Micro-Captive Arrangements

 

Letter 6336 requests that taxpayers review their micro-captive insurance filing positions and notify the IRS in writing by May 4, 2020, if they have discontinued taking deductions or other tax benefits from a micro-captive insurance transaction.  The letter also encourages taxpayers to consult with an independent tax advisor in regard to prior year filing positions and consider filing amended returns to bring themselves back into compliance if warranted.  The letter provides a hotline number for taxpayers to contact us.

The IRS understands that due to the current conditions, taxpayers may need additional time beyond the stated May 4, 2020 due date to provide their written response. As such, the IRS is automatically extending the May 4, due date to June 4, 2020. Those who received the letter need not reach out to us to confirm the extension.   If additional time beyond June 4 is needed, taxpayers should call the hotline number included in the letter.  The IRS will continue to monitor the situation, including the impact of current operations.

Several recent U.S. Tax Court decisions have confirmed that certain micro-captive arrangements are not eligible for claimed federal tax benefits. If you have taken a deduction or other tax benefit on a prior year tax return related to micro-captive insurance, you can amend your return to remove these benefits.

For an individual amended return:

  • Write "Microcaptive" at the top of the first page of Form 1040-X and mail the amended return to Internal Revenue Service, 2970 Market Street, Philadelphia, PA 19104.

For a business paper amended return:

  • Write "Microcaptive" at the top of the first page of the amended return and mail the amended return to the address listed in the instructions for the return. 

For a business electronic amended return:

  • Notate "Microcaptive" as the reason for filing the amended return.

If you have received IRS Letter 6336 and have questions, you may call 737-800-7995 for assistance. This is not a toll-free number.