Buchanan Tax Shareholder Susan E. Seabrook Talks Challenges of Reinsurance Tax Strategy with Law360

In a recent article titled "IRS May Need Legislative Fix for Reinsurance Tax Strategy," Law360 discusses the Treasury’s released proposed regulations to curb hedge funds' use of offshore reinsurance arrangements for tax avoidance and their decline "to craft a rule based on foreign insurance companies’ asset ratios to determine if they qualify for exceptions to tax rules on passive foreign income…"

Buchanan’s Susan E. Seabrook tells Law360 that "the request for comments in the proposed regs shows the government is still considering whether there is a way to implement an assets test, but she notes that it’s tricky to draw those lines based on the nature of the industry."

Senate Finance Committee ranking member Ron Wyden noted that more work still was needed to close the tax loophole, but that the guidance was the first step in the right direction.

"I don’t think that there is a way to punish an offshore hedge fund reinsurer who’s actually taking on real insurance risk," Seabrook told Law360 regarding the guidance as it stands. 

Read the full article - "IRS May Need Legislative Fix for Reinsurance Tax Strategy" (Law360, April 27, 2015). Subscription required.