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Washington’s insurance regulator on Monday launched a webpage for captive owners to register to comply with a measure signed into law last week that imposes additional taxes on captives with risks located in the state.
All captives covering risks in Washington must register with the Office of the Insurance Commissioner by Sept. 9, 2021.
Other requirements detailed in S.B. 5315 include a 2% premium tax for risks located in the state that are insured via a captive and a $2,500 registration fee.
According to a study commissioned by Mike Kreidler, Washington’s insurance commissioner, the law will raise $29 million in back taxes and generate $2.5 million a year in future tax revenue.
The measure follows four years of increased scrutiny of captives in Washington by Mr. Kreidler. Several large companies, including Microsoft Corp. and Costco Wholesale Corp., have already paid back taxes and penalties to settle with the insurance department.
Washington is not a captive domicile.
The IRS on Friday urged participants in “abusive” microcaptive insurance arrangements to exit the programs and warned that it would issue penalties against such captive owners.