IRS Form 8925 – Report of Employer-Owned Life Insurance Contracts

IRS Form 8925 – Businesses that own life insurance policies on employees—commonly known as employer-owned life insurance (EOLI) or corporate-owned life insurance (COLI)—must comply with strict IRS reporting rules. IRS Form 8925, officially titled Report of Employer-Owned Life Insurance Contracts, is the required annual disclosure form for these policies issued after August 17, 2006.

This comprehensive guide explains everything you need to know about IRS Form 8925: its purpose, who must file it, how to complete it step-by-step, filing deadlines, penalties for non-compliance, and best practices. All information is sourced directly from official IRS resources, including the current Form 8925 (Rev. September 2017) and IRS Notice 2009-48.

What Is IRS Form 8925 and Why Does It Exist?

Form 8925 is an informational return that employers (or other applicable policyholders) use to report basic details about employer-owned life insurance contracts to the IRS.

Purpose (quoted from the official form):

“Use Form 8925 to report the number of employees covered by employer-owned life insurance contracts issued after August 17, 2006, and the total amount of employer-owned life insurance in force on those employees at the end of the tax year. Policyholders must also indicate whether a valid consent has been received from each covered employee, and the number of covered employees for which a valid consent has not been received.”

This requirement stems from the Pension Protection Act of 2006, which added IRC Section 101(j) (limiting tax-free death benefits on EOLI) and Section 6039I (mandating annual reporting). The form ensures transparency and helps the IRS verify compliance with notice-and-consent rules that allow death benefits to remain tax-free in most cases.

Download the official form here: IRS Form 8925 PDF

Who Must File IRS Form 8925?

Generally, every applicable policyholder that owns one or more employer-owned life insurance contracts issued after August 17, 2006, must file Form 8925 for each tax year during which the contract(s) remain in force.

Key definitions (from Form 8925 instructions and Notice 2009-48):

• Employer-owned life insurance contract: A life insurance policy owned by a person engaged in a trade or business, where the owner (or a related person) is a direct or indirect beneficiary, and the insured is an employee (including officers, directors, highly compensated employees, former employees in certain cases, and self-employed individuals under IRC §401(c)(1)) on the issue date.
• Applicable policyholder: The owner of the contract, plus related persons under IRC §§267(b), 707(b), or common control rules (§52).
• Employee: Broadly defined—includes current and certain former employees, directors, and owners in many structures.

Exceptions (you do not need to file for):

• Contracts issued before August 18, 2006.
• Certain §1035 exchanges of pre-August 18, 2006 contracts (unless there is a material increase in death benefit or other material change, which treats it as a new contract).
• Policies where the business is not the owner or beneficiary.

Common scenarios requiring Form 8925:

• Key-person life insurance
• Buy-sell agreements / stock redemption plans
• Funding non-qualified deferred compensation
• Bank-owned or corporate-owned life insurance (COLI/BOLI)
• Split-dollar arrangements where the employer is the owner

Notice and Consent Requirements (Critical for Tax-Free Death Benefits)

To keep death benefits generally tax-free under IRC §101(j), employers must satisfy strict notice and consent rules before the policy is issued:

1. Written notice to the employee of the intent to insure their life and the maximum face amount.
2. Written notice that the employer will be a beneficiary.
3. Written consent from the employee (allowing coverage to continue after termination of employment).

Consent is valid only if the policy is issued within 1 year of signing (or before employment ends, whichever is earlier). Additional consent is needed if coverage exceeds the disclosed maximum.

Form 8925 requires you to confirm compliance by reporting whether valid consents were obtained for all insured employees (or the number missing).

Pro tip: Keep detailed records of all notices and consents—electronic signatures are allowed if they meet IRS integrity standards (Notice 2009-48).

How to Complete IRS Form 8925 Step-by-Step?

The form is only one page (plus instructions on page 2) and straightforward:

Top Section:

• Name(s) shown on return + Identifying number (EIN or SSN)
• Name of policyholder (if different) + Identifying number
• Type of business (e.g., manufacturing, retail, professional services)

Lines 1–4:

• Line 1: Total number of employees at the end of the tax year.
• Line 2: Number of employees insured under EOLI contracts issued after Aug. 17, 2006.
• Line 3: Total amount of insurance in force at year-end on those insured employees.
• Line 4a: Check “Yes” if valid consent obtained for every insured employee; otherwise, enter the number of employees without valid consent on Line 4b.

Attach the completed Form 8925 to your business income tax return (e.g., Form 1120, 1120-S, 1065, or Form 1040 Schedule C for sole proprietors).

Recordkeeping: Maintain supporting documentation for at least as long as the contracts are in force.

When and How to File Form 8925?

• Deadline: File with your timely filed (including extensions) federal income tax return for the year.
• Where: Attach directly to your Form 1120, 1065, 1120-S, or other applicable return. No separate mailing required.
• Electronic filing: Most tax software supports attaching Form 8925 when e-filing business returns.

No standalone e-filing of Form 8925 exists—it travels with the main return.

Penalties for Not Filing or Incorrect Reporting

The IRS does not list a specific monetary penalty on Form 8925 instructions. However:

• Failure to file may be treated as an incomplete tax return, potentially triggering the general failure-to-file penalty (5% per month, up to 25%).
• More critically, failure to meet notice-and-consent rules (which Form 8925 helps document) makes death benefits taxable as ordinary income to the employer (minus basis).
• Some tax professionals note a possible $50-per-failure information return penalty under general rules, though the IRS has not issued definitive guidance.

Bottom line: The real cost of non-compliance is often the loss of tax-free death benefit treatment—potentially hundreds of thousands of dollars.

Best Practices and Common Pitfalls (2026 Tips)

• Review all life insurance policies owned by your business annually.
• Update consents if increasing coverage significantly.
• Consult your tax advisor or insurance professional before issuing new policies.
• Use tax software that auto-generates Form 8925 from your return data.
• For partnerships, S corps, and LLCs: The entity (not individual owners) is typically the filer.
• Track material changes—any increase in death benefit can trigger new reporting.

Frequently Asked Questions About IRS Form 8925

Q: Is Form 8925 required every year even if no new policies were issued?
A: Yes, as long as the post-2006 contracts are still in force.

Q: Do I file if I’m a sole proprietor insuring myself?
A: Usually no—self-insuring the owner typically does not qualify as an “employee” for EOLI rules (see Notice 2009-48).

Q: Can I file Form 8925 electronically?
A: Yes, when attached to an e-filed business return.

Q: Has the form changed for 2025 or 2026?
A: No. The current version remains Form 8925 (Rev. September 2017) with no recent updates (confirmed on IRS.gov as of January 2026).

Q: Where can I find the full official instructions?
A: All instructions are printed on page 2 of the form PDF itself, supplemented by IRS Notice 2009-48.

Final Advice

IRS Form 8925 is a simple one-page form, but overlooking it can have expensive consequences—especially when a death benefit is paid. Proper compliance protects the tax-free status of proceeds and keeps your business in good standing with the IRS.

Action steps today:

1. Download the latest form: https://www.irs.gov/pub/irs-pdf/f8925.pdf
2. Review your business life insurance policies.
3. Consult a qualified tax professional or CPA familiar with EOLI rules.

Sources (all trusted and current as of February 2026):

• Official IRS Form 8925 (Rev. September 2017) and instructions
• IRS.gov “About Form 8925”
• IRS Notice 2009-48 (2009-24 I.R.B. 1085)

Stay compliant, protect your tax benefits, and avoid unnecessary IRS scrutiny. For personalized advice, always work with a licensed tax professional or attorney.

This article is for informational purposes only and is not tax or legal advice.