The IRS is vigilant about potential abuses in the micro captive space. They look for signs of non-compliance, such as premiums that aren’t set at arm’s length, lack of genuine risk distribution, or 831(b) Plans that don’t operate with the characteristics of a real insurance company. SRA has developed a stringent 4-Part Test to ensure compliance with the 831(b) Plans it administers. The IRS has previously identified certain micro captive structures as “transactions of interest,” signaling their intent to monitor and potentially challenge perceived abuses. To address this, SRA ensures all clients file appropriate disclosures of the 831(b) Plan which is included in their annual maintenance fee.