IRS backs off on tax proposal that would affect captive insurance industry

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(Host) A federal proposal that would have changed the way Vermont’s captive insurance industry is taxed has been scrapped.

Senator Patrick Leahy and Congressman Peter Welch say they were notified of the decision (today/on Wednesday) by the Internal Revenue Service.

Captive insurance is a form of self-insurance for large corporations. The industry supports 14-hundred high-paying jobs in Vermont.

The change would have prohibited the companies from deducting from their taxes the amount of money set aside to pay claims.

Traditional insurance companies are allowed to deduct their reserves from their taxes and the captives say it’s fair that they can continue to do so, as well.

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