The Internal Revenue Service (IRS) has extended the deadline for the micro-captive insurance filing positions from 4 May to 4 June 2020 due to the current COVID-19 pandemic.
Commenting on the extension, the Self-Insurance Institute of America (SIIA) said that while this is good news for captive owners and their businesses, it has been “strongly advocating for the IRS to stand down on its unnecessary data collection and more appropriately focus its activities on narrowing guidance”.
SIIA explained: “We continue to engage congress on this issue and, more importantly, how captive insurance is helping America’s small and medium-sized businesses when it is needed the most.”
In a statement, the IRS said that due to the current conditions, taxpayers may need additional time beyond the original deadline in May due date to provide written responses.
The IRS noted that those who received the letter do not need to reach out to the IRS to confirm the extension.
If additional time beyond 4 June is required, the IRS urged taxpayers to get in contact. The IRS said it will continue to monitor the situation, including the impact of current operations.
Commenting on the revised deadline, Work said: “While the recent IRS deadline extension announced in the statement offers some short-term relief, it does nothing to alleviate the unnecessary data collection and burden being placed on American small- and medium-sized businesses during the current crisis.”
“If the IRS were to look at this issue without a predetermined bias, they would see that claims are being paid and that captive insurance is offering relief for major business and supply chain disruptions that are keeping many businesses afloat.”
He suggested that this deadline extension does little for business owners already struggling.
“In fact, it’s telling that while the IRS has offered deadline extensions through mid-July for the vast majority of individual and business filings, it refuses to offer the same courtesy to business owners who happen to have legitimate captive insurance structures to mitigate against real risk,” he explained.
Work added: “If the IRS would simply spend the time reviewing its own past filing requirements, it would find that it already has much of the requested information at its disposal. If anything, the success of captive insurance during the current crisis is yet another reason, among many, for the IRS to act in good faith with the industry to find a resolution to ongoing examinations and data collection requirements.”
