The Internal Revenue Service issued a notice aimed at calming fears that it would act against insurance-dedicated money market funds that take advantage of a new temporary guarantee program.
In addition, the notice provides that the Treasury Department and the IRS will not assert that such a fund's participation in the program causes the holder of a variable contract supported by a segregated asset account that invests in the fund to be treated as an owner of the fund.
The IRS issued the notice because some practitioners had expressed concern that participating in the program might raise tax issues for money market funds whose beneficial interests are held exclusively by one or more segregated asset accounts of one or more insurance companies.