15 March 2021Accounting & tax analysis

Be patient with the IRS, urges Carr Riggs and Ingram

Captive owners should be patient in their dealings with agents from the Internal Revenue Service (IRS), according to Carr Riggs and Ingram (CRI), the accounting and advisory company.

Writing in a  note on its website, CRI said there are good reasons why the IRS may not have as much expertise in the field of captive insurance as some would like.

“Over the past decade, progressive budget cuts to the IRS agency have hindered the agency’s ability to provide sufficient training to its agents as a whole,” CRI said. “As such, the agency has been unable to provide more extensive training for the specialised field of insurance.”

In the last five years the IRS has aggressively targeted micro captives or 831(b) captives. In particular it has indicated it will focus on how captives allocate income and deductions and how transfer pricing is applied to foreign captive subsidiaries and transactions.