved. It as nothing to do with beneficiary.[/quote]
Thanks for all of the responses. I could not see any treaty relief with Canada but I will contact the insurance company to make sure.
The crazy thing is that I will now have to file delinquent forms for the past year and owe around $7 on each quarter. Luckily, I already have a Federal EIN so I won't have to apply for one since it is needed to file the Form 720.
This was a surprise to me. There is no mention of this requirement in any of the guides that I have read and it is not mentioned in the US Citizens Living Abroad IRS guide.
Thanks for all of the responses. I could not see any treaty relief with Canada but I will contact the insurance company to make sure.
The crazy thing is that I will now have to file delinquent forms for the past year and owe around $7 on each quarter. Luckily, I already have a Federal EIN so I won't have to apply for one since it is needed to file the Form 720.
This was a surprise to me. There is no mention of this requirement in any of the guides that I have read and it is not mentioned in the US Citizens Living Abroad IRS guide.
-
Canadian Newbie
- Posts: 71
- Joined: Thu Mar 12, 2015 11:59 am
[quote="rafa02"]Perhaps I am misreading this, if a USC had a foreign purchased insurance policy, costing $25 per month, they would need to remit 75 cents every quarter.[/quote]
You are correct. I am a USC and pay around $300 a month for travel insurance for sickness and a small life insurance policy to a CDN insurance company.
I have to remit $9 every quarter on a Form 720. I am actually delinquent for the year 2015 and will be filing the back forms next week. I will be charged around $50 for late filing and interest for the back returns.
Its funny that there is no mention of this anywhere on the IRS website section for US Citizens living abroad. You would think they would provide a section for it but they don't.
You are correct. I am a USC and pay around $300 a month for travel insurance for sickness and a small life insurance policy to a CDN insurance company.
I have to remit $9 every quarter on a Form 720. I am actually delinquent for the year 2015 and will be filing the back forms next week. I will be charged around $50 for late filing and interest for the back returns.
Its funny that there is no mention of this anywhere on the IRS website section for US Citizens living abroad. You would think they would provide a section for it but they don't.