first_imgIRS drops plan to change captive insurance tax statusThe Coalition for Fairness to Captive Insurers, CICA and VCIA are pleased to report that today (February 20, 2008), the Internal Revenue Service announced that it is withdrawing proposed IRS Regulation §1.1502-13(e) on consolidated returns that would have adversely affected single parent captive insurance companies. Consequently, the public hearing requested by the Coalition on this issue which was scheduled for February 29th has been cancelled.”We are thrilled that the IRS and Treasury Department have chosen to withdraw the portion of the proposed regulation involving captive insurance companies,” said Dennis Harwick, Co-Chair of the Coalition and President of the Captive Insurance Companies Association (CICA). “This welcome, but unusual, action is testimony to the strong technical response that the Coalition developed for the IRS and the on-going conversations that we had with representatives of the IRS and Treasury Department about the technical and policy flaws of the proposed regulation.””This decision removes the uncertainty that has hung over the captive industry since the IRS regulation was proposed last fall,” said Molly Lambert, Co-Chair of the Coalition and President of the Vermont Captive Insurance Association (VCIA). “We would like to thank all of the Coalition members who helped with both the technical and political response to the proposed regulation. The forceful and unified response of the captive industry, captive regulators, state governors, and affiliated organizations played a key role in convincing the IRS to withdraw the proposed regulation even before the formal hearing.”The Coalition for Fairness to Captive Insurers was formed last fall shortly after the IRS published its proposed regulation and CICA and VCIA determined that those regulations would have a serious negative effect on many single parent captive insurance companies. The Coalition, CICA, and VCIA made a commitment to engaging the best legal minds to prepare a detailed (39 page) technical response to the proposed regulation, along with a coordinated political effort to oppose implementation of the proposed regulation. “We are gratified that the substance of the arguments put forth in the Coalition’s technical response appears to have been a key reason for the IRS’s decision,” says Harwick. “In addition, it seems clear that marshalling support for the captive industry’s position on Capitol Hill was also critically important to this successful outcome. Our thanks to everyone, inside and outside the Coalition, who helped with this effort.”# # # #last_img

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