The IRS has proposed regulations that identify certain microcaptive insurance transactions as listed transactions and certain other microcaptive transactions as transactions of interest.
The proposed regulations are in response to recent court decisions that held the IRS's practice of issuing notices to identify listed transactions and transactions of interest does not comply with the Administrative Procedure Act (APA) because the IRS issued the notices without following the notice-and-comment procedures required by the APA.
In Announcement 2023-11, the IRS and Treasury said they disagreed with the court decisions but “will no longer take the position that transactions of interest can be identified without complying with APA notice-and-comment procedures.”
The proposed regulations “ensure that these decisions do not disrupt the IRS’s ongoing efforts to combat abusive tax shelters throughout the nation,” the agency said. Read more.