What IRS Form 1120-L (2015) Is For

IRS Form 1120-L (2015) is the official income tax return used by life insurance companies to report their gross income, deductions, and gains for the 2015 tax year. It applies to domestic and qualifying foreign corporations engaged in the insurance business. The form helps the Internal Revenue Service determine each company’s tax liability under the Internal Revenue Code based on reserves, accounting methods, and applicable provisions.

All life insurance companies and certain foreign corporations must file Form 1120-L, even if no tax is owed. It covers key components such as reserve adjustments, return premiums, and deferred acquisition costs. Filing this form accurately ensures compliance with Treasury regulations and proper reporting of insurance company income for federal tax purposes.

When You’d Use IRS Form 1120-L (2015)

Companies typically use IRS Form 1120-L (2015) when filing a late or amended life insurance company income tax return for the 2015 tax year. This may occur when the company missed the original March 2016 deadline, identified reporting errors, or experienced changes that affected its accounting and reserve reporting.

Common reasons for filing include:

1. Late Filing Requirement: A company must submit a late Form 1120-L for the 2015 tax year if it missed the original due date and needs to meet federal filing requirements.
2. Correction of Reporting Errors: The organization should file this form to correct mistakes in gross income, deductions, or reserve computations to ensure accurate tax reporting.
3. Update of Corporate Information: The company must amend the return to correct inaccurate details, such as its employer identification number or principal business address.
4. Business Structure Changes: The insurer must file an amended return after a merger, reorganization, or change in controlled group status to reflect consolidated income data accurately.
5. Revision of Accounting Methods: The company must revise its accounting methods or elections according to Internal Revenue Service approval or updated filing regulations.

Key Rules or Details for Tax Year 2015

The 2015 tax year included several specific provisions and calculation methods that life insurance companies must follow when completing IRS Form 1120-L (2015). These rules determined how insurers calculated reserves, deferred acquisition costs, and taxable income under the Internal Revenue Code. 

Key provisions for the 2015 tax year include:

1. Reserves test under section 816(c): Life insurance reserves, unearned premiums, and unpaid losses on noncancelable policies must exceed 50 percent of total reserves to meet the statutory definition of a life insurance company.
   
   
2. Reserve computation rule: Companies must calculate reserves using the greater of the applicable federal interest rate (AFIR) or the state assumed interest rate (SAIR), depending on which provides the higher value.
   
   
3. Deferred acquisition costs requirement: Under section 848, insurers must capitalize and amortize acquisition expenses, and members of a controlled group are treated as a single entity for this calculation.
   
   
4. Special rate for long-term care riders: As specified in IRS guidance for that year, qualified long-term care riders attached to life insurance contracts are subject to a 7.7 percent tax rate.
   
   
5. Accounting consistency requirement: All financial and tax reporting must follow the company’s established accounting methods, ensuring that statutory reserve figures reconcile with tax schedules and supporting documentation.

Step-by-Step (High Level) 

1. Gather all supporting records: Collect the company’s NAIC annual statement, prior-year returns, IRS transcripts, and related financial schedules that document reserves and deferred acquisition costs.
   
   
2. Prepare the correct form version: Complete the 2015 version of Form 1120-L using the company’s legal name, employer identification number, and official address as they appear on corporate records.
   
   
3. Attached the required schedules: Schedule M-3 must be filed if assets exceed $10 million. Schedule F is used to compute reserves. Schedule G reports deferred acquisition or reinsurance expenses.
   
   
4. Submit the completed return: File electronically or by mail to the designated IRS service center, ensuring that all required signatures are included and any payment due is properly made.
   
   
5. Retain all documentation: To comply with federal recordkeeping requirements, keep copies of the return, supporting schedules, and reconciliations for at least three years after filing.

You should work with a qualified tax professional familiar with insurance company filings to ensure full compliance with IRS regulations and Treasury provisions.

Common Mistakes and How to Avoid Them

Filing IRS Form 1120-L (2015) requires careful attention to accuracy and documentation. Even minor oversights can lead to IRS correspondence, delays, or penalties. 

Common mistakes and how to avoid them include:

1. Incorrect corporate identification details: Always verify the company’s legal name, employer identification number, and corporate address before filing to ensure consistency with official IRS and state records.
   
   
2. Missing required attachments: Double-check that all necessary schedules, NAIC annual statements, and reserve reconciliations are included with the return to avoid incomplete submission notices.
   
   
3. Reserve miscalculations: Confirm that the applicable federal interest rate (AFIR) and state assumed interest rate (SAIR) are correctly applied to produce accurate reserve amounts.
   
   
4. Improper handling of deferred acquisition costs: Capitalize and amortize deferred acquisition costs in accordance with section 848 to prevent misstatements in deductions or taxable income.
   
   
5. Inconsistent statutory and tax reporting: Before submitting the final return, reconcile all statutory and tax accounting figures, particularly those on Schedule F, to ensure they align.

Performing detailed internal reviews and consulting a qualified tax professional familiar with life insurance company filings can further minimize the risk of errors and potential IRS adjustments.

What Happens After You File

After submitting IRS Form 1120-L (2015), the Internal Revenue Service reviews the return to verify reserves, deferred acquisition costs, and income reconciliations. Because life insurance company filings are complex, processing may take several months, and the IRS might request additional documentation, such as reserve calculations or NAIC statement comparisons. 

If adjustments are proposed, the company will receive a written notice outlining any changes and applicable penalties or interest from the original due date. Payments can be made through the Electronic Federal Tax Payment System (EFTPS), and companies unable to pay in full may request an installment agreement using Form 9465. Those who disagree with an IRS determination can appeal through the IRS Appeals Office. 

FAQs

How long can I file an amended 2015 Form 1120-L?

Refund claims are generally allowed within three years from the original due date or two years after the tax was paid, whichever is later. Companies filing after that period may still correct their records, but cannot claim a refund.

What if I cannot locate my 2015 NAIC annual statement?

You can request a replacement from your state insurance department or the NAIC. Keep a copy in your permanent records since the IRS may order it for verification even years after the filing.

Are penalties applied for late filing even if no tax is due?

Yes, the IRS may assess a failure-to-file penalty of up to 25 percent, with a minimum charge if the return is more than 60 days late. Documenting reasonable cause can help reduce or remove penalties.

Can section 848 elections be made on late returns?

Section 848 elections generally must be made within six months of the original due date. Late polls can only be accepted if the company qualifies for specific relief under IRS regulations or obtains formal approval.