The Self Insurance Institute of America (SIIA) and Sean King, JD, CPA, of CIC Services, LLC have called on the IRS to either suspend or repeal Notice 2016-66, as reported in Captive Insurance Times (CIT). Notice 2016-66 places additional reporting requirements on small captive insurance companies (CICs) that make an 831(b) tax election. According to CIT, SIIA’s comments essentially argue that the IRS should wait until Congress clarifies the 2015 Protecting Americans from Tax Hikes (PATH) Act and the U.S. Tax Courts rule on cases involving small captives making 831(b) elections. The PATH Act increased the 831(b) limit from $1.2 million to $2.2 million, while placing some additional ownership restrictions on small CICs seemingly designed to thwart estate transfer. Nevertheless, the limit increase from $1.2 million to $2.2 million suggests Congress strongly supports 831(b) in seemingly direct opposition to the Service’s scrutiny of small CICs. Reading between the lines, SIIA suggests that Congress (elected officials) and the Courts (appointed officials) should provide guidance on 831(b) before IRS bureaucrats create additional work for tax payers.
According to CIT, Attorney Sean King of CIC Services, LLC was a little less charitable than SIIA in his written comments to the IRS.
[King] called for Notice 2016-66 to be revoked. According to King, Notice 2016-66 “undermines important public policies as codified by Congress, unfairly targets small businesses, attempts to administratively repeal Internal Revenue Code Section 831(b), impinges upon the exclusive authority of the states to regulate and define insurance, runs in contravention to court precedent, has many unintended but devastating consequences, and subverts the rule of law.”
To read the Full Article at Captive Insurance Times, CLICK HERE.