IRS Proposes Disclosure Rules on Micro-Captive Transactions (2)

The IRS and the Treasury Department proposed regulations Monday detailing what kinds of micro-captive insurance transactions must be disclosed to the government.

The proposed regulations (RIN 1545-BQ44) are an attempt to address a series of court rulings that the IRS had cut corners in its previous attempts to establish rules governing micro-captives, among other areas. The court rulings, from 2022, contended that the IRS hadn’t issued proper notice or solicited proper comment before it took action, as it’s required to do under the Administrative Procedure Act.

Micro-captive transactions involve small insurers owned by the businesses they insure. The ...