Similar to 401K individual retirement accounts, an 831(b) captive allows business owners to put aside pre-tax dollars that can be used to cover unforeseen business disruptions in the future. For instance, an 831(b) captive can help when unpredictable events hit - such as the avian flu, which recently devastated the poultry and egg industries, or prolonged downturns in the oil and gas markets.
IRSS INSURANCE CODE
This tax code can provide risk coverage not normally available in the traditional insurance market. Congress showed foresight nearly four decades ago when it created 831(b), a special section of the tax code that allows individuals and small businesses to set aside tax-deferred funds for unforeseen or catastrophic events. This is where the 831(b) tax code comes in. Unfortunately for many, traditional insurance plans did not cover the wide range of business disruptions and expenses the pandemic brought. This was no more apparent than during the COVID-19 pandemic when organizations faced unprecedented financial challenges. We’re proud to help facilitate 831(b) captives and know organizations need to mitigate unforeseen risks. With our commitment to conservation, we’ve also reintroduced a herd of 200 bison to the Modoc range. Fees paid to those plans help benefit the Modoc Nation’s wide range of social assistance for our members, such as child care assistance, scholarships for higher education, and improved housing.
This issue directly affects the Modoc Nation, where some providers of 831(b) captives are domiciled. But now, those small businesses are being forced to hire lawyers to defend themselves from the IRS, which has unfairly singled them out. Small businesses around the country successfully protect themselves through this tax code, helping them through events and financial losses that traditional insurance does not cover. When members of Congress travel to Oklahoma this week, we hope they hear one message loud and clear: The IRS needs to stop targeting honest small-business owners and farmers who use the 831(b) tax code, also known as Captive Insurance.
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