Limited Penalty Relief for Micro-Captive Filers

The IRS allows for an extra 90 days to get in compliance

Photo by Raphael Rychetsky on Unsplash

Many farmers have created Micro-Captive insurance companies over the last few years. If done properly, these companies can provide additional insurance coverage and spread the risk, especially with the rapid increase in regular property and casualty premiums and the lack of coverage.

However, the IRS views many of these companies as abusive and requires taxpayers to provide certain information about the company. If a taxpayer owns or controls at least 20% of a micro-captive or loans money to or from the captive or has certain levels of payouts, etc. then the IRS requires these companies to be reported to the IRS.