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Captive Manager Confirms IRS Review of 831(b) Captives

September 15, 2014
IRS is currently reviewing numerous captive insurance companies that are operating under Section 831(b) of the Internal Revenue Service Code and as many as a dozen captive managers may be involved according to David McManus, President of Artex Risk Solutions. “While stressful for the managers and more importantly our customers, if at the end of the day this review removes ambiguity surrounding what is and is not insurance and results in greater clarity regarding risk distribution, it will be helpful to the entire captive industry”, McManus advised Artex Risk Solutions is one of numerous captive managers helping form and manage captive insurers formed under section 831(b). Under this section of the IRS Code insurance companies earning no more than $1.2 million in annual written premiums can opt not to pay taxes on those premiums and be taxed only on their investment income. McManus, President of Artex Risk Solutions said “he believes the small captives Artex has helped form and manage will withstand IRS scrutiny.” In March Forbes Magazine, IRS Watch reported that IRS was increasing its scrutiny of captives. Artex Risk Solutions and David McManus are to be lauded for transparency to its captive clients and being the first to publicly acknowledge the existence of this wide spread IRS review.
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