SIIA Urges IRS to Revise & Streamline Ongoing Form 8886 Filings

Earlier today, the Self-Insurance Institute of America, Inc. (“SIIA”) responded to a formal comment request by the Internal Revenue Service (“IRS”) related to information collection on the Form 8886.  In the comments, which can be found here, SIIA requests that the Form 8886 filing requirements be reviewed, updated, and streamlined due to the recent court decisions involving Notice 2016-66 and the ongoing and unnecessary burdens associated with preparing and filing the Form 8886, especially for small and medium-sized businesses. 

As SIIA outlines in its formal comments, Form 8886 creates an administrative and financial burden on taxpayers due to the following factors: (1) overbroad in scope, (2) duplicative, (3) requires significant financial costs incurred to report, (4) ongoing in nature, (5) creates uncertainty as to how to comply, and (6) demonstrates lack of IRS information access and digital capabilities.

According to data collected by SIIA, the average cost for a captive to complete reporting requirements under Notice 2016-66 amounts to $9,257. SIIA has also found that preparing and filing the Form 8886 takes nearly 51 hours per captive, which is in contrast to the Federal government’s estimate of only 17 total hours for recordkeeping and form preparation. As a result, it is clear that the requirement to prepare and file the Form 8886 imposes a sweeping burden, cost, complexity, and uncertainty on a number of taxpayers, including small and medium-sized businesses. 

In the comment letter, SIIA recommends that the IRS review the necessity and compliance burden of the Form 8886, particularly considering the lack of access to the filings, as well as the need for additional digital submission capabilities.

Please contact Ryan Work, SIIA Senior Vice President of Government Relations, at [email protected] with questions or for further information on these comments or related SIIA captive advocacy activities.