IRS Opens Promoter Investigations Office For 831(b) Micro Captives
The 831(b) micro captives industry received more news this week from the US Treasury Department. The IRS opens promoter investigations office to:
coordinate efforts across multiple business divisions to address abusive syndicated conservation easements and ‘abusive micro captive insurance arrangements as well as other transactions, according to IRS Commissioner Chuck Rettig.
I came across this article in Captive Insurance Times over the weekend. I read it twice to make sure that I had read the article correctly.
An article that read IRS Opens Promoter Investigations Office did not seem to have that much of an impact on my reading until I realized that the IRS is pursuing some of the architects of 831 (b) micro captive arrangements. I have to admit that I have attended a few captive presentations where I had thought – there is no way this could be legal.
The IRS press release was more of a promotion notice for one of their officers – Lois Deitrich, a 20-year veteran of the agency, will be the new office’s acting director.
According to the press release, Deitrich began her IRS career as a revenue agent in 2001. She holds a master’s degree in Tax from the University of Denver and is a certified public accountant and a certified fraud examiner.
The office, known as the Office of Promoter Investigations (OPI), should come as no surprise as the Internal Revenue Service has taken the following steps to assure that all micro captives under the 831 (b) program complies with the current regs – with J&L article references:
- IRS Names Micro captives to Dirty Dozen list for almost 10 years – then abruptly removed them
- IRS Wins Fourth Major Court Case Against 831(b) Micro Captive arrangements
- Six Years Ago Captives were looking like a new insurance frontier
- Reserve Mechanical Court Decision does not bode well for captives.
One of the article links pointed to an article where the SIIA (Self-insured Institute of America) article requests the IRS provide the exact rules for the operation of micro captives.
Our company even explored and began setting up an offshore micro captive for Workers Comp, After reading about how the IRS opens promoter investigations, office, we at J&L (as many insurance advisors) will wait until the IRS issues the final rules on 831 (b) micro captives before venturing further.
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