IRS Initiatives: BGD attorneys explore the IRS' latest plans for captives in Captive Review Tennessee Report 2017
According to their featured column, like every business, the IRS has a business plan that lays out their goals and tasks they wish to complete during the year. For the 2016-17 year they have listed three captive insurance projects. (The column can be found on page 18 in the Captive Review Tennessee Report 2017.)
First, the IRS proposed regulations to tax a domestic cell or series as a separate entity, which would require it to receive its own EIN, file its own returns and make its own tax elections.
Second, the IRS will work on “guidance relating to captive insurance companies.” Some potential topics this could cover are the definition of insurance, the treatment of stop loss insurance for employee benefits, the effect of the Rent-A-Center and Securitas cases on risk distribution or the interpretation of the provisions of the “PATH” Act.
Third, The IRS also seeks to provide “Guidance under section 162(m) addressing certain situations involving a short taxable year.” Section 162(m) involves limitations on health insurance companies’ compensation; there is an IRS Notice that makes it less likely that this provision applies to captives, but one should be vigilant.
Furthermore in the column, they go on to explain the audit and litigation process of captives that has been established.
The Captive Review Tennessee Report is an annual publication by the Captive Review that aims to help explain the process of setting up a captive insurance company. It delivers a comprehensive guide containing a wealth of information collated from established experts like Lavelle, Cohen and Miller. The report sheds light on managing for compliance, IRS initiatives and the regulation of captives among other things. You can view a digital copy of the report here.