Micro-Captive Reporting Deadline Extended

Disclosure Statements Deadline for
Micro-Captive Insurance Transactions Extended

by Anita Anand, JD, Senior Manager

The IRS recently issued Notice 2017-08 which extends the deadline for filing certain disclosure statements pertaining to certain micro-captive insurance transactions that have been identified by the IRS as “transactions of interest” in a prior IRS Notice (2016-66). The original filing deadline was January 30, 2017.

Background of Micro-Captive Insurance Transactions’ Disclosure Statements

In November 2016, IRS released Notice 2016-66 in which IRS stated that it is aware that certain micro-captive insurance transactions have the potential for tax avoidance or evasion. These transactions involve captive insurance companies that make the election under Internal Revenue Code §831(b) to be taxed only on taxable investment income.

In an attempt to limit the potential for tax avoidance and abuse, IRS designated these types of transactions and other similar transactions as “transactions of interest” and requires these arrangements to be subject to certain disclosure requirements, due by January 30, 2017.

Note: There is an exception for captive insurance company arrangements that provide insurance for employee compensation or benefits for which the Employee Benefits Security Administration of the U.S. Department of Labor has issued a Prohibited Transaction Exemption. As such, these arrangements will not be treated as a “transaction of interest.”

The New Deadline Date

After the release of Notice 2016-66, IRS received several requests to extend the time allowed to satisfy the reporting obligations. In response to such requests, IRS has extended the disclosure requirement and reporting deadline from January 30, 2017, to May 1, 2017. A failure to comply with these reporting obligations may result in penalties.

The new notice merely extends the filing deadline. No other changes or modifications to filing or other disclosure requirements are made.


It is important to note that IRS scrutiny of micro-captive arrangements is not new, but rather, something that has been an ongoing issue for the past few years. However, this is the first time that these types of transactions are subject to reporting and disclosure requirements.

By establishing these reporting requirements with respect to such transactions, there will be cases where reporting will be required even in non-abusive transactions. However, all micro-captive insurance transactions should be reviewed and evaluated in light of these recent notices.

For more information about this notice and related issues, please contact your Brady Ware advisor.

Dayton – 800.893.4283

Columbus – 866.502.8555

Richmond – 800.515.5536

Atlanta – 404.257.9475 or 770.458.5000

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