Breaking News – Senate Finance Committee Votes To Increase Maximum Premiums For 831(B) Captives From $1.2 Million To $2.2 Million
It would appear the Internal Revenue Service (IRS) is short on supporters, following its recent rant against small captive insurance companies that make 831(b) tax elections.
First, the breaking news. The Senate Finance Committee just voted to increase the premiums ceiling on small captive insurance companies making an 831(b) tax election from $1.2 million to $2.2 million. This isn’t yet law, but it certainly demonstrates that the Finance Committee recognizes the important role small captives play in protecting small and mid-size businesses. CLICK HERE to read about the recent vote in the Finance Committee.
Second, this week the State of North Carolina rebuffed the IRS’ attack on small captives. In a press release run by Captive Review, North Carolina made it clear that, “Our Captives Are Insurance Companies, Regardless Of IRS Statements.” CLICK HERE to read North Carolina’s statement in Captive Review.
Third, Rob Walling of Pinnacle Actuarial Resources, Inc. skillfully dismantled the IRS’ recent statements against small captive insurance companies. His article, titled “Digging In The Dirt,” acknowledges that some small-scale abuse of the 831(b) tax election may exist, however, he makes it clear that the IRS incorrectly and unfairly paints the small captive industry with a broad brush. The IRS’ statements betray a clear ignorance of the risks and challenges small and mid-size businesses face and a misunderstanding of Congress’ intent for creating the 831(b) tax election in the first place. CLICK HERE to read Rob Walling’s superb article.
Please reach out to me with any questions about the recent activity in the captive insurance industry. We see this week’s news and activity as a win for small and mid-size businesses that either own or are considering owning their own captive insurance company. We expect the industry to continue to grow and more small and mid-size businesses will own their own insurance company in the years ahead.