Will 831(b) proposals destroy the industry or be a refreshing change?

• Opinion split on whether latest IRS intervention is a positive development, or “out to destroy the industry”
• Service buoyed by four for four Tax Court victories over micro-captives
• Up to 90% of captives taking 831(b) tax election could fall into new IRS definitions
• Managers and services providers expected to review risk appetite of continuing 831(b) work

The Internal Revenue Service’s proposed regulations for 831(b) have divided opinion across America’s captive landscape, with some saying they could destroy the industry, while others have branded it a refreshing change.

Captive Intelligence reported last week the IRS had published proposals which, if implemented, would identify certain micro-captives as “listed transactions” and others “transactions of interest”.