Colorado senator Michael Bennett is the latest figure to criticise Notice 2016-66.
In a letter of concern to the Internal Revenue Service (IRS), which used Notice 2016-66 to formally identify micro captive transactions as “transactions of interest”, Bennett stated: “The notice is overbroad and may be burdensome for small businesses to identify transactions involving captive insurance companies over the course of many years.”
“While I understand the IRS’s need to identify and stop tax avoidance schemes, it is my hope that the service can collect this information in a less burdensome manner or use data it may already have.”
Bennett currently serves on the Senate finance committee, which has jurisdiction over tax and captive insurance issues.
It is expected that more senators will join Bennett in writing a letter of concern to the IRS.
The Self-Insurance Institute of America has already asked the IRS to grant more time to 831(b) captives that need to comply with Notice 2016-66.
The filing deadline for affected captives is 30 January 2017, just 90 days from the 1 November date of issuance of the notice.
