The IRS now requires disclosure for certain small insurance company tax arrangements

The US tax agency just tightened rules on certain small insurance company tax arrangements. People who use these arrangements, and their advisors, must now tell the IRS about them or face penalties.

For years, some companies used their own small insurance companies to get tax deductions, often without actually transferring much risk. The US tax agency has now formally labeled these arrangements as reportable, making it much harder to use them for tax avoidance. This means the IRS can now systematically track and penalize these arrangements, rather than fighting them one by one.