Notice 2016-66 is a notable absence from the US Treasury’s Donald Trump-ordered review of tax regulations, despite the Self-Insurance Institute of America (SIIA) asking for its inclusion.
Earlier this month, the Internal Revenue Service (IRS) published an interim list of eight regulations that the Treasury is examining ahead of its full report, which is due by September.
President Trump ordered the review of new tax rules issued on or after 1 January 2016 that “impose an undue financial burden on US taxpayers, add undue complexity to the federal tax laws, or exceed the statutory authority of the IRS”.
In June, SIIA wrote to the Treasury to request Notice 2016-66 be included on the list of US tax rules to be reviewed.
SIIA claimed in its request to the Treasury that Notice 2016-66 meets “several of the criteria” outlined in the president’s definition of regulatory burdens.
Notice 2016-66 labelled most captives that take the 831(b) election as “transactions of interest” and required them to provide extensive reporting for the past 10 years by 1 May of this year.
SIIA’s members argued that the notice placed a significant burden on the captive insurance industry.
The average cost for a captive to complete its notice reporting was $9,257, compared to a typical range of $1,000 to $4,000 to file a federal tax return, according to SIIA.
The overall cost of notice compliance by SIIA members alone totalled more than $22 million.
A final report, identifying actions of the IRS and Treasury that impose financial burdens, undue complexity, or which exceed their authority, is expected to be released no later than September.
