Skip to Main Content
 

MEDIA ADVISORY: Deadline for Small Captive Insurance Company Filing is January 30, 2017

November 17, 2016, Caplin & Drysdale, Chartered

For inquiries, please contact:
Rachel L. Partain at rpartain@capdale.com
Charles M. Ruchelman at cruchelman@capdale.com

Urgent Action:
Deadline for Small Captive Insurance Company Filing is January 30, 2017

Caplin & Drysdale’s Tax Controversies Group
Advises Urgent Action on Small Captive Insurance Transaction Reporting Requirements

On November 1, 2016, the Treasury Department and the IRS, via Notice 2016-66 (2017-47 IRB _), classified certain captive insurance transactions, electing treatment under section 831(b) of the Internal Revenue Code, as “transactions of interest.” The IRS believes these transactions have a “potential for tax avoidance or evasion,” and are implementing significant reporting responsibilities on businesses, captives, owners, and managers, with considerable penalties for non-compliance.  The deadline for filing is January 30, 2017.

Taxpayers who have established a captive insurance company, and elected to be taxed pursuant to section 831(b) of the Code, must immediately determine whether they have a reporting obligation with respect to their participation via Form 8886 Reportable Transaction Disclosure Statement with the Office of Tax Shelter Analysis, and with future income tax returns.

Failure to timely report transactions as required will be subject to potential section 6707A penalties, as well as possible accuracy related penalties under sections 6662 or 6662A, which could be significant.

Managers, CPAs, actuaries, and other advisors who have formed or assisted with these captive insurance companies also must determine immediately whether they need to report their assistance via Form 8918 Material Advisor Disclosure Statement and to preserve all documents related to the transaction.  Failure to timely report as a material advisor as required will be subject to potential section 6707 penalties.

For inquiries, please contact Rachel L. Partain (rpartain@capdale.com) or Charles M. Ruchelman (cruchelman@capdale.com)

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
-Business, Investment & Transactional Tax
-Complex Litigation
-Corporate Law
-Employee Benefits
-Exempt Organizations
-International Tax
-Political Law
-Private Client
-Tax Controversies
-Tax Litigation
-White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office:
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000
        New York, NY Office:
600 Lexington Avenue
21st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2017 Caplin & Drysdale, Chartered
All Rights Reserved.