The Feldman Law Firm, the affiliated law firm of Capstone Associated Services, has sent a letter to Texas congressman Kevin Brady highlighting the Internal Revenue Service’s (IRS) “recent tactics against small captive insurance companies”.
The letter, sent by Stewart Feldman, attorney at the Feldman Law Firm, referenced a meeting that Feldman and Brady previously had where they discussed the IRS’ targeting of captive insurance companies in June 2019.
Feldman noted that the IRS has continued to “target and harass small businesses and their owners over captive insurance coverage”.
In the letter, he outlined the steps that the IRS has taken including the issuance of Notice 2016-66 against small captive insurance companies as well as the IRS’ more recent letter campaign to dissuade business from electing under statutory provisions.
He explained that captive insurance companies play a vital role in the US economy, “allowing businesses to write customised insurance coverages that are otherwise unavailable or unaffordable in the commercial insurance market”.
Feldman explained that despite the IRS’ recent “bully tactics” the current COVID-19 pandemic emphasises the importance of captive insurance programmes to mid-market companies.
According to Feldman, businesses with captive insurance “stand in a better financial position to weather the current storm posed by the pandemic and the resulting shutdown of businesses”.
He said: “We would appreciate your office’s assistance in ensuring that small businesses are treated with fairness in their ability to access benefits enacted by congress. Absent any action, the IRS will continue to attack small businesses and their owners over their use of captive insurance and the American economy stands to suffer for it, all while subverting the intention of congress.”
“Senator Grassley has been a champion of captives for many years, in recognition of their widespread use among agricultural interests”, he added.