IRS-Captive Insurance Update: Reporting Requirement Delayed

SIIA Advocacy Efforts Show Early Results

January 4, 2017 - This past November, the Internal Revenue Service (IRS) issued Notice 2016-66, creating new reportable transaction requirements for captive owners and managers, with a deadline of January 30, 2017. In response to this Notice, the Self-Insurance Institute of America, Inc. (SIIA) sent a formal request to the IRS, Treasury and Congress asking for modifications and a reporting extension. In addition to the unnecessarily short timeline for compliance, SIIA commented that the requirements set forth in the Notice are too broad, resulting in little useful new information versus the tremendous cost of compliance to the taxpayers and loss of revenue to states. As a result, SIIA met with the IRS in December to discuss these concerns. During this time, SIIA and its members also spoke with dozens of Members of Congress, many of whom contacted the IRS to request rescission and modifications.

Hearing these concerns, the IRS issued a revised Notice 2017-08 on December 29th, extending the original filing deadline by 90-days to May 1, 2017. While SIIA applauds this necessary deadline extension, there is a continued belief that the requirements under the Notice are duplicative and unnecessary at a time when the PATH Act provisions have not yet fully taken effect. SIIA will continue to lead advocacy activities aimed at reviewing and further modifying the Notice.

With the changes to 831(b) captives included as part of the 2015 PATH Act, SIIA met throughout the year with Congress and the IRS to create more certainty surrounding its implementation. While the IRS has yet to provide guidance and clarification on the PATH Act changes, as requested by Congress, SIIA, joined by 15 state captive associations, sent a letter in October requesting that the IRS provide guidance, or issue interim administrative relief. In addition, SIIA has recommended legislative changes to ease unintended consequences on small businesses utilizing captives for appropriate risk mitigation.

Whether it be the IRS Notice, or recent legislative change to 831(b) captives, SIIA has led the charge in Washington, D.C. - educating key policymakers and regulators, and changing the course of impactful industry changes.

If you would like more information on advocacy efforts or to participate in SIIA, please contact Ryan Work, vice president of government relations, at rwork@siia.org.

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